NOTE BAN CORE TO BOTH BJP AND OPPOSITION HOPES

Nripendra Mishra saw ‘cashless’ economy as being a force multiplier for orderly growth, while Doval regarded the measure as having the potential to deal a death blow to counterfeiting.

The BJP expects to get a demonetisation dividend in the Assembly elections due in the coming months. BJP president Amit Shah has made the 8 November 2016 note ban the key plank of his party for the polls. In contrast, setting aside the question of leadership for the present, Opposition leaders including Rahul Gandhi, Arvind Kejriwal, Mamata Banerjee, Mayawati and Sitaram Yechury have gone on the offen- sive against Prime Minister Narendra Modi. They calculate that the 8 November 2016 “note ban” will cause economic distress and therefore will end up as a political disaster for the NDA government. Certainly, the move has been the most consequential step ever taken by a Prime Minister in India since Jawaharlal Nehru embraced the Soviet model of development in the 1950s. However, given the unanimous view within his small circle of official advisors about not simply the desirability, but the essentiality of extinguishing the legality of the (old) Rs 500 and Rs 1,000 notes, it was a given that Prime Minister Narendra Modi would heed the counsel of Principal Secretary Nripendra Mishra, National Security Advisor Ajit Doval, Reserve Bank of India Governor Urjit Patel, Revenue Secretary Hasmukh Adhia and other key officials and approve the measure announced by him at 8 pm on 8 November 2016.

Mishra saw the “cashless” economy as being a force multiplier for orderly growth, while Doval regarded the measure as having the potential to deal a death blow to counterfeiting and to terror financing. Adhia envisaged a substantial increase in the direct tax base from the currency demonetisation, while the RBI Governor calculated that about Rs 450,000 crore of currency would get extinguished, thereby relieving some of the pressure exerted by NPAs on the banking system.

Prime Minister Modi has, from the time he was Chief Minister of Gujarat, treated official views with considerable respect and has run government with their help, rather than in a “Bureaucracy Lite” manner of depend- ing instead on outside expertise. From 8 November onwards, Modi’s fate, that of the BJP, and that of the Indian economy depends on the success of the manner in which the “note ban” was implemented, especially during the 50-day grace period requested by Modi in his words to the nation. Overall, the assessment of the Opposition is that the results of the past nine weeks bear out their own pessimistic forecasts, rather than the optimism of the BJP about the impact of the recordbreaking measure.