Consumption Likely To See 'Base Effect' Hit After Election-Driven Social Spending Cools In 2025
In 2025, only Delhi and Bihar will hold assembly elections — a break from the marathon cycle of parliamentary and assembly polls India held this year.
Election-driven social spending by central and state governments that surged during 2024 will cool in the coming year, leaving a high base for 2025 and impacting broad-based consumption, according to a report by ICICI Securities.
In 2025, only Delhi and Bihar will hold assembly elections—a break from the marathon cycle of parliamentary and assembly polls India held this year.
Lok Sabha elections were conducted between April and June alongside Arunachal Pradesh, Sikkim, Andhra Pradesh, and Odisha, while Jammu and Kashmir and Haryana voted in September-October, followed by Maharashtra and Jharkhand in November.
"Election fervour-related social spending may abate going forward, which could have an unfavourable base for consumption, although rising agricultural output may have an offsetting effect," ICICI Securities said in a recent note.
Social spending refers to welfare measures like income support for farmers and women that are popular and rolled out generously by incumbents around elections.
Governments in India have increasingly pivoted to a direct benefit transfer model where cash is credited into the beneficiaries' bank accounts. This lends purchasing power to households, giving them the flexibility to spend.
