Demonetisation: Voters in poll-bound states may reap a rich bonanza of scrapped notes

“The fact is that she (Mayawati) had collected crores by selling BSP tickets and all that has become garbage now,” BJP secretary Shrikant Sharma said six days after demonetisation of high-value notes.

Even if it’s true that Mayawati has amassed “crores”, she is not about to toss the whole lot of it into a garbage bin or make a bonfire of it. She wasn’t born yesterday. And clever thinking is not the absolute monopoly of the BJP.

Politicians in Uttar Pradesh, Uttarakhand, Punjab, Manipur and Goa, which are going to polls in next three or four months, know how to use at least some of their black money in the old Rs1000/500 notes. And the BJP, which can’t truthfully claim to use only lilywhite cash in elections, knows it too well.

Former Chief Election Commissioner of India SY Quraishi agrees that politicians will use different routes to spend their unaccounted money in the upcoming elections.

“The demonetisation will substantially limit the misuse of black money but not entirely stop it in the coming round of elections,” he told Firstpost. “And by the time the next round of elections are held after this one, politicians would think up new avenues of using money.” Elections are due in Gujarat and Himachal Pradesh later in 2017.

Representational image. Reuters

Quraishi, who was the CEC during 2011-12, knows what he’s talking about. His 2014 book, An Undocumented Wonder – The Making of the Great Indian Election lists 40 different ways in which election candidates hide their illegal expenditure and six ways in which corrupt political financing is done.

All that the parties and candidates in the five states that will go to polls before March 2017 need to do is to split their “payments” into smaller amounts in old notes and make them earlier than planned. There is time till the year-end to exchange the old notes for new ones.

This is not to suggest that demonetisation will have zero impact on elections in these five states. Without doubt, it will hugely disrupt the many ways in which cash usually plays its part in the poll process. And in Punjab and UP, it has already led to redrawing of campaign schedules and delaying of the candidate selection process. But it would be too optimistic to expect the coming round of elections to put a sudden end to the menace in one fell sweep.

As Quraishi points out, candidates in the five states may even jack up the cash they pay voters but dispense it in scrapped notes before the December 30 deadline for exchanging them at banks. “They may give away, say, Rs 1,500 or more per vote instead of smaller amounts like Rs 500 or Rs 1,000 they paid up earlier,” he says.

In fact, that’s something which already appears to be happening in the local self-government elections currently underway in Maharashtra. This report says that voters are getting more than the Rs 500 that they got in the previous elections but in scrapped notes, which they are only too happy to exchange for legal tender.

But in the case of the assembly elections, there is a problem. Candidates go in for cash dole-outs usually during the 48 hours before voting begins. And if they choose to fob off their demonetised notes on voters, they need to do it long before the polling day. “Party leaders can also distribute to cadres black money in abolished notes in small amounts so that they can exchange it for legal money and spend on sundry things,” says Aazhi Senthilnathan, noted Tamil writer and election-watcher.

Besides cash-for-votes, there are indeed a plenty of other things which parties and candidates splurge their black money on:

At least some of this expenditure can be split into amounts of less than Rs 2.5 lakh and distributed among party workers in a way that the long arm of the Income Tax official won’t reach them.

This decentralisation is not a new innovation that the demonetisation has kicked in. It has been going on. Parties and candidates have been distributing expenditure among well-wishers and businessmen for long. But in the immediate aftermath of demonetisation, decentralised spending will go on with new fervour and in new innovative ways.

“The means will change but the concept will not,” says Senthilnathan. He says black money hoarders are finding ingenious ways to subvert the law. He cites the instance of Tamil Nadu’s capitation fee colleges — notorious havens of unaccounted and untaxed money — which are offering to pay their faculty 10 months of salary in advance in scrapped notes.

While the implementation of demonetisation has left a lot to be desired, its very efficacy as a tool to ferret out black money is yet to be proved. But even if scrapping of high-value currency proves to be effective, it will take a while to have a significant impact on election spending. And it needs a great many other steps as well by the government and parties to completely clean up the election process.

And it’s not just the money we are talking about. While Tamil Nadu, Andhra Pradesh, Karnataka have become notorious for huge seizures of illegal cash during elections, Punjab tops the list in poll-time distribution of drugs.

During the 2012 Punjab assembly polls, such huge quantities of drugs — 2,700 kg of poppy husk and 53.5 kg of heroin — were seized that Quraishi took the unusual step of writing a letter to the then Prime Minister Manmohan Singh telling him: “...every conceivable drug is being abused in the State”.

Author tweets @sprasadindia