Effect of elections on Indian economy

Abstract

This report explains the impact of Lok Sabha election on different economic factors like inflation, exchange rate, stocks and deficit. Working with this data from 1970 to 2014, we have found out that there is no particular pattern in these economic variables before and after the election. Before 2000, India was going through various ups and downs in the economic growth in addition to major political changes happening in the country. In almost every year there is a state election that is happening in India which along with the other factors could have been the reasons that we don’t find political business cycles or political budget cycles in India. As the Indian economy shows steady growth in future, it is possible to have political budget cycles as it is present in most of the developed countries.