December 9, 2016. It is total chaos at the foriegn exchange kiosks at the Delhi international airport. None of the ATM are working. While the official exchange rate is 68.5 for a dollar, they give 62 Rs per dollar. This means they are looting 6 RS per every dollar. This means millions a day. I had to stand in the que for one hour to get two 2000 notes. Now I have to struggle to get change for Rs 2000 ,note. Because, a day you can only exchange up to Rs 5000. Foreign turists were so frustrated. And one Japanese monk put it so well, " I never knew Modi was so stupid'!! Ache din for Bankers and the rich !!!!!"
Modiji and co seem to be doing a high risk- high return game on thedemonetization. Despite the trouble in the first two months, demonetizationmay help to raise significant amount of new resources in the new budget. The government may try to normalize things by the budget session. And the next big surprise will be that he would use the new resources to directly transfer money ( say Rs 5000 each) to the accounts of those who are BPL- and they may begin this with UP. And this he may increase by cutting on many other social sector expenditure. And by 2018 they may transfer Rs 15000 a year- and this would be used to 'win-over'voters, as a direct cash transfer programme and indirect cash for vote programme. So this seems to be part of the larger game as it is well planned and implemented after their mid-term of the government. Usually people will forget the trouble so fast when they get money in the bank account. And this will be accompanied by huge propaganda blitz. This is where the opposition parties may lose the plot as they are reacting the agenda set up by government and not being able to set a new agenda and new politics.
My sense is that demonetization may not be a big electoral issue. Because public memory is rather short. The chances are that within the next month, the financial transaction may become normal. It is true that demonetization has adversely affected informal sector and also will affect the overall GDP growth. But in electoral politics what matters is how do you connect issues on an 'emotive way' and in terms of perceived 'incentives'. BJP is a following an 'identity-incentive' model of campaigning, with the full force and advantage of governmental power- and also with lots and lots money power( with the support of crony capitalist). So eventually it is the 'sales' pitch 'rhetoric vs rhetoric' and 'manipulating and managing perception'. The fact of the matter is that the electoral politics in India has been reduced to a 'circus' of marketing slogans and managing perceptions. In such a context, the 'ideological' arguments of the old politics simply may not work in the electoral market place and voting impulse. But a politics simply based on rhetorical promises will become redundant when the rhetoric runs of the steam and end up as stale over a period of time. So people may end up surprising even the smartest campaigners in India. One such example is the electoral outcome of the 2004 election.
Following the demonetization, it is almost clear that the Union government may try to introduce some kind of populist cash transfer( to redeem themselves from all the promises they made) for the 'poorest'( BPL) as means to collapse all subsidies for education, health, and even NREGA. The idea of Universal Basic Income is good- but I wonder government will have resources to ensure Universal Basic Income for millions of house holds in India. This will certainly create a mess as India where in almost 75% percent of the people with less than two dollar equivalent a day. And most of the household survive with less than 12 K a month. And withdrawing the existing subsidies on food, education, health etc could be really boomerang on the government as those who large number of vulnerable poor( including marginalized farmers) can turn against the government. And the cash transfer programmes in India may have its own huge implementation problem as well.
Modiji and co seem to be doing a high risk- high return game on thedemonetization. Despite the trouble in the first two months, demonetizationmay help to raise significant amount of new resources in the new budget. The government may try to normalize things by the budget session. And the next big surprise will be that he would use the new resources to directly transfer money ( say Rs 5000 each) to the accounts of those who are BPL- and they may begin this with UP. And this he may increase by cutting on many other social sector expenditure. And by 2018 they may transfer Rs 15000 a year- and this would be used to 'win-over'voters, as a direct cash transfer programme and indirect cash for vote programme. So this seems to be part of the larger game as it is well planned and implemented after their mid-term of the government. Usually people will forget the trouble so fast when they get money in the bank account. And this will be accompanied by huge propaganda blitz. This is where the opposition parties may lose the plot as they are reacting the agenda set up by government and not being able to set a new agenda and new politics.
My sense is that demonetization may not be a big electoral issue. Because public memory is rather short. The chances are that within the next month, the financial transaction may become normal. It is true that demonetization has adversely affected informal sector and also will affect the overall GDP growth. But in electoral politics what matters is how do you connect issues on an 'emotive way' and in terms of perceived 'incentives'. BJP is a following an 'identity-incentive' model of campaigning, with the full force and advantage of governmental power- and also with lots and lots money power( with the support of crony capitalist). So eventually it is the 'sales' pitch 'rhetoric vs rhetoric' and 'manipulating and managing perception'. The fact of the matter is that the electoral politics in India has been reduced to a 'circus' of marketing slogans and managing perceptions. In such a context, the 'ideological' arguments of the old politics simply may not work in the electoral market place and voting impulse. But a politics simply based on rhetorical promises will become redundant when the rhetoric runs of the steam and end up as stale over a period of time. So people may end up surprising even the smartest campaigners in India. One such example is the electoral outcome of the 2004 election.
Following the demonetization, it is almost clear that the Union government may try to introduce some kind of populist cash transfer( to redeem themselves from all the promises they made) for the 'poorest'( BPL) as means to collapse all subsidies for education, health, and even NREGA. The idea of Universal Basic Income is good- but I wonder government will have resources to ensure Universal Basic Income for millions of house holds in India. This will certainly create a mess as India where in almost 75% percent of the people with less than two dollar equivalent a day. And most of the household survive with less than 12 K a month. And withdrawing the existing subsidies on food, education, health etc could be really boomerang on the government as those who large number of vulnerable poor( including marginalized farmers) can turn against the government. And the cash transfer programmes in India may have its own huge implementation problem as well.
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