Maha Shivratri 2017: BJP gains in BMC a thumbs-up for note ban

Madhuchanda DeyMoneycontrol Research

The Bharatiya Janata Party (BJP) must be celebrating Mahashivratri in Maharashtra with slightly more fervour than usual, the festival coming a day after a resounding win for the party in local body elections in the state that many saw as a referendum on November’s demonetisation announcement.  

In the last couple of months, the country and the markets have debated the impact of demonetisation quite extensively. Post the Oct-Dec results of India Inc, the consensus seems to be veering towards a ‘mild negative’ impact on the organised sector. It is difficult to gauge the impact on the unorganised sector in the absence of reliable data sources. The first verdict from an eclectic mix of organised and the unorganised sector comes from the municipal election results in Maharashtra, an industrialised state with the highest state GDP.

A Maharashtra local election result deserves more scrutiny than other states. This is because, by virtue of being industrialised, the state has attracted a fairly large number of migrants from other states of India and so mimics, in some sense, the diversity of India.

So what should we read into the verdict?

It is a thumping victory for the BJP in eight out of the 10 Municipal Corporations. The party was well ahead of its nearest competitor in Pune (another cosmopolitan city, now with a large share of migrants), Pimpri Chinchwad, Nagpur, Nashik, Solapur, Akola and Amravati. BJP’s one-time ally and newfound rival Shiv Sena managed to put up a brave front in Thane and was barely ahead in the all-important Mumbai Municipality.

Political analysts tracking elections closely had been suggesting a ‘mass support’ for demonetisation from the so-called ‘have not’. Prime Minister Narendra Modi’s mantra of ‘robbing the rich to pay the poor’ through demonetisation and a clamp-down on black money appears to the have struck the right chord with the targeted audience – the man on the street or the ‘aam admi’.

If the municipal election was the first official quasi referendum on Modi’s demonetisation drive, the headline would read “Modi wins referendum’. While we await the RBI’s figures on the real economic gains of this move -- in terms of the kind of windfall from extinguishing currencies or higher taxes from erstwhile undeclared wealth -- the political dispensation in New Delhi should feel happy about winning hearts. The economic gains will follow.