Will black money war be Modi’s nemesis in 2019?

If you ask anyone on the street now as to who will win the 2019 General Elections, you don't find many who will root either for Rahul Gandhi of the century-old Indian National Congress or any other candidate from a divided house called Opposition camp. That means it should be a cakewalk for Narendra Damodardas Modi, the current Prime Minister and Gujarati strongman with humble beginnings who took India's political landscape by storm in 2014 and put Bharatiya Janata Party (BJP) in driver's seat at the Centre. Modi's achievement is no mean feat by any standards.

Under his stewardship, BJP secured a clear majority in Lok Sabha. It was first time in more than three decades that a political party secured majority mandate after Rajiv Gandhi, Rahul Gandhi's father, notched up a massive victory and won a record 414 seats of 541 in Lok Sabha way back in 1985. For record, BJP won just two seats then when sympathy wave following the brutal killing of Indira Gandhi, Rahul Gandhi's grandmother and multiple-time Prime Minister, washed away non-Congress parties.

But going by the way the Modi government is using the Central Bureau of Investigation (CBI), Enforcement Directorate (ED) and Income Tax (I-T) department to get at BJP's strong political rivals and politically-strong leaders of Congress, the saffron party seems to be working with a larger strategy to beat Rajiv Gandhi's record in 2019. If not on its own, the saffron party may want to take the tally of the National Democratic Alliance (NDA) that its leads, beyond the 1985 milestone. In that eventuality, BJP will further establish its credentials as the strongest political in the country, dethroning Congress from that coveted position forever.

But that is not going to be an easy task. Though Narendra Modi as the Prime Minister and BJP as a political party still rule the roost in the country's political arena, the game is not yet over as there is nearly 20-month time between now and 2019 summer when the country goes into election fever yet again. As they say, one month is a long-time politics. By that yard stick, 20 months are a pretty long time and anything can happen during this period.

However, the most-likely hurdle that will come between BJP and its 2019 electoral ambition is the economy. It is a fact that all is not well with the Indian economy. To prove that, you don't need to be a celebrated economist. In the last 15 months, GDP (gross domestic product) has been on a downward spiral, hitting a three-year low growth of 5.7 per cent during April-June, 2017.

The decline is, surprisingly, across the board at a time when India is blessed with most-favourable climate to accelerate the GDP growth into double digit zone. Inflation is low, interest rates are slowly coming down, crude oil prices (India is a heavy importer of crude oil) are at a historic low, monsoons are good, stock markets are on steroids and we have a most-stable government in decades.

Still, the manufacturing sector which creates jobs has lost sheen while exports are not encouraging. And there are no credible signs that there will be any course-correction in near future as hurriedly-implemented Goods and Services Tax (GST) is causing havoc now.

But the trillion-dollar question is why the economy is faltering? Its looks like the current sorry state of economic affairs in the country is a result of BJP's self-goal. During the 2014 elections, Narendra Modi made a tall promise that he would bring back ill-gotten wealth stashed outside India and distribute it among the poor. He went a step further and said that Rs 15 lakh would be deposited in the each account of the poor.

As his government could not bring black money from outside, he turned his focus inside and launched a slew of measures to unearth black money supposedly lying inside the country. The most important step among them was the demonetisation exercise that pushed the country into cash chaos for over three months from November 2016, but failed to bring in the black moolah. But that did not deter the central government from launching other measures.

It deregistered 2.09 lakh companies, terming them as shell companies that are used for money laundering. Further, it disqualified over 1 lakh directors belonging to these shell companies and other entities as a part of its war on the black money. These steps have not only failed to unearth stash, but also inflicted collateral damage. While the demonetisation exercise crippled the economy, the black money war on companies sowed seeds of suspicions in the industrial sector.

"No doubt, war on the black money is a good step, but painting scores of industrialists and business people with same brush is not a good thing. That's what is happening now. Trust levels between the industry and the government have come down. This will obviously reflect on the economy as companies will not show much interest on new investments," a senior representative of a national-level industry body told this writer recently.

He has a valid point. The Union Ministry of Corporate Affairs recently released a list of disqualified directors from Hyderabad. K Satish Reddy, Chairman, and GV Prasad, Co-Chairman and CEO of $2-billion Dr Reddy's Laboratories figured in the banned list as Dr Reddy's Research Foundation for which the two are directors did not file documents for the past three years! Interestingly, the list was released to 'name and shame' disqualified directors.

This goes on to show how the war on black money is discrediting some industrialists. In this kind of environment, will industry come forward and invest more? It's very unlikely. So, it’s no surprise that the private investment in India has touched nadir now.

Without private investment, it is not possible for the country to post decent GDP growth and create new employment opportunities. The Modi government will face music in 2019 elections if it fails to generate more number of new jobs. So, we should not be surprised if the war on the black money unleashed by the central government proves to be Modi's nemesis in 2019 elections.

By P Madhusudhan Reddy