Political fallout

Political rollercoaster

Print edition : December 23, 2016

Prime Minister Narendra Modi addressing the BJP’s Parivartan Rally in Moradabad on December 3. Photo: PTI

Opposition leaders protesting against demonetisation at Parliament House in New Delhi on November 28. Photo: PTI

A protest against demonetisation in the Jan Akrosh Morcha in Mumbai on November 28. Photo: Vijay Bate

The seemingly never-ending glitches in the demonetisation drive and the pressure of expectations from the ground seem to be pushing the government into an unprecedented governance rollercoaster fraught with dangerous political ramifications.

FROM the moment it was dramatically unravelled on the night of November 8, political games and intrigue have remained an unambiguously key component of Prime Minister Narendra Modi’s demonetisation drive. Just like the self-professedly path-breaking but otherwise operationally muddled financial sector enterprise, the political games associated with the demonetisation drive are charting a dicey, bumpy and shifty path. The demonetisation drive has progressed with many twists and turns and is leading to huge contests with a more or less united opposition comprising parties with a national presence such as the Congress and a clutch of powerful regional forces as well as the communist parties. These contests have manifested themselves in different forums, including Parliament and non-institutional public spaces, with no clear indication as to which way the balance is tilting.

For the record, the Bharatiya Janata Party (BJP) has sought to cite the results of a couple of State Assembly byelections and civic body elections in Maharashtra and Gujarat as affirmation of the growing popular support for the demonetisation drive. Sections of the BJP, comprising the most ardent supporters of Modi, have gone into overdrive with a campaign on this. However, from a closer analysis of these results, the conclusion, even from within the Rashtriya Swayamsewak Sangh (RSS)-led Sangh Parivar, is that they cannot be viewed as substantive indicators of popular approbation. On the other hand, powerful sections of the RSS and other Sangh Parivar organisations, especially in the north Indian States of Uttar Pradesh and Bihar, are of the view that Modi and his close associates have scored what would, in the long run, be a self goal. In this context, the overall mood within the BJP and the Sangh Parivar is that no one is able to predict with conviction the net impact that the demonetisation drive will have on the prospects of the ruling dispensation. The blatantly undemocratic manner in which a Bill proposing a new tax regime was pushed through in the Lok Sabha as well as certain executive steps relating to controlling gold trade have all exposed the high anxiety quotient in the top rungs of the government and the Prime Minister’s close circles.

Still, the dominant internal assessment within the higher echelons of the BJP and the Sangh Parivar count two unmistakable short- or medium-term gains from the move. First, that the demonetisation drive and the propaganda blitz that has accompanied it has successfully diverted the attention of vast sections of people from the bribery charges that had come up against Modi in various constitutional bodies, including the Supreme Court. The bribery allegations were on the basis of documents that had come up during the raids of investigating agencies on the premises of the Sahara and Aditya Birla groups which suggested that Modi had been given Rs.65.7 crore (Rs.40.7 crore by Sahara and Rs.25 crore by the Aditya Birla group) when he was the Chief Minister of Gujarat. That the allegations brought up before the Supreme Court did not lead to a probe is also perceived as a factor that contributed to this diversion of popular attention. Rejecting the appeal for a probe into the documents containing pointers to illegal gratification by a number of politicians, including Modi, the Supreme Court bench of Justices J.S. Khehar and Arun Mishra stated that the entries did not “arouse its conscience” enough to order a probe.

The second short-term gain listed by Sangh Parivar insiders relates to the manner in which demonetisation and the political thrusts connected to it have upset the preparations of the BJP’s opponents, the Bahujan Samaj Party (BSP) and the Samajwadi Party (S.P.), for the forthcoming elections in Uttar Pradesh. As was deduced by these Sangh Parivar constituents in the days immediately following the demonetisation announcement, it is the BSP that was more disconcerted than the S.P.

‘Peripheral gains’

According to a senior RSS activist based in Lucknow, these are merely peripheral gains that would not alter the situation on the ground substantively. “At best these would form additions to a larger political climate. The fundamental question is how far the larger political climate is turning in favour of the BJP on account of the demonetisation drive. At the moment, there are two palpable aspects that one can see on the ground. On the one side are the colossal inconveniences suffered by the people on account of the banking restrictions and the liquidity crunch. On the other side you have the high expectations that the very same people, particularly poor people, have about getting material gains once the drive comes to a conclusion. The real test will be in the government’s ability to fulfil these expectations. If this is not done and not done in good time, the consequences will be disastrous,” he said.

He added that there were hundreds of Sangh Parivar cadres across the country, including in the BJP, who held similar opinions. He also said that the triumphant campaign linking the results of the recent byelections and the civic polls in Maharashtra and Gujarat was also discussed among a section of Sangh Parivar activists in this perspective. They were apparently of the view that the hype created on the Maharashtra victory was completely misplaced and that such campaigns have often led to unfounded confidence, leading to organisational and political reverses.

Pointers from Maharashtra

Civic body elections were held in 19 districts of Maharashtra. Following these, the State and central leaders of the party claimed major gains and ascribed them to the overwhelming response of the people in favour of the demonetisation drive. However, this claim was shown as hollow from the details of the results that came out. Although the overall tally of the BJP was higher than of other parties, it did not signify overall political dominance in the State. In fact, close to half of the BJP seats came from one region, Vidarbha. Out of the total 3,727 winning candidates, 893 are from the BJP, 727 from the Congress, 615 from the Nationalist Congress Party (NCP) and 529 from the Shiv Sena. Maharashtra’s BJP Chief Minister Devendra Fadnavis called this a “tsunami of noble thoughts”. But the fact is that the BJP won 448 seats from Vidarbha alone and just 445 from the other four regions combined, namely Konkan, Marathwada, western Maharashtra and northern Maharashtra. It was the NCP that had more seats than other parties in these four regions; the number two in this geographical sector was the Congress.

Similarly, the BJP retained the Shahdol Lok Sabha seat in Madhya Pradesh with a vastly reduced majority. Sangh Parivar activists, however, rated the comeback in Gujarat after some reverses in the last year as significant. But here too, they pointed out, linking this with the demonetisation drive could turn out be counterproductive in the medium and long term. Evidently, their iteration was about ensuring that some benefits accrue to the poor and the marginalised after the completion of the demonetisation drive.

On its part, the government, especially Finance Minister Arun Jaitley, has been asserting that the slowing down of business would only be a matter of a few days and that demonetisation would ultimately increase investments in rural India. “Cash worth crores has come into the banking system, which will increase the banks’ capacity to approve loans. It is a huge decision and the government had to be strong to make difficult choices” has been Jaitley’s refrain at several interactions.

Another argument repeatedly advanced by the government was as to how demonetisation had struck heavy blows on terrorist activities from Islamist jehadism in Jammu and Kashmir to left-wing extremism in central India. These claims were questioned by political and security observers following the attacks on the Nagrota camp of the security forces and the jailbreak at Nabha in Punjab.

Three plans, ground-level campaigns

Travelling across several districts of Uttar Pradesh, what Frontline gathered was that the people’s expectations cited by the senior RSS activist were being bolstered through sustained campaigns of the cadre of the BJP and other Sangh Parivar activists. This was being done by etching out three proposals that could acquire concrete dimensions in early 2017. The first of these possibilities was about a direct transfer of money from the Central government to people living below the poverty line who have zero-balance Jan Dhan accounts. The refrain on this was that Modi was moving with a clear plan and that was why he had first got the Jan Dhan accounts opened in large numbers and later sought to flush out black money so that it could be transferred to the needy. The amount of money mentioned in this campaign is in the range of Rs.50,000 to Rs.4 lakh. The second proposal widely circulated involved the enhancement of the credit facility of the Kisan Credit Card, which was originally brought in by the United Progressive Alliance government. The amount mentioned in this context is Rs.25,000 to Rs.50,000. The third proposal was about speeding up the “Housing for All by 2022” Mission announced by Modi in June 2015. As part of this announcement, the Central government had visualised building low-cost houses for over 10 crore people below the poverty line. The campaign was that the initial work would start on about 20 lakh houses in 2017 with the black money that was being flushed out through the demonetisation drive.

Sense of desperation

Indeed, all these ground-level campaigns were built on the premise of accruing at least Rs.3 lakh crore of black money to the government’s coffers. However, as it existed in the early part of the first week of December, the picture was not that promising. Finance Ministry officials admitted that their expectations might not be met on this count as a large quantum of cash originally perceived to be black money was getting into the system and being legalised. By all indications, there was a sort of desperation building up within the Central government and the BJP’s central leadership about this.

The virtual bulldozing of the Taxation Laws (Second Amendment) Bill, 2016, aimed at taxing the money deposited in bank accounts post-demonetisation through special schemes and rules, is seen as a manifestation of this desperation. The new stipulation on gold holdings also seemed to have a similar political trigger. All this have added to the repeated flip-flops by the government in the first week of the demonetisation drive. “Evidently, there is a scramble to raise some money so that it can be transferred to the people to seek votes. But that is not working according to plan,” a Finance Ministry official told Frontline.

At the level of political administration and governance, all these decisions have reportedly emanated from the Prime Minister himself or his close associates in the Prime Minister’s Office (PMO), underscoring the kind of individual stakes involved in the whole frantic operation. The level of the frenetic activity has also led to loose talk about unseen pressures working on the Prime Minister. Is this loose talk true? If so what could it lead to next? These questions too are doing the rounds in Delhi’s political circles even as one of the things that go in favour of Modi in the form of a lack of cohesion in the opposition is highlighted. Indeed, although the opposition has closed ranks in a manner unprecedented in the last two years against the pitfalls in the demonetisation drive, it has fallen short of a cohesive and effective unity. While that blessing does remain with Modi, the seemingly never-ending glitches in the demonetisation drive and the pressure of expectations from the ground seem to be pushing the government as a whole into an unprecedented governance rollercoaster fraught with dangerous political ramifications.

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