T.S. Krishna Murthy, addressing reporters at his swearing-in as head of the three-member Election Commission, said parties needed to observe campaign rules even before the date for the polls is set.

"As far as possible, the taxpayers' money should not be used for electoral advantage," Murthy said.

Political parties in India regularly splash full-page advertisements in newspapers and put up massive banners of their leaders.

Prime Minister Atal Behari Vajpayee's government offered a raft of indirect tax cuts and other voter-friendly incentives in an interim budget days before parliament was dissolved Friday.

Asked about the last-minute spending bill, Murthy said: "I would like to use this opportunity to tell all political parties -- those in power and those in opposition -- that the spirit of the code of conduct should be observed even now."

Vajpayee's Hindu nationalist Bharatiya Janata Party (BJP) wants elections held in April or May to take advantage of booming economic growth triggered by a bountiful monsoon.

It is up to Murthy's commission to set the date for the election, in which more than 650 million voters are eligible.

Murthy, 63, took over from the outspoken James Michael Lyngdoh, who incurred the wrath of politicians by describing them as a "cancer" to India.

In 2002, he reprimanded the BJP for telling him situation was normal in Gujarat after 2,000 people died in anti-Muslim riots. Elections were held in the western state in December 2002 with the BJP sweeping back to power.