Will Upcoming Assembly Elections In Maharashtra, Haryana, and Jharkhand Influence the Union Budget 2024?

After reigning for the third time in a row, the Prime Minister Narendra Modi-led government will announce the full-fledged Union Budget 2024-25. The latest Budget is expected to be presented between July 20-25. This comes after the interim budget which was announced on February 1, 2024. However, this Budget will come ahead of assembly elections in key states like Maharashtra, Jharkhand, and Haryana. Will the assembly elections have an impact on the Union Budget?

In Motilal Oswal's view, there is a low probability of this and there are several reasons behind it.

Motilal Oswal explained that firstly, it is now amply clear that the voting patterns in state and general elections tend to be very different. Second, while the supporters of a rural economy package point to the poor performance of the BJP in Uttar Pradesh and Maharashtra, it does not gel with its exceptional win in Bihar and Madhya Pradesh.

Thirdly, it is highly unlikely that tax incentives for the middle-class and poor Indians would be seen by voters in the election-bound states as exclusive policies for them. More importantly, a list of a large package of freebies, which was included in the Congress manifesto but was largely absent in the BJP manifesto, reflects the maturity of voters in the country, as per the brokerage.

" Lastly, we believe the results of Maharashtra assembly elections would be largely driven by the state politics, rather than national policies," the brokerage said.

The legislative assembly election in Maharashtra is likely to be held in October month this year. BJP and its opposition will be competing for 288 seats in the state.

The Haryana assembly is also expected to take place in October and end on 3 November 2024. Here, the rivalry will be for 90-member seats in the state.

On the other hand, the Jharkhand Assembly elections 2024 for 81-member seats will be held between November to December 2024.

According to Motilal, the mandate of the BJP in NDA-II (starting FY25) is much stronger than during NDA-I. This was quite visible in the Cabinet allocation, wherein the BJP retained most of the high-profile departments with their ministers (such as home, defence, finance, external affairs, road transport and highways, among others).

Over the past decade, Motilal highlighted that the BJP has very carefully created an image of a clean government, minimizing wasteful spending and corruption, making the Budget more transparent by reducing off-budget expenditure/borrowings leading to higher capex allocation, resisting calls for large rural support, and maintaining fiscal prudence.

It added, "We strongly believe (and hope) that there will not be substantial changes in its mindset/philosophy, creating policy continuity. Coalition politics, however, could make it more challenging to pass legislation on the more ambitious parts of the government reform agenda in areas like agriculture, land, labour and judicial, which are usually out of Budgets."

Finance Minister Nirmala Sitharaman who has taken charge of the ministry since 2019, will be presenting the Union Budget 2024 in July. This will be her seventh budget, the highest by any finance minister.

During his oath ceremony speech, Modi hinted that in his third term focus will be on the upper middle and middle class. In his speech, Modi said, "We will continue to ensure the welfare of our people, and will continue to deliver 'quality of life' to all." Also, he added that in the next 10 years, good governance, development, quality of life and I am determined to reduce government interference in people's lives."