Friday November 24, 2017
Home India Modi’s ...

Modi’s Demonetization will hit upcoming Election Campaigns in Punjab and Uttar Pradesh

Modi's demonetization drive has so far proven popular among increasingly aspirational voters who are tired of corruption

0
696
People queue outside a bank to exchange and deposit their old high denomination banknotes in Masuda village in the desert Indian state of Rajasthan, November 15, 2016. (Representational image)REUTERS/Himanshu Sharma

By Rupam  Jain and Tommy Wilkes

New Delhi, November 17, 2016:  Indian Prime Minister Narendra Modi’s shock ban on high-value banknotes will hit the war chests of his rivals before a key state election next year, sparking accusations that his strike against “black cash” will unfairly boost his party’s chances.

People queue as they wait for the post-office to open to exchange their old high denomination bank notes in the early hours, in New Delhi, India, November 16, 2016. Picture taken November 16, 2016. REUTERS/Adnan Abidi
People queue as they wait for the post-office to open to exchange their old high denomination bank notes in the early hours, in New Delhi, India, November 16, 2016. Picture taken November 16, 2016. REUTERS/Adnan Abidi

That is despite widespread anger among millions of Indians forced to queue outside banks to change small amounts of old money for legal tender, possibly denting support for the ruling Bharatiya Janata Party (BJP) at least in the short term.

Opposition politicians are scrambling to redraft campaign plans ahead of the ballot expected early next year in Uttar Pradesh, a state of more than 200 million people which will be crucial to Modi’s long-term plan for re-election in 2019.

A cashier displays the new 2000 Indian rupee banknotes inside a bank in Jammu, India November 15, 2016. REUTERS/Mukesh Gupta
A cashier displays the new 2000 Indian rupee banknotes inside a bank in Jammu, India November 15, 2016. REUTERS/Mukesh Gupta

The prime minister last week outlawed 500 and 1,000 rupee notes in a drive to rein in corruption and a shadow economy that accounts for a fifth of India’s $2.1 trillion gross domestic product.

People queue outside a bank to exchange and deposit their old high denomination banknotes in Masuda village in the desert Indian state of Rajasthan, November 15, 2016. REUTERS/Himanshu Sharma
People queue outside a bank to exchange and deposit their old high denomination banknotes in Masuda village in the desert Indian state of Rajasthan, November 15, 2016. REUTERS/Himanshu Sharma

With no state election funding, illicit cash is the lifeblood for political parties that collect money from candidates and businessmen, and then spend it to stage rallies, hire helicopters and hand out “gifts” to win votes.

A woman checks her documents before depositing her old, high denomination banknotes outside a bank in Khoraj village on the outskirts of Ahmedabad, India, November 15, 2016. REUTERS/Amit Dave
A woman checks her documents before depositing her old, high denomination banknotes outside a bank in Khoraj village on the outskirts of Ahmedabad, India, November 15, 2016. REUTERS/Amit Dave

Spending on the Uttar Pradesh election is forecast to hit a record 40 billion rupees ($590 million), despite the cancellation of big notes.

A farmer smokes while sitting on sacks of paddy crops as he waits for customers, one week after the Indian government withdrew the circulation of high denomination banknotes, in Sanand village on the outskirts of Ahmedabad, India, November 15, 2016. REUTERS/Amit Dave
A farmer smokes while sitting on sacks of paddy crops as he waits for customers, one week after the Indian government withdrew the circulation of high denomination banknotes, in Sanand village on the outskirts of Ahmedabad, India, November 15, 2016. REUTERS/Amit Dave

MIXED REVIEWS

Modi’s demonetization drive has so far proven popular among increasingly aspirational voters who are tired of corruption, although views among the broader population and economists are divided over the efficacy and fairness of the move.

A woman sits in front of a closed bank as she waits for it to open early in the morning in Chandigarh, India, November 15, 2016. REUTERS/Ajay Verma
A woman sits in front of a closed bank as she waits for it to open early in the morning in Chandigarh, India, November 15, 2016. REUTERS/Ajay Verma

Opposition politicians have united to decry it.

“We will have to plan the entire election strategy all over again,” said Pradeep Mathur, a senior Uttar Pradesh leader of the Congress opposition party that was trounced by the BJP in 2014 national elections.

Workers unload boxes carrying Indian currency outside a bank in Chandigarh, India, November 15, 2016. REUTERS/Ajay Verma
Workers unload boxes carrying Indian currency outside a bank in Chandigarh, India, November 15, 2016. REUTERS/Ajay Verma

His concerns reflect a view that the BJP, with more members than its rivals and close ties to big corporate donors, can survive the cash crunch better, helping Modi win Uttar Pradesh and four other territories heading to the polls early in 2017.

NewsGram brings to you latest new stories in India

For Modi, winning India’s main battleground state is vital to strengthen his party’s position in the upper house of parliament, where it is still in the minority, before seeking a second term in the 2019 general election.

“Their calculation is that this is going to hurt everybody, but in relative terms the BJP is going to come out stronger,” said Milan Vaishnav, a South Asia expert at the Carnegie Endowment for International Peace in Washington.

According to the Delhi-based Center for Media Studies (CMS), which tracks campaign financing, the BJP relies on cash for less than two-thirds of its funding in a state like Uttar Pradesh.

Its regional rivals use cash to cover 80 to 95 percent of campaign spending.

People crowd the entry gate of a bank to exchange and deposit their old high denomination banknotes in Jammu, India November 15, 2016. REUTERS/Mukesh Gupta
People crowd the entry gate of a bank to exchange and deposit their old high denomination banknotes in Jammu, India November 15, 2016. REUTERS/Mukesh Gupta

SCALING BACK

Demonetization will force Congress to hold smaller rallies, said Mathur, and there will be fewer “freebies” for voters.

Other parties are also adjusting plans in Uttar Pradesh. Ashok Agarwal, a politician with the incumbent Samajwadi Party in the city of Mathura, will have to rely more on his team of 1,000 volunteers to connect with voters.

In a bid to limit the squeeze, parties are paying workers to queue at banks and swap old notes for new ones and evade scrutiny from tax inspectors, said party activists in Mathura.

Event managers, whose businesses usually boom at election time, are worried.

“No political party except the BJP wants to organize big rallies before January. All of them depend on cash,” said Rajesh Pratap, who has provided loudspeakers, outdoor air conditioners and security to party rallies for over a decade.

Mayawati, a powerful former leader of Uttar Pradesh who Modi’s aides view as his biggest electoral threat in the state, says the demonetization timing appeared highly political.

BJP officials accuse Mayawati of hoarding “black” money garnered from selling tickets to candidates to fund her campaign.

Go to NewsGram and check out news related to political current issues

One senior official and a close aide to Mayawati said some of her party’s rallies would be axed and replaced by more door-to-door campaigning.

“Last month … we had to bring over 300,000 villagers from across UP (Uttar Pradesh) to Lucknow city for a day … It’s not just us, but every political party spends money at grassroots level to win votes,” the official said.

People sit on a floor as they wait for a bank to open in Chandigarh, India, November 15, 2016. REUTERS/Ajay Verma
People sit on a floor as they wait for a bank to open in Chandigarh, India, November 15, 2016. REUTERS/Ajay Verma

Modi has not explicitly linked demonetization to a clean-up of electoral funding, but officials in his party say rivals should have heeded his warnings earlier this year that he was serious about clamping down on “black” cash.

“You cannot call it a bolt from the blue because Modi … had dropped sufficient hints that he will take strict action,” said a close aide.

“MOTHER OF ALL CORRUPTION”

While an immediate liquidity crunch for parties is clear, the longer-term impact on funding is less so.

The symbiosis between businessmen seeking favors and parties needing cash has sent campaign funding soaring.

In southern Andhra Pradesh state, three in four voters reported receiving money from parties during the last general election, according to research by CMS.

The group’s chairman N. Bhaskara Rao describes electoral corruption as “the mother of all corruption” in India.

In the 2014 election, when Modi swept to power with an electrifying campaign that included 3D holograms of him giving speeches in villages across India, parties spent a record 370 billion rupees ($5.4 billion), CMS estimated.

Look for latest news from India in NewsGram

They have also long circumvented rules and learned to avoid using cash – parties get donors to acquire equipment for rallies directly, or local traders to buy gifts for would-be voters, such as mobile phone credits. (Reuters)

(Additional reporting by Mayank Bhardwaj in MATHURA, Sharat Pradhan in LUCKNOW and Subrata Nagchoudhury in KOLKATA; Editing by Douglas Busvine and Mike Collett-White)

Next Story

Heroin worth Rs. 100 crore seized by BSF in Punjab

22kg heroine was recovered during a combat between Pakistani smugglers and BSF troopers

0
34
22kg heroin seized in Punjab
BSF recovers heroine worth Rs. 100 crores from Pakistani smugglers. Wikimedia Commons.

In a joint operation, Border Security Forces (BSF) troopers and the Punjab Police have recovered 22kg of heroin in Punjab’s Ferozepur sector following exchange of fire with Pakistani smugglers near the international border, a BSF officer said on Saturday.

The encounter took place late on Friday following a tip-off that smugglers were trying to send heroin consignment into India.

At least one Pakistani smuggler was injured in the exchange of fire as blood stains were found during search of the area on Saturday, BSF officer D.S. Rajpurohit said.

The BSF recovered a pistol and one Pakistani Sim card.

The BSF also arrested three Indian smugglers who were waiting close to the border fence to collect the heroin consignment.

The smugglers were trying to smuggle the heroin consignment using a plastic pipe across the border fence.

The heroin is worth nearly Rs 110 crore in the international market.

The Ferozepur border is around 275 km from here.

Punjab shares a 553-km-long barbed-wire fenced international border with Pakistan. (IANS)

Next Story

Indian Farmers reason behind Smog in Pakistan

Smog in Pakistan has affected the health of people but also caused road accidents.

0
19
Indian Farmers causing smog in Pakistan
Indian Farmers causing smog in Pakistan. wikimedia commons
  • Pakistani officials have said that stubble burning by Indian farmers has caused a thick blanket of smog in Punjab province which led to smog in Pakistan as well.

The officials with Environment Protection Department of Punjab province told Xinhua news agency on Saturday night that the smog is causing various diseases and the provincial government is taking measures to control the situation.

The department’s minister Zakia Shah Nawaz Khan said that the smog engulfed the province for the last two weeks, and is feared to continue for the coming week.

She added that the smoke from the Indian farms moved at a velocity of 7 to 8 km per hour towards Punjab province.

Also Read: Restrictions on Freedom of Expression: Pakistani Journalists Struggle with Growing Threats from Government and Militants alike

Local experts said that the total Air Quality Index in the provincial capital of Lahore is 357 whereas the maximum limit should be around 100, adding that if the situation was not controlled, the level is feared to exceed 500 soon.

Syed Mubashir Hussain, an official of the environment department said that the provincial government has banned stubble burning across the province and violators were being arrested.

A total of 197 First Information Reports have been filed against violators and 65 people have been arrested due to stubble burning and solid waste burning.

Some 175 pollution-causing units have been stopped. About 15,718 smoke emitting vehicles have been confiscated, and a total of 43 lakh Pakistani rupees (about $43,000) fine has been imposed, Hussain told Xinhua.

Apart from this, brick kilns using substandard fuel and running their units without emission control devices like wet scrubbers, electrostatic precipitators and fly ash arrestors have also been closed, he added.

Smog in Pakistan has not only affected the health of people but also caused road accidents. According to local media reports, at least 18 people have been killed and 45 others injured in separate fog-related accidents across the province.

Air traffic was also affected due to smog-caused low visibility. Six domestic flights from various airports have been suspended due to smog in Pakistan, spokesperson of Pakistan International Airlines said in a statement.

The Met office said that smog will disappear after rains or heavy winds, but there was no possibility of any of it in the next 48 hours.( IANS)

Next Story

Small, medium firms were limping back when GST added to pain: Stakeholders (Note Ban Series)

0
22
Small, medium firms were limping back when GST added to pain: Stakeholders (Note Ban Series)

New Delhi, November 3, 2017: The backbone of India’s manufacturing sector — micro, small and medium enterprises (MSMEs) — had not yet recovered from the demonetisation move when the Goods and Services Tax (GST) came in to add to the pain, according to industry stakeholders.

“The base of the MSME pyramid is comprised of informal sector, which has traditionally done business in cash. With withdrawal of cash, this market seized up for a quarter or so. They (MSMEs) are limping back to normality,” Anil Bhardwaj, Secretary General, Federation of Indian Micro and Small and Medium Enterprises (FISME), told IANS.

“The recovery is slow because of the new disruption in the form of GST. In the short term, there could be loss of business opportunities because of lack of capital in the informal markets,” he said.

Bhardwaj said that the housing sector, which had more than 60 product categories linked to MSMEs, was drastically hit, both directly and indirectly.

According to D.S. Rawat, Secretary General of Assocham, except for some payment gateways, most of the sectors lost out.

“The impact of demonetisation would have evaporated, but the GST roll-out issues are being braved by some sectors, particularly the SMEs and the traders,” Rawat told IANS.

In the Economic Watch report by Ernst & Young for September 2017, demonetisation has been blamed for an adverse impact on the economy in the short run, as its “benefits are yet to overtake” the costs.

“The government and people at large did have to bear considerable costs in the immediate aftermath of demonetisation. Some of these costs may be difficult to quantify, but objective evidence of the short-term costs is available in at least some important dimensions,” the report said.

“There was an erosion of growth, output and employment,” it added.

The overall economic growth is still contested, however, as some argue that the downward spiral in gross domestic product (GDP) growth preceded demonetisation.

“Though the GDP growth has been lower post the exercise, it will not be fair to conclude that demonetisation was the only factor responsible for this. The growth had started slowing right after the third quarter of 2016-17 and the trend continued post-November as well,” said Ranen Banerjee, Partner-Public Finance, Economics and Urban, at PwC India.

Others like the EY’s report indicate that demonetisation resulted in a “tangible adverse impact” on GDP growth.

“Real GDP growth has been falling steadily quarter after quarter since the fourth quarter of FY16, when it was nine per cent. It fell to 5.7 per cent in first quarter FY18, a decrease of 3.3 percentage points,” the report pointed out.

“The two quarters that can be considered as the demonetisation quarters in FY17 were the third quarter of FY17 and fourth quarter of FY17. In these two quarters, the GDP growth rate fell to seven per cent and 6.1 per cent, respectively.”

It mentioned that the downward trend in growth preceded demonetisation and was largely caused by an investment slowdown.

On the industrial production front, in December 2016, the Index of Industrial Production (IIP) had contracted by 0.4 per cent from a 13-month high of 5.7 per cent reported for November.

However, it rose 2.7 per cent in January 2017. The latest IIP figures for August showed that factory output grew 4.3 per cent against the same month last year on the back of robust mining and electricity sector growth.

According to the Ministry of Statistics and Programme Implementation, manufacturing output in the country in July 2017 had grown marginally by 1.2 per cent.

“The event clearly pushed the economy towards a higher degree of digitisation and financial inclusion. Accordingly, the digital finance sector seems to have gotten a push while over the longer term financial services should be the biggest gainer,” said Anis Chakravarty, Lead Economist, Deloitte.

(Rohit Vaid can be reached at rohit.v@ians.in)

(Editors: The above article is part of a series of demonetisation stories leading up to November 8)

–(IANS)