Modi’s currency gamble Ups BJP’s stakes in UP

Prime Minister Narendra Modi addressing at BJP’s Parivaratan Rally in Moradabad
Prime Minister Narendra Modi addressing at BJP’s Parivaratan Rally in Moradabad

The Uttar Pradesh State Assembly elections were considered as mega semi-finals to the grand finale of the 2019 general elections where Prime Minister Narendra Modi would be seeking another term for his government. Recent developments, including the ongoing family feud between the two ruling Samajwadi Party’s Yadav dynasty and Modi government’s surgical strike against cash economy have given a new twist to the crucial elections in the country’s most populous state.


For one, it will be the BJP’s first major bid to regain its lost paradise in Hindu heart land, where it was voted to power on its own during the Ram temple wave of 1991 and had been in and out of power in transient  coalitional era that ended with Bahujan Samajwadi Party’s (BSP) rule in 2007 elections and Samajwadi Party’s landslide victory in 2012.


At a time when the party appeared in terminal decline, Modi led the BJP to make a clean sweep in 2014 Lok Sabha elections, winning 71 of the 81 Lok Sabha seats in UP.  Gaining across caste and class barriers, the party’s vote-share dramatically catapulted from a meager 17.5 per cent in 2009 to 42.3 per cent.

The ruling Samajwadi party was confined to five family-held seats, the Congress to the two-pocket boroughs held by its President Sonia Gandhi and Vice-President Rahul, and the BSP couldn’t win a single seat. It was as if Modi had mesmerised the UP electorate. Half way through his term, it was politically vital for the BJP to keep up its winning momentum in 2017, especially as its loss in the recent Bihar Assembly elections had put a question mark over Modi’s charisma in the cow belt.


On the face of it, the omens seemed favouring it. The decay in the Samajwadi Party, vividly brought to light by open war between various factions within the SP supremo Mulayam Singh Yadav’s family, became more and more pronounced during the run up to 2017 elections. The overt dominance of the BJP by Other Backward Classes (OBCs) and the slow but steady drift of the minority vote towards Mayawati’s BSP appeared to script new political paradigm in UP.


It is a moot question what drove PM Modi to make a sudden and risky move to demonetise the economy just before the crucial UP and Punjab elections. Despite the PM’s claim that it was a long overdue decision to push ahead with his campaign against black money, it is clear that politics trumped economics in this case.


It is one of India’s least kept secret that all political parties use black money to finance their campaigns and bribe voters. Recent bypolls held in six states and one Union Territory after demonetisation would seem to indicate that overall the BJP has increased its tally. The bypolls became significant as these took place merely a week-and-a-half after the Modi government embarked on its note exchange scheme. With demonetisation pains felt acutely across the nook and corner of the country, it was a test whether it has impacted the voters, especially in the rural zones, to go beyond their ideological leanings and give BJP thumbs down.


The BJP top brass may take heart from the party’s performance this time around, but the  full electoral impact of demonetisation will only be known in the 2017 round of polls, with the mother of all battles in UP. Modi has taken a big gamble and the stakes are high. The initial euphoria about Modi’s “brave new world” might evaporate as queues on cashless banks lengthen indefinitely and the negative consequences for people and for the economy persist.


While the impact of demonetisation on the electoral outcome is uncertain and unpredictable, one thing is certain. The move will definitely impact the way all political parties manage their election campaigns. For one, it will drastically bring down the poll expenditure and consequently the bribes parties give in exchange for votes.

In 2012, nearly 7,000 candidates had fought the election for state’s 404 assembly seats in UP. Even if each spent `50 lakh—in many cases the amount spent was must more—the total spending would be over `3,500 crore. It would be problematic if the parties and their candidates manage to get their hands on such a staggering amount. Sources in Election Commission (EC) admit that demonetisation will impact unbridled election spending. But it will have a real impact if the EC is legally empowered to act against the use of money power in elections as suggested in several reports, they point out.

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