Modi’s Surgical Strike on Black Money Will Also Hit Poll Campaigns

Campaigning in UP and Punjab will be the worst hit and the BJP too will be impacted, writes Nilanjan Mukhopadhyay.

There is a saying in Hindi – hamaam mein sab nange hain – primarily indicating the universality of corrupt practices. This phrase is apt for Indian politics and political parties, not known for high standards of probity.

Prime Minister Narendra Modi’s ‘surgical extraction’ of Rs 500 and Rs 1,000 currency notes has come tantalisingly close to polls in Uttar Pradesh, Punjab, Uttarakhand, Manipur and Goa. The election process must be completed in these states over the next six months. Consequently, it is necessary to assess if the dramatic decision will impact the fortunes of different parties or if it will reduce the role of slush funds in elections.

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Corruption in high places is nothing new and the use of illicit money during polls is not a new phenomenon. In January 2015, the Election Commission (EC) declared that a majority of candidates contesting polls in India “under-report” election expenses despite the actual expenditure being far greater than the legally permissible limits. Though the EC’s disclosure was for the 2014 parliamentary polls, it is common knowledge that the situation is no different for Assembly elections.

Spending Limit in Polls

According to EC guidelines, which were revised in 2014, a candidate in the fray for the Lok Sabha polls is permitted to spend up to Rs 70 lakh while those contesting Assembly polls have an upper limit of Rs 28 lakh. It is common knowledge that the actual expenses often cross the legal limit. Candidates and parties have been using unaccounted money raised through slush donations from interest groups as part of a quid pro quo arrangement.

Certain parties have been accused of “selling” party tickets to aspirants. While this charge has been levelled against BSP leader Mayawati most recently, other parties have too have not been spared of such accusations. Even a relatively new party like AAP, which was expected to be more transparent, was accused of questionable ways of raising funds. This buttresses the belief that it is impossible to eliminate unaccounted money from the electoral process.

Criminality and money power are two major banes of Indian elections and while the former is used to coerce opponents and voters, the latter is used to offer inducements. Over the years, this has made elections more expensive and ordinary citizens, even those with exemplary professional records, find the idea of contesting polls beyond their imagination.

In UP, it is commonly estimated that electioneering in every constituency costs an average of Rs 10 crore, pegging the total expenditure at Rs 4,000 crore. The cost in other states is slightly less but not very significantly.

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Alter Funding Scenario

Modi’s unexpected decision to demonetise high denomination bank notes will undoubtedly alter the funding scenario of the polls. Parties and candidates who accumulated unaccounted money to cover their election campaigns will now have to find ways to first dispose of the existing cash and then generate fresh funds.

For the record, almost 86 percent of the currency in circulation is in the form of Rs 500 and Rs 1,000 notes has now become invalid. Of the states that go to polls, while money power is crucial in all, the spotlight will be on UP and Punjab because the outcome is key for the BJP.

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Ongoing Yatras Will be Hit

The immediate crisis because of unavailability of currency notes higher than Rs 100 will be faced by the ongoing yatras of the BJP and the SP in UP. Local organisers will have to find ways to meet logistical costs to ensure that the campaign does not get disrupted. It is certain that campaigning, which was beginning to heat up with the BJP launching four parivartan yatras, will hit a trough and the momentum will gather only after the new currency notes are available in abundance.

Yet there is no denying that compared to the past, parties will be hamstrung by a resource crunch for at least two months before the forthcoming polls. This situation will, however, be advantageous for political parties with deeper loyalties, based either on identity or ideology.

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Advantage for Parties in UP?

In UP, while the situation is likely to initially benefit the BSP and the BJP, in Punjab, the AAP stands to gain as it has the advantage of a strong anti-incumbency sentiment backing it. In contrast, Akali Dal workers have a need-based relationship with the party leadership and enthusiasm likely to wane in the absence of adequate resources.

While the resource crunch will impact party strategy and the ticket distribution process, voters’ reaction to Modi’s decision will be more crucial. There is no doubt that the decision will significantly influence the eventual decision of voters, but it is early to say whether this will enable the BJP to buttress its three-pronged plank in UP comprising nationalism and Hindutva layered with the development mantra.

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Affect Real Estate Sector

The decision to demonetise will have a further negative impact on the real estate sector, considered by many as the second largest employer after agriculture in the unorganised sector. Because the sector is significantly financed by unaccounted funds, it faces the spectre of new construction coming to a halt. If migrants from rural areas lose jobs and return home, it would add to burgeoning rural distress and damage the BJP’s prospects.

The party’s leaders are undoubtedly caught in a quandary. They cannot criticise the government’s decision and will have to face the brunt of the people’s wrath. The best hope for the party to meet the challenge faced from a resurgent BSP would be if Modi decides to take the conflict with Pakistan to another level. But then that would alter many things, including matters of security.

(The writer is an author and journalist based in Delhi. His most recent books are ‘Sikhs: The Untold Agony of 1984’ and ‘Narendra Modi: The Man, The Times’. He can be reached @NilanjanUdwin. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)

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