Business Times

Poll spending or economic stimulus package?

Elections are here again and that too during the festive season. Furthermore this is at a time when the conflict is over, an event war-weary Sri Lankans - from all sides of the spectrum -- have been waiting for.
In this context, hopefully the elections fever and possible violence won't dampen the spirits (and the one that cheers) of many planning to have fun and be carefree this season.

Hotels are reporting good bookings and New Year dinner dances are expected to draw large crowds irrespective of the fact that December 31 being a Poya day, no liquor will be served - till 12 midnight.
Many Sri Lankan expatriates are making their way to Colombo for the season making use of the opportunity to see the country in a new, war-free environment.

While the two main candidates - President Mahinda Rajapaksa and General (retd) Sarath Fonseka - this week begin a high stakes battle for success at the presidential poll on January 26, the cost of hosting an election plus what is spent by the candidates and their supporters is stupendous.

According to some reports, the cost to the Elections Commissioner is around Rs 1.5 billion. Unlike in previous years, this time with a common candidate challenging the President, each party -- in particular the UNP and the JVP - and the candidate itself would have separate spending budgets for the poll, again another costly affair.

According to some conservative accounts, the ruling party campaign could cost as much as Rs 2 billion and more if one takes into account the state resources that are used. The opposition (all parties taken together) on the other hand is likely to cost in excess of another Rs 2-3 billion.

Now where does this spending go? In the Elections Commissioner's case, it is for a daily allowance, meals and travel for the 200,000-plus staff deployed for the poll. In addition to that there is infrastructure to be placed in polling booths, special allowances for on-duty police, stationery, polling cards, ballot papers, meals and a whole list of unseen costs.

In the case of the political parties and their candidates too, the costs include media advertisements (which also applies to the Elections Commissioner's Office) which is a sizable cost; grounds and platforms; travel and fuel; musical bands (applies to the ruling party too); street promotions and cut-outs; allowances for party workers, and so on.

The biggest hidden cost in an election is the price a party pays for crossovers. That can be in the millions and like all election spending, is unaccounted for. While election spending normally attracts the good, bad and ugly comments - and in this case costs that are unnecessary because this is an election that needs to be held only two years from now unlike the general election which must be held before April 2010 - there are different schools of thought on whether election spending is productive or not.

The more popular and most effective argument so far is that this is wasteful spending and that - if its roughly Rs 6 billion or around that figure - such a collosal amount could have been spent more productively on development like infrastructure - bridges, roads, hospitals, schools - or in improving these services for the people.

The recent flyovers around Colombo have cost around Rs 1.5 billion each and the election spend could have built three more flyovers. On the other hand, democracy - which is essential and non-negotiable - also comes at a price.

The schools of thought on election spending fall into essentially two categories: 1) Wasteful and unproductive spending, or 2) Spending that generates economic activity although it is more of a consumption than a productive nature.

The large amount of money in circulation creates economic activity, jobs and maybe extra bonuses for those during the festive season because almost all the activity associated with election spending is now outsourced. What about the meals that have to be provided for tens of thousands who would be involved in some form of election activity? A windfall for some caterers and blue-eyed party supporters?

The media across the board gets the bulk of the business during this period including advertising firms entrusted with the campaigns; platform providers and the equipment that goes with it, will benefit, and a whole range of individuals and small and medium companies - across the country - that tend to get business during an election. The parliamentary election however will be much costlier as each candidate has a budget in addition to the party budget.

So isn't this a kind of unexpected stimulus package for various sectors in the economy? Those arguing the point that this is wasteful spending, reject the idea that this kind of spending stimulates the economy. "If one says election spending creates economic activity, then the same argument should apply in the case of bribery and corruption because the corrupt with huge bags of money have to spend that, and that gets into the econony," noted a lawyer. Nevertheless it raises an interesting aspect of the election process - is spending on elections productive or not? The Business Times would like to hear your views on this which could be emailed to

In the meantime, next month’s poll will stimulate a lot of economic activity - some negative, some positive.

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