India

Demonetisation: Will India's rupee ban decide a crucial election?

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Media captionHow India's rupee ban is influencing voters in PM Modi's Varanasi

As the northern Indian state of Uttar Pradesh holds a seven-phased election to choose a new government, the BBC's Geeta Pandey travels through the politically key state to see if the recent currency ban is an issue with the voters.

In November last year, Prime Minister Narendra Modi stunned the country by announcing that 500 ($7.47; £5.96) and 1,000 rupee notes were as good as garbage.

Despite his insistence that the ban was meant to curb black money and put terrorists out of business, many analysts said it was motivated by politics rather than economics, and done with an eye on the Uttar Pradesh - or UP - elections.

Since the rise of the regional Samajwadi Party (SP) and Bahujan Samaj Party (BSP) in the late 1990s, India's national parties - the Congress and Mr Modi's Bharatiya Janata Party (BJP) - have been often relegated to third and fourth positions in the state.

Image copyright AFP
Image caption Analysts believe that India's currency ban was done with an eye on the Uttar Pradesh polls

This time around, the Congress has joined the governing SP as a junior partner in an alliance, and the BJP is making an all out effort to win back the state.

In the past few days, I've travelled through several districts in the state to ask people if the currency ban - called demonetisation by Indian authorities and economists, and simply "notebandi" (Hindi for stopping of notes) here - is an election issue.


Why Uttar Pradesh (UP) matters

  • The state is India's most populous with more than 222 million people - if it were a separate country, it would be the fifth largest in the world, after China, India, US and Indonesia.
  • It sends the largest number of 80 MPs to India's parliament.
  • Several of India's prime ministers have come from here.
  • Prime Minister Narendra Modi chose the city of Varanasi in the state to make his parliamentary debut in the 2014 general election.

The Indian election no-one can afford to lose


The "notebandi" has without doubt touched every life, in the big cities, smaller towns, and tiny villages, and everyone talks about the problems they've faced.

But will it impact the way people vote?

In the main market in Barabanki town, not far from the state capital, Lucknow, the trading community is seething at the "BJP's betrayal".

Traders have traditionally supported the BJP, and in the past they have also contributed generously to party funds. But this time, they tell me they will not vote for the party.

"Notebandi is the biggest issue here," says Santosh Kumar Gupta, who along with his brothers runs the family hardware store.

"The public has been really hassled. The government set limits on withdrawals and even those little amounts were unavailable because banks had no money."

Mr Gupta points out that in his address to the nation, the prime minister said the government had been planning for it for six months and that people would face minor problems.

"But there were lots of problems. Isn't he ashamed of lying?" he asks angrily.

"Police used sticks to beat up people waiting in queues to withdraw their own hard-earned money. All small manufacturing units in Barabanki shut down for weeks. Thousands became unemployed.

Image caption Manoj Kumar Jaiswal says he is voting for the BSP
Image caption His brother Santosh Kumar Gupta (L) is seething at the "BJP's betrayal"

"There's a labour market a few metres from our shop and every morning, nearly 500 daily wage labourers from the nearby villages would gather to look for work, but for the first time, we saw there were no takers for them."

His brother Manoj Kumar Jaiswal adds: "Traders are very angry with Mr Modi. He first said it was done to curb black money. Then he said it was done to promote digital economy.

"You can use credit cards and (popular mobile wallet) Paytm in cities like Delhi and Mumbai, not in Barabanki. People here are illiterate, many people don't have bank accounts or credit cards."

The Gupta family has 10 voters and not one will opt for the BJP.

In Gosaiganj, on the outskirts of Lucknow, I stop to talk to people gathered at a tea stall.

Image caption The chatter everywhere is about the hardships caused by the rupee ban
Image caption Farmer Raja Ram Rawat says the rupee ban has hit them hard

Raja Ram Rawat, a 60-year-old widower, lives with his two sons and four grandchildren. The small plot of land he owns is not sufficient to support the family and his sons work as daily wagers to supplement the family income.

"Since 8 November, they've not been able to find work even for one day," he says. I ask him how they are managing. "Earlier if we bought two kilograms of vegetables, now we buy only one. That's how we are managing."

A farmer in the group, Kallu Prasad, compares the ban to "poison" for his community - it came just as the rice crop had been harvested and the sowing season had begun for wheat, mustard and potatoes.

"Normally we sell a kilo of rice for 14 rupees, but this time we had to sell it for eight or nine rupees. We couldn't buy seeds and pesticides in time. Farmers who grew vegetables were the worst affected. Since people had no money to buy vegetables, they had to just throw them away."

'Bolt of lightning'

In the holy city of Varanasi, walking through the narrow lanes of Lallapura area, where homes sit cheek by jowl, one cannot escape the noise of looms.

Here, every home is a tiny factory where weavers work in semi-darkened rooms, using coloured silk threads to create beautiful patterns.

Varanasi is famous for its hand woven silk and cotton saris and nearly a million people make their living from this cottage industry here.

"It was like we were hit by a bolt of lightning," says factory owner Sardar Mohd Hasim, describing the moment of Mr Modi's announcement.

Image copyright AFP
Image caption Weavers in Varanasi say the rupee ban has hit them hard
Image caption Ram Manohar Yadav says he received his salary for two months in coins

Mr Hasim, who represents 30,000 weavers, says initially "about 90% of the industry" was affected since all their transactions happen in cash.

"We had no cash to buy raw materials, we had no cash to pay wages to the workers. Nearly three months later, all my 24 looms are still shut. Most of my weavers are doing other jobs to earn a living."

Varanasi has eight constituencies, and Mr Hasim insists that BJP will not win even one. "Why would anyone now vote for Modi?" he asks.

One of his former workers, 40-year-old Mangru Prajapati, who is now back to work in Mr Hasim's brother's loom, agrees. He's the sole breadwinner for his family of eight - his wife, four children and elderly parents.

"Earlier I would work six days a week. Now I consider myself lucky if I can find work even two or three days in a week. Survival has become very difficult."

Image caption Pramila Chaurasia, 19, is a fan of PM Narendra Modi
Image caption Sarvesh Maurya quit his gardening job because his employers didn't have the cash to pay his salary any more

Rajan Behal, trader and leader of the organisation that represents traders, weavers and sellers, calls it a "major disaster".

The ban, he says, couldn't have come at a worse time - November to February is the wedding season when sales peak, but this year it's been a wipe-out.

The industry's annual turnover is estimated to be about 70bn rupees ($1bn; £835m) and the loss is estimated to be around 10bn rupees.

A long-time BJP supporter, Mr Behal refuses to say who he will vote for but predicts that Mr Modi "will not win enough seats to be able to form a government in the state".

The people have faith

It's an assessment challenged by senior BJP leader in the state Vijay Pathak, who pegs the party's chances of winning at "101%".

He says that there were difficulties in the implementation of the currency ban, but insists that they have been able to convince the voters that it was done in the nation's interest.

"We started our campaign with the aim to win more than 265 of the 403 seats. Now we believe we will cross 300."

That, he says, is because people have faith in "the man who's taking the decisions" - the prime minister.

On this count, he's right - Mr Modi's personal stock remains high, especially with the youth.

Image caption Farmers and vegetable sellers were also hit hard because of the timing of the ban
Image caption Tanu Maurya says the note ban was "a good decision even if it caused some hardships in the short term"

In Kukha Rampur village in Tiloi constituency in Amethi district, 21-year-old Tanu Maurya says she will vote for Mr Modi because he is "doing good work" and that the note ban was "a good decision even if it caused some hardships in the short term".

Someone else voting for Mr Modi is Pramila Chaurasia, 19, the newest bride in the neighbouring Bhulaiya Purva village - as will most of her family and fellow villagers.

Since his sweep of the 2014 general election, Mr Modi has not had much luck in state elections and he's desperate to reverse that losing trend.

A victory in the politically key state of Uttar Pradesh would be a huge shot in the arm for Mr Modi and his party. But will the rupee ban help him or hurt his chances?

When the votes are counted on 11 March, we will know whether it was a masterstroke or a miscalculation.

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