<p>The consensus in the literature on the political business cycle is that it is more likely in new democracies than older ones. We argue, in contrast, that India, an old federal democracy, experiences a political business cycle at the subnational level. Because state governments control fuel sales tax rates—a significant and highly visible cost for voters—they are more likely to lower these taxes for electoral gain. Incumbent politicians and parties adopt this electoral strategy because voters are rationally ignorant and pay more attention in the lead-up to an election, but are quick to forget outside of this specific context. Predictably, incumbents lower fuel taxes the most when the electoral benefits are the greatest: directly prior to a scheduled election and when petroleum prices are high. We find strong empirical support for our expectations using an original dataset from the Ministry of Petroleum and Natural Gas in India that includes sales tax rates levied by state governments on petrol and diesel from 1978 to 2019.</p>