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Now Get Ready For Cheaper Elections

Eliminating Rs 500 and Rs 1000 notes will have an impact on the assembly elections in Punjab and Uttar Pradesh

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If you happened to visit an ATM or a fuel station on the night of November 8, it would have been unfair to call you nuts for mistaking them for Armageddon and the end of time. Bharatiya Janata Party (BJP) president, Amit Shah, had all but stated that this “surgical strike” on black money would enable his party to win back Uttar Pradesh after more than two decades.

At a more humble level, the common man was worried about simple purchases, as the existing Rs 500 and Rs 1000 currency notes were demonitised effective midnight, November 8, in a bold move by Prime Minister Narendra Modi.

By the time you read this, the initial panic, confusion and rumour mongering would have settled down. The average Indian will adjust to a life temporarily without Rs 500 and Rs 1000 notes. But one class of people, namely politicians, are worried, apart from folks with huge stacks of cash stashed around in different places. Particularly worried are politicians aspiring to be candidates in the forthcoming Assembly elections in Uttar Pradesh, Punjab, Uttarakhand and Goa, due early in 2017. When it comes to elections in India, cash effortlessly beats ideology. A mid-level BJP leader from Ghaziabad near Delhi who prefers anonymity, sheepishly admits, “All of us ad mire and respect Modiji for his bold and brilliant decision. This will silence all his critics who have claimed that his anti-black money stand was just a jumla (empty promise). But at the ground level, we still don’t know how this will affect our ability to fight elections. All of us know cash becomes very important as Election Day approaches.”

If BJP leaders too are worried, one can imagine how worried leaders and potential candidates of other parties would be! On paper, the Election Commission of India, has managed to tackle the “cash” problem during elections. It has “strict” rules about how much money candidates can spend during elections. For a Lok Sabha seat, a candidate is not allowed to spend more than Rs 70 lakh. For an Assembly seat, a candidate is not allowed to spend more than Rs 28 lakh.

On its official website, the Commission has specified the following guidelines: “Although supporters of a candidate can spend as much as they like to help out with a campaign, they have to get written permission of the candidate, and whilst parties are allowed to spend as much money on campaigns as they want, recent Supreme Court judgments have said that, unless a political party can specifically account for money spent during the campaign, it will consider any activities as being funded by the candidates and counting towards their election expenses. The accountability imposed on the candidates and parties has curtailed some of the more extravagant campaigning that was previously a part of Indian elections.” The Commission now routinely deploys observers in “sensitive” constituencies to try and check misuse of cash during elections.

Even if you are not a cynic, you have to admit that the best efforts of the Commission have simply not been enough. Consider the expenditure limit of Rs 28 lakh for Assembly elections (Rs 20 lakh for the North-East and hill states), for instance. Those who follow politics in India know that money spent by candidates for student union elections in some universities is far more than that. According to analysts and researchers, a serious candidate for an Assembly seat actually spends anything between Rs 5 crore and Rs 10 crore. There have always been credible, but unverified and unproven allegations that potential candidates actually start the expenditure process by “buying” the candidacy, as they pay huge sums to decision makers in parties.

Rumours are that the going “rate” for a ticket in the forthcoming Assembly election in Uttar Pradesh ranges from Rs 50 lakh to Rs 1 crore. Without a shadow of doubt, there is going to be a serious disruption of this cosy process, thanks to the shock announcement by Prime Minister Modi. Currency notes of denominations of Rs 500 and Rs 1000 play a vital role in the ability of candidates to defy the Election Commission’s guidelines.

From outright bribes to voters to cash payments to an array of “service” providers candidates today are very dependent on the Rs 500 and Rs 1000 notes. Of course, the entire economy will be affected by this decision. According to a Reserve Bank of India report, 86 per cent of the total currency in circulation was in the form of Rs 500 and Rs 1000 notes. For “normal” Indians, the disruption would be temporary, as they don’t deal with ‘black’ or illegal money. But for those who do not want to declare their income or sources of wealth, the pain will be heavy.

But can this eventually clean up the electoral system? New Rs 500 and Rs 2000 notes will be issued soo. Will they be able to save the system?