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The first an­niver­sary of de­mon­eti­sa­tion of high-value cur­ren­cies comes up later this week on 8 Novem­ber. With the Bharatiya Janata Party (BJP) de­cid­ing to take up the gaunt­let thrown by the op­po­si­tion—who plan nationwide protests—by declar­ing it anti-black money day, po­lit­i­cal grand­stand­ing and bick­er­ing will be par for the course.

The fact that we are in the mid­dle of two key state assem­bly elec­tions, Hi­machal Pradesh (which votes a day af­ter the first an­niver­sary of de­mon­eti­sa­tion) and Gu­jarat, has only added to the deci­bel level. Clearly, there is a high-stakes bat­tle for pub­lic per­cep­tion (a col­lat­eral gain is that eco­nom­ics is dom­i­nat­ing the po­lit­i­cal dis­course, which hope­fully will trans­form from name call­ing to an il­lu­mi­nat­ing de­bate).

The last time there was a sim­i­lar show­down on de­mon­eti­sa­tion was in the run-up to the elec­tion cam­paign to the Ut­tar Pradesh assem­bly. The op­po­si­tion made it a key part of their ar­gu­ments to dis­credit BJP and Prime Min­is­ter Naren­dra Modi. It clearly didn’t work and BJP won a record land­slide.

Since then, how­ever, the Re­serve Bank of In­dia (RBI) has re­leased data re­lat­ing to the de­mon­eti­sa­tion ex­er­cise, which has punched holes in some of the ar­gu­ments put forth to jus­tify this un­prece­dented ac­tion— with­draw­ing 86% of the value of cur­ren­cies in cir­cu­la­tion. This, and the slow­ing of the econ­omy, have en­cour­aged the op­po­si­tion to launch an­other scathing at­tack on Modi­nomics (the eco­nom­ics of Prime Min­is­ter Modi). Whether or not they will suc­ceed would be known only on 18 De­cem­ber, when the votes are counted for both as­sem­blies.

It is very likely that this is not the last of the run-ins on de­mon­eti­sa­tion. The op­po­si­tion is des­per­ate for a cred­i­ble counter-nar­ra­tive to Modi. This is the best open­ing they have had so far, es­pe­cially in the back­drop of a slow­ing econ­omy and the dis­rup­tion caused to the in­for­mal econ­omy by the im­ple­men­ta­tion of the goods and ser­vices tax from 1 July.

There is no doubt that de­mon­eti­sa­tion caused mas­sive dis­rup­tion, es­pe­cially in the ru­ral econ­omy— which runs mostly on cash. The big­gest squeeze was on the in­for­mal econ­omy, in­clud­ing the one op­er­at­ing in the pe­riph­ery of ur­ban In­dia. Shoddy im­ple­men­ta­tion en­sured that ATMS and bank branches did not have ad­e­quate sup­plies of the new cur­ren­cies, lead­ing to end­less queues in ur­ban In­dia (re­mark­ably though, there was no re­port of so­cial dis­tur­bance as peo­ple sto­ically went through the paces) for nearly three to four weeks.

Yes, the eco­nomic ar­gu­ments jus­ti­fy­ing de­mon­eti­sa­tion were dodgy, but the pol­i­tics was not. In al­most ev­ery stump speech in the run-up to the 2014 gen­eral elec­tion, Modi harped on cor­rup­tion and black money; and of course, the dodgy record of the United Pro­gres­sive Al­liance in of­fice only strength­ened this nar­ra­tive. And once elected to power, the Prime Min­is­ter stayed on the mes­sage with a se­ries of pol­icy ac­tions. In ret­ro­spect, it is ap­par­ent that he was steadily build­ing a trust quo­tient with the elec­torate—in a democ­racy this is the only key to power. The pol­icy ac­tions of his gov­ern­ment may have been clumsy, but his in­tent was never in doubt—at least, among the ma­jor­ity who voted.

De­mon­eti­sa­tion was the crown­ing mo­ment of these pol­icy ac­tions. Anec­do­tally, it was ev­i­dent that those hold­ing a stash of il­le­gal wealth (al­ways a mi­nor­ity) were for the first time in­con­ve­nienced if not living in fear of the tax sleuth. It gen­er­ated the feeling of schaden­freude or plea­sure de­rived by some­one from an­other per­son’s mis­for­tune among the ma­jor­ity of the peo­ple. Fur­ther to them, here was a politi­cian who had ac­tu­ally staked his so­cial cap­i­tal in go­ing af­ter the cor­rupt. To put it an­other way, it was restor­ing the pre­mium on hon­esty.

If elec­tion out­comes are any in­di­ca­tion, then it is clear that Modi has traded in the trust quo­tient quite re­mark­ably to win the per­cep­tion bat­tle. The pro-poor nar­ra­tive of eco­nomic pol­icy pur­sued in the last two years too no doubt has con­trib­uted.

It is to be seen though how this plays out over the next 16 months to the 17th Lok Sabha elec­tion. The Prime Min­is­ter has eroded a lot of the so­cial cap­i­tal he earned and will need to re­plen­ish it quickly to get re-elected.

And in this the de­liv­er­ables on the econ­omy, par­tic­u­larly ru­ral In­dia which is still reel­ing un­der a decade of ne­glect and a pro­longed phase of drought/in­ad­e­quate rains, would be the key.

In that sense, un­like in the bat­tle for pub­lic per­cep­tion on de­mon­eti­sa­tion, eco­nom­ics will drive pol­i­tics in the next elec­tion cy­cle.

Anil Pad­man­ab­han is ex­ec­u­tive edi­tor of Mint and writes ev­ery week on the in­ter­sec­tion of pol­i­tics and eco­nom­ics.

His Twit­ter han­dle is @cap­i­tal­cal­cu­lus.

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