Bank of Baroda Reports Drop in Capex Use in Election Months

Economist Prabhakar finds it intriguing to see how things unfold in 2024. However, indicators like inflation, credit, currency, bond yields, and stock markets didn’t show any clear trends during the last elections, especially during the polling months.

“It will be interesting to see if there are any unexpected events affecting these factors this time,” the economist remarked.

Over the next six weeks, from April 19 to June 1, India will hold its 18th General Elections. The Lok Sabha elections will take place in seven phases over 44 days, with results expected by June 4. In 2019, the elections were held during April and May, with results announced on May 23.

In 2019, inflation remained steady during April and May but started rising from July, peaking in December. For this year, the Bank of Baroda economist anticipates inflation to remain stable, possibly moderating during the election months. Retail inflation in India is within the RBI’s comfort range of 2-6%, but slightly above the ideal 4% mark, standing at 4.85% in March.

Regarding the stock market, the Sensex showed modest gains in April 2019, which were erased in May. The pattern remained erratic in the following months, with no clear trend emerging. In contrast, the domestic market has seen stable gains so far in 2024.