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A Budget that is austere would defy India's history

Feb 22 2013, 13:02 IST
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Chidambaram could defy history if he presents a largely austere 2013/14 Budget. (Reuters) Chidambaram could defy history if he presents a largely austere 2013/14 Budget. (Reuters)
SummaryChidambaram could defy history if he presents a largely austere 2013/14 Budget.

India's Finance Minister P. Chidambaram could defy history if he presents a largely austere 2013/14 Budget on Feb. 28, ahead of general elections next year.

* A Standard Chartered analysis shows that since the 1990s, spending invariably rises in the two years leading up to a general election.

* For example, the government during 1991-96 cut average real expenditure by an annualised 4 percent in the first two years of its term, but raised it by 3.6 percent in the final three years, Stanchart says.

* The trajectory was similar for the governments in power from 1999-2004 (2.8 percent versus 9.0 percent) and 2004-09 (-1.9 percent versus 14 percent), the lender says.

* The biggest welfare move expected in the current budget is the food security bill, which will likely raise annual food subsidies to 1.12 trillion from 750 billion rupees now, almost a 50 pct hike, Stanchart predicts, quoting government estimates.

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