Managing Notebandi Anger: Modi Reaches Out to Small-Time Traders

As BJP tries to woo traditional voter base of small traders, Nilanjan Mukhopadhyay writes why move can backfire.

Prime Minister Narendra Modi has risked his and the BJP’s politics in wooing mutually antagonistic economic classes across the country. Within two days of announcing the decision to demonetise high-value bank notes, Modi began claiming at every opportunity that his government embarked on the audacious strategy because government was anti-rich and pro-poor.

It was clear that the decision, ostensibly on an economic matter, was taken with a political intent. Modi was obviously attempting to recast BJP’s core constituency and jettison the predominantly trader and middle class which had been his party’s bulwark against adversaries till date. The metaphors Modi used and imagery he drew left little doubt about his intentions. Famously, he claimed the rich were forced to queue up and desperately seek sleeping pills, while the poor were in deep slumber in the comforts of their dwellings.

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Operation ‘Salvage Core Constituency’

Over the past six odd weeks while little evidence surfaced of winning over the under-privileged, indications surfaced that the primary voter base of the BJP was getting alienated from the party. Several instances were reported of BJP lawmakers and leaders staying away from supporters because they could not meet the stream of requests for cash. No one spoke about anything else. Serpentine queues, squabbles and shared memories became the norm as resentment began to take root.

It appears that the leadership of the Rashtriya Swayamsevak Sangh (RSS), undeniably in loop with decisions over demonetisation, did some plain speaking after getting feedback from its cadre and the result is the sudden change in Modi’s tack. On 16 December, Modi addressed his party’s parliamentarians.

While touching on several issues, the prime minister dramatically initiated the process of assuaging alienated traders. Modi promised aggrieved traders that he had told his officers that they should not conduct any “post-mortem” of those in small businesses and trades whose annual income jumps dramatically. He said that his government will provide every opportunity to enable them to “join the mainstream.”

“I have instructed officials,” Modi declared, “there will be no retrospective post-mortem (of business activities), otherwise, we cannot bring them into mainstream… I have also told the labour ministry not to have retrospective nitpicking of their books…” It was evident that Modi’s ‘Operation Salvage Core Constituency’ was underway.

Also Read: Notebandi Sounds a Death Knell for Already Neglected Social Sector

BJP’s Core Vote Bank in Danger?

• Feedback from RSS cadres on impact of demonetisation leads to Modi changing tack as he tries to woo small-time traders.
  
• BJP launches Operation ‘Salvage Core Constituency’ as Modi promises that his officers won’t harass those in small business and trades.
  
• Pacification continued with PM Modi promising incentives for switching over to the digital economy.
  
• BJP desperate to consolidate its traditional vote bank as RSS conveys feedback that note ban has failed to woo economically under-privileged.
  

Assuaging the Fears of Traders

There were two main messages in Modi’s speech and he directed his lawmakers to carry these to their constituencies. First, Modi wanted to convey to traders and small businesses that the BJP would not jeopardise their existence. He dispelled fears that disclosure of actual income and the true scale of their business would lead to a scrutiny of past practise of understating the income and attract penal action.

Secondly, he communicated that government would incentivise small business, more than the proverbial last man in the queue, for switching over to digital economy. From the time immediately after demonetisation when Modi solely addressed the poor, he was now opening a line with the small, cash-dependent businessmen and employers.

Too Little, Too Late

On 19 December, the government decided to reduce the existing rate of deemed profit under section 44AD of the Income Tax Act. A day later, Arun Jaitley elaborated that decision to tweak the presumptive income norms would reduce the tax liability by up to 30 percent for those small traders opting for digital transactions. Modi’s declaration and Jaitley’s explanations are indicative of the prime minister’s need to reach out to the community which has been a loyal vote bank.

There is no doubt that feedback from the RSS network that the all-out strategy of wooing the economically under-privileged was not yielding the secured result. Consequently, operation salvage has been initiated. But this move to go back to wooing the core constituency is likely to anger masses as the viewpoint gains ground that most of those who held undisclosed wealth, in cash or otherwise, managed to launder money.

Hardships Await Modi

In 1998 when Yashwant Sinha, finance minister in the Vajpayee government, explained why Rs 1,000 notes needed to be re-introduced, he also stated that the government is not in favour of tax amnesty schemes: “Every honest taxpayer comes to us and says, ‘what is the point in paying taxes if at some point of time or the other we know that you will bring measures which will give amnesty to all those who have avoided paying taxes and evaded paying taxes’.”

The more concessions that Modi makes to those who are unscrupulous in trade and businesses in the eyes of the people, the more its chances of bringing the masses into its fold will fade.

Every time Modi explains his decision as essential to bring more businesses into the mainstream, the masses will feel that demonetisation was another elaborate ploy to enable the rich to launder money. As it is, Modi has already come up with the fourth tax amnesty or voluntary disclosure scheme in a span of fifteen months and the third this year. Sadly, till potential supporters back out, Modi faces the possibility of being rejected by his erstwhile supporters because of business losses and undue hardship.

(The writer is an author and journalist based in Delhi. His most recent books are ‘Sikhs: The Untold Agony of 1984’ and ‘Narendra Modi: The Man, The Times’. He can be reached @NilanjanUdwin. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)

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