Synchronised elections will lead to higher GDP growth, says Ram Nath Kovind-led panel

The one-nation-one-election panel report submitted to the President Droupadi Murmu suggests that synchronised elections will lead to “higher economic growth, lower inflation, higher investments, and improved quality of expenditure”. The panel says that synchronised elections will lead to higher GDP growth by approximately 1.5 percentage points.

Quoting a research paper entitled “Macroeconomic Impact of Harmonising Electoral Cycles” by Prachi Mishra and N. K. Singh, the panel said the findings in the paper suggest “relatively higher economic growth, lower inflation, higher investments, and improved quality of expenditure following periods of synchronized elections”. The estimates of each of the macroeconomic indicators were based on a comparison between synchronised and non-synchronised elections in the past.

The report specifically elaborates on higher GDP growth that synchronised elections are supposed to produce.

Comparing changes

“Comparing changes in real national GDP growth before and after episodes of simultaneous and non-simultaneous elections, the estimates suggest that on average, real GDP growth is higher following episodes of simultaneous elections, while we find a decrease post the non-simultaneous episodes. The magnitudes suggest approximately 1.5 percentage points (hereinafter referred as p.p.) higher post-pre difference in real national growth during simultaneous elections as compared to non-simultaneous elections,” said the report.

Also read: Ram Nath Kovind-led panel recommends two-step approach for ‘One Nation One Election’

“To put the magnitudes in perspective, a 1.5 percent of GDP is equal to INR (Indian Rupee) (4.5 lakh crores in Financial Year 2024, half of the public spending on health, and one third of that on education. Publicly reported estimates of conducting national and state elections, beyond the official costs of conducting elections, range from ₹4-7 lakh crores, which are close in orders of magnitude to our growth estimates,” it added.

The report said annual inflation rate would also be lower because of simultaneous elections.

‘Politically motivated’

Talking to businessline, the head of the Congress’s research unit and former professor of Economics at the IIM, Bangalore, M. V. Rajeev Gowda said: “If you actually think about consumption which drives economy, what happens in some elections in some states is that certain amount of money flows into the system. If you have synchronised elections and an injection of money into the system, it stands to reason that in non-synchronised elections there would be multiple such injections. If you have only one election, tell me how that can be more impactful?”

According to Gowda, the conclusion drawn in the report seems to be “politically motivated”.

A number of economists that businessline spoke to said that prima facie, it would be hard to conclude that simultaneous elections would lead to a bump up in GDP growth. The analysis cited in the report could, they said, “be just a coincidence”.

Said Madan Sabnavis, Chief Economist, Bank of Baroda: “The major benefit will be on saving in costs as economies are achieved”.

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