India changes high value bank notes to get at the tax evaders and the black money. This is going to cause a political problem:
The prime minister last week outlawed 500- and 1,000-rupee notes in a drive to rein in corruption and a shadow economy that accounts for a fifth of India’s $2.1tn gross domestic product.
With no state election funding, illicit cash is the lifeblood for political parties that collect money from candidates and businessmen, and then spend it on staging rallies, hiring helicopters and on “gifts” to win votes.
Spending on the Uttar Pradesh election is forecast to hit a record 40bn rupees ($590m), despite the cancellation of big denominations.
Modi’s banknote change has so far proven popular among increasingly aspirational voters who are tired of corruption, although views among the broader population and economists are divided over the efficacy and fairness of the move.
Opposition politicians have united to decry it.
“We will have to plan the entire election strategy all over again,” said Pradeep Mathur, a senior Uttar Pradesh leader of the Congress opposition party that was trounced by the BJP in national elections in 2014.
No, not that powerful a complaint really.