Demonetisation 2.0 Before This General Election in India?

DeMo 1.0

It's not 9/11 but 8/11 that sends shivers down every average Indian resident. 8/11/2016 was the day when current Modi Government suddenly decided to take out about 86% of money out of circulation by banning higher denomination currency notes of INR 500 & INR 1,000.

This note ban was not justified by any economic rationale and any comparative historical experience. Although several claims of benefits were made in the past; in the hindsight we see that overnight decommissioning of high-value notes didn't bear any positive economic results except causing sufferings to general public.

But who is concerned of economic benefits out of it?

Politicians are generally not economists. And even if they are, they are politicians first and anything else later.

Modi too is a politician ...and a good one at that. All his major moves are politically motivated. No doubt, demonetisation was one of them. Many understand that the current Indo-Pak tension is also created due to political motives as General Elections are around the corner. But let's not digress here.

Demonetisation was planned just less than 3 months before the elections in Uttar Pradesh were scheduled. Prominent political parties in that state viz. SP and BSP's major source of funding were from unknown sources (SP 83% & BSP 100%). Whereas Modi's BJP had only 65% income from unknown sources.

UP is the India's most populous state. Winning UP election is very critical for every Government. It is said that one who rules in UP is the one who rules whole of India. So Modi decided to hit these parties where it hurts the most ...their finances.

Demonetisation 1.0 was aimed at hurting political opponents disproportionately.

DeMo 2.0

Now is perfect time for demonetisation 2.0 as General Elections are just a couple of months away. Hitting opponent political parties' financial sources will make a huge impact in the election campaign and its final outcome. So all brains are at work for how to achieve that.

Last week, Government hurriedly came up with an Ordinance for regulating deposits. The Banning of Unregulated Deposit Schemes Ordinance, 2019 was notified last week.

It is apparently intended to protect gullible investors from ponzi schemes, pyramid schemes and similar scams. But that could be done through passing a regular bill and enacting an Act. Why an Ordinance in a hurry?

The timing and the methodology of it raises doubts over some mischievous intent here. Here is a good info graphics sourced from Economic Times:

This article published last week in Economic Times gives a great insight on how this Ordinance can hit the sources of funding to political parties.

Aside chit fund companies and thrift & credit cooperative societies, several cash strapped small businesses and students too will suffer as a consequence of this Ordinance. And by nature of an Ordinance, it is legally valid for a 6 months' time without even being debated or passed by Parliament.

But who cares for common man when it can guarantee a win in the election?
I often wonder, whether we have a smart Prime Minister or a smart politician at the helm of this country!