Looming elections boosts aviation, media sector

Excerpts from India Business Hour on CNBC-TV18 Watch the full show »

Elections are a costly affair but this time with the Indian general elections around the corner not everybody is complaining. Sectors like paper, paints, aviation, transportation and even media will get a leg up. For an economy which is struggling to grow at 7% this fiscal, this accidental Keynesian boost is more than welcome.

Here is a verbatim transcript of Abhijit Neogy's comments on CNBC-TV18. Also watch the accompanying video.

If the Indian economy badly needs another stimulus, the forthcoming Indian general elections coupled with strained central finances have ensured that the much needed stimulus was not to be. But now ironically it's the elections itself which could push in Rs 10000 crore into the economy and most of it in cash.

The Election Commission has been sanctioned a budget of Rs 1300 crore by the government. The state governments will spend another Rs 700 crore on its own account. Party funding has been estimated by the Centre for Media Studies at about Rs 1500 crore for most of the major national and regional parties. Add to this an estimated spend of about Rs 5000 crore by atleast 1500 candidates across the country. Besides, these figures typically see an upward revision of 10% to 15% as the campaign takes on fever pitch and the total spend could be close to the Rs 10000 crore mark.

Jayanti Natarjan, Spokesperson, Congress said, "Elections are a costly affair, you have to reach out to the people media costs are going up but still our expenses are reasonable."

Interestingly, political sources say about Rs 2500 crore worth of unaccounted money could also find its way into actual election spends. This is not counting another ballpark figure of Rs 2000 crore that the bookies have put at stake in predicting the outcome of the elections as also who will be Prime Minister.

Sources in the Congress have told CNBC-TV 18 that a sizeable chunk of the party's contributions have come from Delhi and Maharashtra.

This election more than others is going to provide a much needed push to sectors such as aviation, paper, paint, transport as well as the media industries. A 100 un-scheduled choppers are being deployed at an average base price of 1,25,000 rupees per hour.

Aviation industry sources expect total billing of about Rs 250 crore this season. The total media budget for parties across the political spectrum could be in the region of Rs 350 to 400 crore. With the demand for handbills, posters, pamphlets and the like in full swing, the industry is already on the way to hiring about 4000-5000 extra workers in the election season. And the car industry is also expecting heavy orders for deployment and is looking atleast at a Rs 50 crore billing opportunity.

So though the government is planning an official fourth stimulus in the next full budget, election pump-priming may just ensure that atleast some sectors of the economy stay afloat till a new government is formed.