Posted on February 18, 2009. Filed under: finance, politics | Tags: 6000 crore, bjd, bjp, bsp, budget, congress, dmk, election commission, interim, interim budget, package, pranab mukherjee, stimulus |
NEW DELHI: Pranab Mukherjee’s interim budget may have disappointed as it failed to provide a third stimulus package for the economy, but the coming Lok Sabha election is expected to provide a stimulus of sorts. Around Rs 6,000 crore would be pumped into the system as political parties and candidates splurge on their campaign and the Election Commission pays a huge bill for conducting the election. And the main beneficiary would be the services sector that often spurs growth. Poll norms, of course, limit the amount of money that a party or candidate can spend during elections. But in reality, the actual expenses are almost always 4-5 times in excess of such restrictions. On top of this, there are surrogate expenses incurred by support groups that swell the amount of money that changes hands during campaigns. Political parties may deny this on record. But in private every politician admits the fact that a serious candidate spends on an average at least Rs 2 crore for fighting for a Lok Sabha seat, even though the official limit is just Rs 25 lakh. In some constituencies – especially in metros – candidates spend higher. For instance, a third candidate in a Mumbai constituency is learnt to be splurging. In this election, many contests are expected to be triangular. In other words, there will be at least three serious candidates in most contests. Besides, delimitation has changed the shape of every constituency, bringing in new voters. And candidates will have to spend more to reach out to these voters whom they have not cultivated in the past. So, assuming there will be on an average three serious contenders in each of the 543 Lok Sabha seats, these candidates alone would be spending at least Rs 3,258 crore. Given the fragmentation of the polity and the outbreak of aspirations, there are likely to be resourceful rebels and other candidates spending between Rs 20-50 lakh each – depending on their political and financial clout or affiliation to a strong local party. The combined spending by such candidates throughout the country can be conservatively put at Rs 250 crore. Then are the expenses borne by parties. Both Congress and BJP are expected to end up spending about Rs 200 crore each this time. These expenses will cover the cost of running the propaganda machine as well as lumpsum payments to the candidates. Strong regional parties such as the BSP, BJD, JDU, DMK and NCP that hold power in key states, as well as parties such as the SP and AIADMK and Shiv Sena which have held power earlier and are very much in the reckoning, will also not count their pennies. Put together, they could end up spending another Rs 250 crore, if not more. Beyond all this, the Election Commission’s cost of conducting the poll is likely to be well over Rs 1,300 crore, the cost incurred in the last Lok Sabha poll in 2004. The Interim Budget on Monday made a provision of only Rs 850 crore for this purpose, but considering that the expenditure rose from Rs 880 crore in 1999 to Rs 1,300 crore five years later, the amount this time is bound to be revised upwards. Admittedly, not all expenses – except those by the EC – will reflect on paper. In 2004 election, for example, the Congress declared an expense of Rs 125 crore and the BJP just Rs 42 crore. The difference was that the saffron party did not declare the lumpsum payments it made to candidates. But for the economy, it’s not what is on paper that matters but the reality on the ground. For providers of vehicles, shamianas, posters, sound systems, and sundry other services there’s big money coming their way.
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Posted on February 14, 2009. Filed under: finance | Tags: bail out, barack obama, congress, economic, milestone, obama, senate, stimulus package, US president |
US President Barack Obama has welcomed Congress’s approval of his $787bn (£548bn) economic stimulus package. He described it as a “historic step” and “major milestone on our road to recovery”, and is expected to sign the bill into law early next week. The Senate approved the measure with just three Republican votes, hours after the House of Representatives backed it without Republican support. Mr Obama has said the plan will “save or create more than 3.5 million jobs”. Republicans argue the tax cuts are insufficient, and that the economy will be saddled with debt for years to come. Members of both houses of Congress reached a deal over the content of the stimulus package on Wednesday. This historic step won’t be the end of what we do President Obama Battle exposes partisan rifts Send us your comments The BBC’s Kevin Connolly in Washington says the first set-piece drama of the Obama era ended in a comfortable but not entirely unqualified victory for the president, who had hoped for more bipartisan support. All 176 Republicans and seven Democrats voted against the revised package in the House. It was backed by 246 House Democrats. The three rebel votes in the Senate were enough under Congress rules to stop the Republican Party using blocking tactics to delay the stimulus plan, and it passed 60-38. ‘Immediate investments’ In his weekly address, President Obama described his economy recovery package as “an ambitious plan at a time we badly need it”. “This is a major milestone on our road to recovery, and I want to thank the members of Congress who came together in common purpose to make it happen,” he said. “I will sign this legislation into law shortly, and we’ll begin making the immediate investments necessary to put people back to work doing the work America needs done. “This historic step won’t be the end of what we do to turn our economy around, but the beginning.” The approved version of the plan is split into 36% for tax cuts and 64% percent in spending and money for social programmes. STIMULUS PACKAGE $240bn in tax breaks for individuals and businesses $140bn for health care $100bn for education $48bn for transportation projects Source: Associated Press Running to more than 1,000 pages, it includes new road building, cash to pay police in hard-up cities, and tax breaks for consumers buying houses and cars. The package also imposes new limits on cash bonuses and other incentive compensation for executives on Wall Street, which are much tougher than those proposed by the Obama administration last week. The provision, inserted by Senate Democrats, targets senior executives at financial institutions receiving government bail-out funds. The colossal package is all to be funded with borrowed money. Republicans had insisted on larger tax cuts instead of big spending programmes. Republican Senate minority leader Mitch McConnell said: “This isn’t Monopoly money. It’s real. It adds up, and it has to be paid back, by our children and by their children.” The Democratic leader of the Senate, Harry Reid, praised the three Republicans who had voted for the bill and said it was the most important piece of legislation he had worked on. “The country is in trouble and we’re so fortunate we were able to get it passed,” he said. “It’s going to give this country a shot in the arm.” Earlier, Mr Obama had said that in the longer term the government needed to rein in spending, and that “we are going to have to once again live within our means”. The president told members of the Business Council in Washington that the package was “only the beginning of what I think all of you understand is going to be a long and difficult process of turning our economy around.” Presidential pressure “We have a once-in-a-generation chance to act boldly, and turn adversity into opportunity, and to use this crisis as a chance to transform our economy for the twenty-first century,” Mr Obama said. Among the measures in the approved package is a “Buy American” clause that had caused alarm among US trading partners. The EU and Canada said that provisions favouring American-produced materials for government projects risked provoking retaliatory protectionist measures. In the face of this reaction, the clause was softened to a version requiring the government not to violate trade agreements. Last week, the House had approved an earlier $825bn version of the package without any Republican support. The Senate voted to approve a different $838bn version on Tuesday, with few Republicans opting to back it. The two versions had to be reconciled in a joint House-Senate committee before facing final votes in the two chambers.
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