This Article is From Dec 02, 2016

Modi Holds The Trump Card Show Recent Election Results

The recent civic polls and by-election results in Maharashtra and Gujarat reaffirm that the Prime Minister's support has not been dented by the cash crunch and the opposition has erred badly in reading the public mood.

BJP has emerged with flying colours from the first electoral test since Prime Minister Modi's demonetization drive was launched on November 8 this year. In civic elections in Maharashtra, which BJP and Shiv Sena, (partners in the state's ruling alliance) fought separately, BJP won 51 mayorships, Shiv Sena came second with 25, followed by Congress with 23 and Sharad Pawar's NCP got only 18. In Gujarat, BJP swept the civic elections yet again winning 107 out of 123 councils. The results have obviously dampened the spirits of opposition parties in the two western States as they had hoped the travails of "note bandi" or cash crunch in the wake of the ban on Rs 1,000 and Rs 500 currency notes would antagonize voters against Mr Modi's party.

Significantly, the BJP also scored big in by-elections in West Bengal and Madhya Pradesh. In the latter, it retained its seats albeit with a reduced majority in the Shahdol Lok Sabha constituency. In West Bengal, where the party's influence is rather limited, it registered a huge jump in the Cooch Behar parliamentary seat, securing 28 percent of the total votes, up from 12 percent that it got in 2014. Quite clearly, queues outside bank branches and ATM counters, difficulties being faced by ordinary people - from farmers' inability to buy seeds in the sowing season to arranging weddings in the family - have not metamorphosed into electoral anger. From all accounts, Narendra Modi's popularity not only remains undiminished but may have even gone up by a few percentage points.

On a personal note, in the last fortnight, I travelled to three places in the country far removed from one another well after the cash crunch hit us. My experience suggests there is a big disconnect between Delhi and other urban/suburban centres in the response to the "note bandi". In Lucknow and its surrounding areas, I found people shrugging off its effects. Indeed there were no long queues outside bank branches. Talking to farmers on the city's outskirts, I found them largely indifferent, their only complaint being that wholesale dealers were still paying them in old notes which had become difficult to exchange. In Kolkata and neighbouring Hooghly (from where I had contested the 2014 Lok Sabha election), the indifference was even more palpable. Middle-class Bengali society usually makes a virtue of frugality. Most people I encountered said Rs 10,000 was enough to last a month and that much they had successfully drawn from their bank accounts. There was also some disregard for the note ban. Small traders could be seen routinely conducting business with old 500-rupee notes, confident they would successfully deposit their non-legal tender in banks at least till December 30. 

My most recent visit was to the Army's War College in Mhow, some 50 km outside Indore in Madhya Pradesh. Army officers may not really be representative of the average common man, but they too have to run households. The universal response even from army wives was that although cash was at a premium these days, they had not been particularly discomfited.

In all three places, there was overwhelming support for demonetization. It was vocally argued that the war launched by the Prime Minister on black money was long overdue and it would help restore the nation's moral values. The move has also reinforced Narendra Modi's image as a "doer", especially as it comes in the wake of the cross-LoC surgical strikes on Pakistan-sponsored terror camps. As a result of the growing respect for the Prime Minister's leadership, the inconvenience faced by the middle class in urban and suburban centres is being brushed aside by comments like "No gain without pain". 

It is here that the opposition miscalculated badly while mounting a frenzied campaign to highlight "people's suffering". As the civic poll and by-election results show, the electorate is ready to endure the suffering in the confidence that economic prosperity will soon be on its way. Characteristically, the Prime Minister has turned the tables on the Opposition by forcefully arguing that those opposed to demonetization are, in effect, supporting the cause of black money holders, hoarders and other economic offenders. The fact that some regional party leaders are alleged to have procured large quantities of illicit funds over the years has added grist to Mr Modi's mill.

But having said this, it must also be contended that the longer the currency crunch continues, public opinion may start turning against the move. The biggest problem is the inadequacy of funds with banks and the continuing difficulty of withdrawing cash. Since an estimated 70 percent of economic transactions in India take place with cash (60 percent of the population still lacks bank accounts, the Jan Dhan drive notwithstanding); the severe shortage of currency notes has hit daily wage earners, petty shopkeepers and marginal farmers. The government's initiative to promote digital transactions through bank transfers, debit cards and e-wallets is laudable, but the transition to a cashless economy will take a long time. Even in mature Western economies, the widespread use of plastic money, supplanting paper currency as the main medium of transaction took more than two decades. Given the size of India's economy and its largely semi-literate population, this is a humungous challenge.

As of now, the Prime Minister holds an unchallenged upper hand over the Opposition. In fact, the more his rivals block parliament's functioning or hold street protests, the more Mr Modi's cause gets stronger. The only negative impact of demonetization will be easily overcome if the government now pushes the mints to print new currency, especially Rs 500 notes (since the Rs 2,000 note has proved highly unpopular), and all ATMs are recalibrated on a war footing. In fact this is an imperative and the exercise must be completed in good time before the crucial assembly elections in Uttar Pradesh and Punjab are held, presumably in March 2017. Meanwhile the opposition would do well to recalibrate its strategy of blind opposition. Its cohesion is, in any case, cracking with Nitish Kumar breaking ranks, and Naveen Patnaik and Chandrababu Naidu, among others, coming out strongly in favour of the war on black money. Typically, the Congress is in a quandary. It cannot bring itself to accept that public opinion is with Mr Modi in his drive against black money. Some hours spent outside banks and ATMs won't move people to vote against the Prime Minister's policy. Clearly today, Narendra Modi holds the trump card.

(Dr. Chandan Mitra is a journalist, currently Editor of The Pioneer Group of Publications. He is also former BJP MP, Rajya Sabha.)

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