Originally Published 2016-11-09 08:54:10 Published on Nov 09, 2016
Modi's big gamble with banning Rs. 500 and Rs. 1,000 notes

Prime Minister Narendra Modi was elected to take big, transformational decisions. He hasn't exactly been full of such decisions in the past two and half years - but he showed on Tuesday that he was certainly capable of them.

The decision to ban existing 500- and 1000-rupee notes has a certain economic logic to it. Certainly, the absence of large-denomination notes will make it harder for people to keep black money in hand. That said, there are no clear estimates as to how much black money is in actual currency notes, and how much in land or gold or other forms of wealth.

But the point behind Modi's announcement wasn't to actually change the way that the black money economy works. It was to show that he is capable of doing something - of strong leadership. And, from that point of view, it was a sign both of desperation and brilliance.

Modi is now reaching that point in his term in office when the promises he made in 2014 are coming back to haunt him. He spent the last week under a spotlight because of the One Rank, One Pension (OROP) agitation - something that he politicised to start off with, and on which he has failed to deliver to the satisfaction of many ex-servicemen. Two and a half years into his term, their patience was at an end. I wrote last week that it was only the beginning of a long-overdue accounting for Modi's extravagant promises on the campaign trail in 2013 and 2014.

The promise to "bring back black money" was another such promise, one even more resonant than the OROP promise. Rare was the BJP voter in North India who was not convinced by the party's skilled propaganda, and by statements from senior leaders that they had personally been defrauded of lakhs of rupees (Rs. 15 lakh is the generally accepted figure) by Sonia Gandhi, Manmohan Singh, and a cabal of sinister figures from the Vatican, Switzerland, and Dubai. Modi would end the black money economy, we were told. Whether or not Modi specifically promised to bring back 15 lakhs and put it in everyone's bank account, there's little doubt that many of those who voted for him expected some cash in their account from black money.

Well, that hasn't precisely worked out, has it? It is one of the most effective weapons in the opposition's arsenal, in fact. Rahul Gandhi had a lot of fun last year comparing the Prime Minister's "10-lakh suit" with the absence of 15 lakhs in people's bank accounts.

People may be led to believe any number of things by the government's skillful control of regular and social media. They may believe that everyone in the world suddenly started "respecting" India in 2014, that Pakistan and China are on the run, that there hasn't been a single shady deal since May 2014, that Acchhe Din have come to India in general, just not to their particular village. But you definitely can't be led to believe that a black money refund has arrived in your bank account when it very certainly hasn't.

Plastic Money, Credit Card, Is plastic money going to be promoted post Tuesday?

In other words, the black money issue was one of the most vulnerable for Modi. And that's what underlies the sudden and swift decision to outlaw Rs. 500 and Rs. 1000 notes. It's something that every single voter will get to know about - no exceptions. And it's something that each and every one of them will be told is meant to cut down on black money. They may not be getting any money in their accounts, as they expected, but they will go away with the solid impression that their Prime Minister is certainly doing something about it. There are enough voters in the world who don't much care what sort of decision you take and whether it works - if it's big and courageous enough, they will just admire you for having taken it at all. That's the angle that Modi's going for.

Make no mistake: this is the beginning of Narendra Modi's re-election campaign.

No more coasting along, no more promises he can't deliver on. Now he's going to focus on changing the subject from everything he hasn't been able to do since 2014. If the opposition fails to figure out that's happening, then they'll be so far behind when 2019 rolls around that they won't be able to put up a fight. And if the opposition isn't nimble enough in constructing counter-narratives, they won't stand a chance even if they try to fight. Each time a voter sees or misses a 500-rupee note, will he praise Modi for making an effort - or condemn him for making life more inconvenient for his own ends?

The answer to that question depends on how well the opposition mobilises its counter-narrative. And the answer to that question will determine whether Modi's big gamble pays off politically or not. But make no mistake - this is the first of many such gambles. Modi is India's first modern politician. He knows better than anyone else in this country - except perhaps Arvind Kejriwal - how to seize a narrative. He certainly knows exactly how to turn it around, and to his advantage. Let's see if this one works, and what gambles will follow in the months leading up to the Uttar Pradesh election - and beyond.

This commentary originally appeared in NDTV.

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Mihir Swarup Sharma

Mihir Swarup Sharma

Mihir Swarup Sharma is the Director Centre for Economy and Growth Programme at the Observer Research Foundation. He was trained as an economist and political scientist ...

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