Everyone waited, with a bit of trepidation, to be honest, for PM Narendra Modi’s speech on new year 2017 eve.
Everyone waited, with a bit of trepidation, to be honest, for PM Narendra Modi’s speech on new year 2017 eve. No new harsh steps were announced or even any new measures related to demonetisation – a bit of a relief considering the turmoil of the last 50 days. Instead, the PM rolled out sops for the audience the Opposition says its heart bleeds for. And with these steps, the Opposition will be left chasing another ‘balloon’- in Rahul Gandhi’s words, a sign that the politician in Modi yet again set the agenda for them.
What is also clear is that pain of cash shortage is not going away any time soon – something that the govt will need to calibrate irrespective of the sops announced today to keep the public support it thinks it is getting. Nothing was announced on checking political funding too.
The measures for farmers, SMEs, small traders, rural & urban housing, pregnant women & senior citizens announced in a speech connected with demonetisation is clearly an attempt to link the ‘black money’ gains from the rich to the poor who have been deprived – something that will continue to give the PM the backing he needs to push this agenda through. While it is not clear yet whether the govt has or will make any substantial gains whatsoever from the entire demonetisation exercise, the Opposition will find it hard to counter the political opportunity from the sops announced for the poor and the lower middle classes. Initial criticism from the Opposition is around the source of funds for these giveaways and that the speech read more like a mini-budget.
Importantly, it is clear the PM will push this exercise as a people’s movement. This is something that has implications for the outreach strategy of the Opposition. PM Modi is constantly asking for people’s support and participation, pitching this as a battle for more benefits to the poor. A speech after 50 days of demonetisation focused more on announcing benefits for the not so well off – the subtle connection of using illegal gains of the rich for the not so privileged.
There is also an immediate political connection. Important state elections are scheduled to be held soon, especially in key states like Punjab and Uttar Pradesh where farmers and rural/urban poor will sway votes. The election commission is scheduled to announce dates soon. The measures announced are especially tailored for these key states.
The decision to offer senior citizens a fixed interest rate for 10 years is an interesting pointer too. It is largely expected that banks, once flush with funds after the huge inflow of cash, will cut both deposit and lending rates. Each deposit rate cut – from bank deposits to small savings schemes – hurts senior citizens more than anyone else as they have no means of increasing their inflow. We could see some interest rates cut in the days to come that will lead to cheaper home, auto and other loans which the govt will hope will kick-start economic activity after the apparent hit it has taken recently due to the cash crunch. Interest rebates given for home construction are also aimed at boosting employment through more activity in the construction sector.
The most interesting aspect will be how the Opposition reacts to this speech on the ground and the measures announced in the days to come. The PM has targeted the core constituency the Opposition wanted to turn against the demonetisation decision with his speech today. Rahul Gandhi and Mamata Banerjee have been the most vocal opponents of PM Modi in the last few days. But, with Rahul Gandhi out for vacation, this is one ‘balloon’ that Mamata will have to hunt down by herself. 2017 promises to be as contentious as 2016. Happy New Year.