Test lies in stage 3 of notebandi , Swaminomics for Modi

Modi || ThePoliticalIndia : Demonetisation still dominates conversation in India. Do ordinary people think it was inhumane and despotic, as claimed by critics? Or do they believe Modi is the only politician willing to get tough on black money? How will this play out in the big Uttar Pradesh election in February-March? #modi #noteban #500 #1000 #demonitization #modimoves #bjp #UP #thepoliticalindia #claimed #election

Test lies in stage 3 of notebandi , Swaminomics for Modi
Test lies in stage 3 of notebandi , Swaminomics for Modi

We will see three stages in the demonetization drama. In stage one, people will back Modi despite short term tribulations. In stage two, economic dislocations will continue for maybe two quarters, hitting GDP by maybe Rs 150,000 crore and threatening a mini-recession. So, disillusioned voters may turn against Modi.

In stage 3, Modi can use financial resources emanating from demonetisation to place thousands of rupees into the 250 million January Dhan accounts opened when he came to power. this can be declared before or throughout the election movement for the UP elections, hoping to make a pro-BJP wave that doesn’t exist nowadays within the state.

According Economic Times :

test-lies-in-stage-3-of-notebandi-swaminomics-for-modi-1

So, demonetisation did not make Modi a conquering hero sweeping the polls. But he did gain modestly, showing there was no mass resentment.Voters were not swayed by media stories of mass inconvenience and dislocation caused by demon etisation, or of old people dying standing in unending bank queues.

Test lies in stage 3 of notebandi , Swaminomics for Modi
Test lies in stage 3 of notebandi , Swaminomics for Modi

After these elections came stage two. The media carried ever more reports of massive laundering of black money through Jan Dhan accounts, and by paying an army of poor people to exchange old notes for new in small lots. Widespread distress and economic dislocations were reported in rural and informal markets. Small finance companies serving the unorganised and rural sectors reported serious shortfalls in loan repayments, raising fears of a payments crisis.

Many analysts, together with me, known that only a little fraction of black hoards were in money (the rest having been reborn into different assets); that ending while not different reforms would do nothing to prevent the generation of recent black money; that the implementation of the theme had been atrociously bad; which the economic dislocation may cause a mini-recession that cuts value by one thing like one hundred and twenty fifth (Rs 150,000 crore).

But next comes stage three. At the end of December, maybe 10-20% of high-value notes will not have been deposited or exchanged, and will be extinguished. This will give the RBI a massive windfall of Rs 1.5-3 lakh crore, that can be given to the government as a special dividend.

This will enable Modi to pour Rs 5,000-10,000 into each of the 250 million Jan Dhan accounts. That will surely shift the public mood in his favor. Never in Indian history has any politician put so much hard cash into the pockets of all the needy . That might just win Modi the UP election.

 

 

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