Impacts of Election on the Economy

  4 min 40 sec to read
Impacts of Election on the Economy

Bijay Damase

August 14: The government has announced the election to the federal parliament and provincial assemblies in one phase in upcoming November. After the announcement of the election date, political parties have started gearing up for the general elections in every nook and corners of the country.

The election is believed to impact not only the country’s politics but also the economy.

The political parties and election candidates spend a large amount of money during the election campaign, which is expected to increase economic activities. Some say it is a positive aspect of election while others argue that the excess of money in the market will cause inflation.

The Election Commission has estimated that the total cost of the election will be around Rs 10 billion.

The amount will basically be spent on voter education, printing of voting materials, transportation of those materials and salary of those involved in conducting the election as well as security personnel, including temporary police.

According to EC Spokesperson Shaligram Poudel, the commission has estimated the cost of election and had requested the Finance Ministry to release the required budget.

On the other hand, the finance ministry officials are still awaiting the cost estimates from various bodies before ascertaining the budget required for the election. They say that the exact cost of the local elections held in May is yet to be received. Home Ministry Spokesperson Dhundi Prasad Niraula says that they are yet to receive the cost estimates for the upcoming election.

The government had allocated a total of Rs 17 billion for the local elections. Deputy Spokesperson of the Election Commission Surya Prasad Aryal informed that the EC had initially demanded Rs 12 billion from the government for the local election but later revised the cost estimate to Rs 8.94 billion. The finance ministry released only Rs 8.11 billion back in May.

Aryal claimed that the commission held the election with a budget of Rs 5 billion by reducing unnecessary expenses.

A senior official of the finance ministry believes that the entire cost of the upcoming election will reach between Rs 20 billion to Rs 30 billion by adding the cost of the EC, Home Ministry and other government agencies.

However, it is not only the government that spends during the election. Political parties also loosen their wallets during the election campaigns. Although the EC fixes the ceiling for spending, the political parties hardly abide by the rule because it is not practical to force the spending limit during the election, says former secretary Bimal Wagle.

He argues that the political parties have not been able to submit a report of their expenditure during the local elections held on May 13.

Another former secretary Gopi Nath Mainali says that the political parties breach the election code and spend excessively. He argues that the officials of the EC are appointed by the political parties and therefore they turn a blind eye to the spending of the parties.

He says that the election will have both positive and negative impacts in the economy.

Economist Dilli Raj Khanal says that the election will reduce development budget. According to Khanal, the sudden release of large amount of money in the market is likely to cause inflation.

He recalled to the excessive price hike in the market during the first Constituent Assembly election.

The positive aspect of the election is that it gives short-term employment to many people, says economist Khanal. He however, says that the election does not cause an overall economic growth because it is not possible to measure it.  He says that the election will cause excessive liquidity in the market and also increase imports, thereby causing pressure in the foreign exchange reserves.

“There will be some positive impact in the overall GDP due to the increase in economic activities but it will have a negative impact in the economy due to imports,” says Khanal.

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