Modi Black Money Move: Clear Political benefits for BJP

The Modi black money move is being viewed by most middle class voters (source: social media) as a very courageous move against unfair and unethical practices. The sudden and dramatic manner in which the Prime Minister announced the decision further enhances Mr Modi's image as a courageous and honest Prime Minister amongst his core middle class vote. There have been murmurs of protest who lose from this move but it is difficult to quantify the size of this until the next two months

The big question however is will the BJP benefit politically from such a move in the short and long run?

On UP and Punjab

In Punjab, the benefits for the SAD BJP regime are likely to be minimal as the anti-incumbency factors will be a bigger factor. The high decibel campaign of the Congress party and AAP will likely overwhelm any benefits arising out of the Surgical strikes and the black money move.

In UP, the BJP is certainly likely to benefit in the short run. In the most recent Axis opinion poll about 68% of upper caste voters expressed their support for the BJP. A swing of 10-20% could deliver 2-3% more vote for the BJP taking them closer to the 35% mark. The response of young OBC and Dalit voters is also likely to be positive but it is difficult to quantify the gain at this moment as these voters are likely to be made counter offers by both SP and BSP. A swing in favor of the BJP will put greater pressure on both the BSP and SP to strike an alliance. This is likely to happen over the next 3-4 weeks.

National Elections 2019

National election results in 2019 will be driven by 4 factors - a. Best PM choice, b. Satisfaction with the Government c. Level of Opposition Unity and d. Level of anti-incumbency in the State

As I mentioned earlier, the black money move will certainly enhance the PM's image. It is also likely that the PM will make more such announcements over the next two and half years. Unless the opposition comes up with equally dramatic moves during this period, the PM will remain unchallenged. Many voters who were neutral to Mr Modi (regional party voters in particular) are likely to move towards the BJP. The biggest benefits are likely to accrue in Kerala, Karnataka, Tamil Nadu, Odisha and West Bengal.

Satisfaction with the Government is dependent on many factors with the economy being the primary one. On this, it is unclear if it is possible to quantify the benefits of the black money move in the long run . At this moment, I foresee very few losses but the minimal progress made in growth could show up in the unemployment situation over the next year or so. While the CMIE survey appears to show a significant improvement in employment post the monsoon, it needs to be seen if this can be sustained. The benefits if any are likely to be in the Southern and Eastern States only as the BJP operates at a low base

The Opposition parties coming together will deliver some losses in UP and Bihar. Particularly so in UP if the BJP wins the election in 2017. However these losses are likely to range in the 10-15 range (Bihar plus Uttar Pradesh).

The State level anti-incumbency factor might deliver some losses to the BJP whether it is in Rajasthan, Gujarat, Chattisgarh, Jharkhand or Maharashtra. However, the losses are not certain and the scale and size of the losses are unquantifiable at this moment.

On Campaign management, it is likely that the BJP will lose some financiers for the first time since 1989 due to its sudden black money move. While the BJP is likely to see unlimited funding going forward, opposition parties are also likely to benefit from funding due to the Modi move as those who suffer losses are likely to penalize the BJP to some extent.

In sum, the BJP is likely to gain in the UP election and not so much in Punjab. It is likely to make significant gains in the South and East during election 2019. However, whether it loses a lot or sustains its performance in the rest of India will depend on economic performance and employment. At the moment, that part is unpredictable. Assuming steady growth and reduced unemployment, one could say that the PM's move will definitely help the BJP in the short and long run. Does the Opposition have a big counter move?