The economic impact of the Modi Government’s decision to demonetise high value currency notes will be assessed in the long run, but its political fallout will be felt soon in the upcoming Assembly elections to five States, particularly Uttar Pradesh.
The timing of the decision has given Opposition parties an opportunity to allege that it was aimed at influencing the UP polls by impoverishing BJP rivals. On record, leaders of the Samajwadi Party, the Bahujan Samaj Party and the Congress may be backing the objective of the move, but undoubtedly they have received a major jolt by the sudden demonetisation announcement.
It’s a well-known fact that all political parties use black money in a big way in the elections. Now that overnight they have lost their treasure chests, they are accusing the BJP of masterminding the move to impact the polls. UP Chief Minister Akhilesh Yadav and BSP chief Mayawati, the two main players of the State polls, as well as Congress vice-president Rahul Gandhi are consistently alleging that the BJP converted its dirty money before the actual announcement.
The BJP’s rivals in UP have not only latched on to the “leak” theory, but they are also trying hard to cash in on the misery of people affected by the glaring loopholes in the implementation of the demonetisation scheme.
Farmers, a constituency that the BJP was desperately trying to cultivate, are high on the list of segments that the party could woo in the run up to the polls. On the other hand, BSP chief Mayawati is telling her voters that the Government has no interest in solving their problems and the exercise was not going to impact the real hoarders of black money, the rich and powerful.
With Rahul Gandhi doing his bit by standing in a queue for two hours to exchange Rs 4,000 currency notes and accusing the BJP Government of helping loan defaulters like Vijay Mallya and the rest, the BJP has decided to undertake a serious damage-control exercise. Prime Minister Narendra Modi has asked the party MPs to rush to the constituencies to publicise “benefits” of demonetisation and also counter the Opposition’s charges against it this weekend as the political battle over the measure heats up in and outside Parliament.
Sources said the MPs have been asked to interact with people and the media to disseminate information about the move’s positive impact and also assuage public concerns caused by endless queues outside banks and ATMs to exchange old notes and withdraw money.
The party leadership has asked its allies to follow suit and take on the Opposition.
BJP’s Parliamentary Party office has given all the MPs, including those of its allies, a compilation of the RBI’s and Finance Ministry’s communication over demonetisation so that they could use the information to inform the masses and counter the Opposition’s points, sources said.
A party leader pointed out the relaxations announced by the Government for farmers or families hosting weddings and said these should be spread among the masses. The saffron party is working overtime to dispel any negative publicity, especially in poll-bound States like UP, over the radical move and deployed its rank and file to project the exercise as an important step against black money, corruption and fake currency. SP and BSP, its main rivals in UP, have flayed the measure, calling it “anti-poor”.
However, Akhilesh Yadav has taken the lead in exploiting the fallout of the demonetisation move. While criss-crossing the State on his ‘yatra’, Akhilesh is highlighting the misery of the farmers, especially their difficulty in selling their harvested crops due to the cash crunch in the market.
Criticizing the Centre for “foisting a crisis” on farmers, who have been at the receiving end of nature’s wrath for consecutive years, on Friday Akhilesh said the “ill-planned” demonetisation could have an adverse impact on the economy.
He said the State’s farmers, who hoped that this time round they will make up for the losses of past years, have been forced to face not a natural calamity but a “Government-made crisis”.
“This has been forced by the Government knowingly. They (BJP) have the most knowledgeable persons and if such intelligent people force hardships on people what more can be said,” he wondered.
Talking to reporters after presiding over a Cabinet meeting, the Chief Minister said, “The meeting was of the opinion that farmers should get relaxation in use of Rs 500 and Rs 1,000 notes...cooperative banks to which farmers are directly linked should get relaxation as money is not promptly reaching bank branches.”
On the Centre’s stand that demonetisation will check corruption, Akhilesh said cases of graft involving new currency notes are already making news in some parts of the country.
“We have also come to know that corruption through new notes has already started. Such reports are surfacing in newspapers and especially on the social media,” he said, claiming the goal of unearthing black money and weeding out fake currency notes will not be achieved.
Attacking the Central Government over “lack” of preparations before demonetising high-value notes, he said, “Even ATM machines were not equipped for the new notes...the currency exchange can take as long as six months or a year.”
“People will get relief only when markets start functioning properly but till then if farmers and labourers suffer huge losses all the economic statistics will lag behind and so will the country,” Akhilesh said, adding, “it will impact employment, factory workers and daily wagers the most.”
“The entire country is today saying that preparations were not made and everything was changed suddenly. If we believe in them (the Centre) and something emerges from a neighbouring country then they will put the country into problems...if there are no proper preparations, it can spell danger to the country,” he said.
Mandis have come to a “standstill” and soon reports will come how the daily wagers are facing problems, Akhilesh said.
Relaxation is being sought in hospitals and also for farmers because the government will be at a loss if any business comes to a halt, he said.
On the other hand, on Friday Mayawati made a renewed bid to use the demonetization crisis to reach out to her voters.
“ The way common man is suffering because of demonetization, I will urge Prime Minister Narendra Modi to shed his stubbornness and dictatorial attitude and think about the common man. I would also urge him to be present in the Parliament and listen to all and make changes accordingly so as to fill the loop holes,” said Mayawati.
Speaking Rajya Sabha on Wednesday, Mayawati had played the time-tested move to arouse the passion of his voters by raising the bogey of the powerful and rich.
She alleged that the Government the BJP leaders and their corporate friends were told about the demonetization move in advance and only the poor and weak were forced to wear the brunt of the government decision/.
When the long queue before the banks finally peter out, the battle of UP will intensify and the political warrior will move from parliament to test the fallout of the Modi government highly ambitious move.