Indian money politics. Will BJP benefit?

BJP will derive benefits in both Party funding and political mileage from the demonitisation. However, in political terms BJP may not earn the dividend to the extent that had been planned.

Perception is crucial in a nation where nuances and reading into events correctly are not a practised culture. However, inmediate difficulties that people are made to bear could result in spontaneous negative reactions. That is why tomato and onion shortages during election period are known to swing votes.

Demonitisation was a political coup of mass acceptance but the counter coup was complete liquidity crunch that demonitisation caused. This situation was kind of an imposed starvation in the year of plenty.

The Government not only had printed wrong ATM size new notes of 500 and 1000 Rupees  but they had not realised the necessity to print greater stock of Rupee 100 and 50 notes. The old 500 and 1000 notes were invalidated and the replacements could not be distributed through the existing ATM system. Further people converted their old high notes in smaller denominations and stocked up the same.

Money supply in Indian market took grievous hits from 3 sides. First the sudden banning of old 500 and 1000 notes. Second the replacement could not be distributed due to transportation bottle necks and worse wrong ATM size notes. And third the exiting small notes went out of circulation with black money being stocked up in such notes.

There will be temporary setbacks to fake money printing process and certainly there would be considerable reduction in  the quantity of black cash stock. However, actual black wealth cannot be dented as Government claims. As for political gains, the elections including ongoing  bye election results will demonstrate the impact of the exercise. Whatever the end effect and impacts, there is no doubt that this exercise of demonitisation has turned the Indian economy and way of commercial transaction upside down for all Indians from villagers to urban dwellers. 

I find this Indian scenario fascinating chaos. I do  appreciate the unholy  predicaments that so many people continue to face  especially the common people who knows no other method  than cash transaction and cash just evaporated in the market.