How BJP Won In UP Despite Opposition’s Negative Demonetisation Campaign

A year back on 8 November, Prime Minister Narendra Modi surprised everyone by announcing demonetisation of Rs 500 and Rs 1,000 currency notes. That was just less than two months before the Election Commission of India, on 4 January 2017, announced assembly polls in five states – Uttar Pradesh (UP), Uttarakhand, Punjab, Manipur and Goa.

UP was the most crucial one for Bharatiya Janata Party (BJP) because 403 assembly seats were at stake. Since BJP and its allies had won 73 out of 80 seats earlier in 2014 Lok Sabha polls, they were under pressure to replicate their performance. Also, the Prime Minister was elected from Varanasi and, thus, represented the state. So, everyone was asking one question: would demonetisation adversely impact the UP election outcome for BJP?

The question was very crucial as there were long queues all over banks and ATMs in the state. Several media houses created panic by showing stray cases of people falling sick or even dying in queues without verifying the cause of death or sickness. Just three days after the demonetisation – on 11 November 2016 – Devothhan Ekadashi was celebrated in UP. The festival, according to Hindu belief, signals the awakening of Lord Vishnu after four months of sleep (during which marriages are barred). Devothhan Ekadashi signals the beginning of the marriage season. People in both rural and urban areas faced hardships as they were not able to withdraw their own money because of weekly ceilings put by government on withdrawals from banks.

These hardships faced by people unnerved even the BJP leaders and many were uncertain about the electoral outcome. Some even nursed the idea of postponing the election until the situation became normal. However, there were some positive signals from other states, where local body elections were held and demonstrated that, contrary to media projection of peoples’ anger and anti-BJP sentiments against demonetisation, people gave BJP massive thumps up in Maharashtra, Orissa, Chandigarh and Gujarat civic by-polls held in November-December 2016.

When the demonetisation discourse had captured the imagination of people in the state, the Samajwadi Party suddenly stole the limelight. The power tussle between the father-son duo Mulayam Singh Yadav and chief minister Akhilesh Yadav became the most dominant narrative in media during December-2016 and January 2017. That gave people some time to absorb shocks of demonetisation.

Simultaneously, the government was taking incremental steps to ease the situation of cash crunch while also moving towards digital economy. By the end of December and beginning of New Year, generally, all banks and ATMs were functioning normally. And from 1 February 2017, all limits on cash withdrawals from current accounts and their ATMs ended, easing the woes of businessmen and politicians.

The opposition parties were nursing the hope that long queues and difficulties in cash withdrawals would electorally harm BJP. But, they missed one point completely. Who were the people who were standing in those queues? Many amongst them were not the people who were there to withdraw their own money; they were not account holders and could stand before any bank to change notes. Genuine account holders could deposit any amount of money and also withdraw from banks as usual a sum of Rs 25,000 with weekly ceiling. That meant one could withdraw up to one lakh monthly but, frankly, most Indians don’t need such huge cash on a monthly basis.

The people in bank queues were those who were virtually doing ‘social service’ for a ‘cut’. They knew that they were doing something wrong but were happy as they got some fast cash by exchanging Rs 4,000 old notes for a cut of 10 per cent. That they could do two to three rounds brought huge smile on their faces at the end of the day. Many labours and daily wage earners did brisk business. Because of that, instead of cursing Modi for demonetisation, they virtually became his fans.

But, most importantly, the common man saw the demonetisation exercise not so much as an economic measure but felt confident that it was Modi’s assault on the unscrupulous rich, the high tax evaders and the anti-social elements – be they terrorists, drug-peddlers or patronised stone pelters in Jammu and Kashmir. The result was there for all to see. The assembly election outcome surprised even the BJP, which never thought of such a huge majority of 325 out of 403 assembly seats. They had pegged only at Mission 265; but the demonetisation was a big hit with the electorate that gave them more than three-fourths majority.

Do people in UP still remain where they were a year back or have moved from that position vis-a-vis demonetisation? The situation does not appear to have changed much though the additional factor of goods and services tax (GST) on the heels of demonetistion may have brought difficulties for the trading and small business community. In many cases, the sellers and service providers are charging GST but one does not know whether they are passing on the tax to the government or not.

However, peoples’ faith in Modi remains intact despite anti-Modi noises from several quarters. Ordinary people of India can see the extraordinary holistic policy initiatives in several sectors that is giving India global recognition and improving its rankings in many areas. People are willing to see demonetisation as one step towards wide range of economic and political reforms and may have patience to bear with ‘no-lollypop-politics’ of Modi.