Currency Ban: Impact on Electoral Politics

The Central government has just decided to flush Rs 14 lakh crore or $217 billion – 86% of the value of Indian currency currently in circulation in a bid to crackdown black money, fake currency, and Terror Funding. Analysts say this will also have an impact on electoral politics which are dominated by Cash.

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This notes ban will ensure that the political parties going for elections in near future will have an acute cash crunch. They can not buy votes with old notes and get huge amounts of new notes for the existing Black Money is not easy. There will be initial cash crunch due to heavy demand and so it will be a problem.

BJP may be at advantage to the opposition parties on this issue in the states going for elections very soon. However, in long run, this may not have a big impact on electoral politics when the availability of new notes normalizes. But then if any politician stashed the black money in notes will have to face the music. The Black Money Parties accepted from the aspiring candidates will also become a headache.

Back in the Telugu States, the immediate impact will be on the upcoming MLC elections. Parties will spend huge money in these elections. But the since there will be a very limited number of voters in these elections, cash crunch may not be that hard. But then all the details available in public domain on the impact of this measure are very limited and can be completely gauged only in the coming days.