The currency ban could give the Bharatiya Janata Party an upper hand in the upcoming UP election by denying funding to opposition parties.
The Congress has already attacked the move to ban 500 and 1000 rupee notes with effect from midnight today.
Since nearly the entire money used to fight elections in India is in ‘black’, the sudden and unexpected move by the BJP government to ban old notes of 500 and 1000 rupees will render much of the political funds totally useless.
To make matters worse, not all parties are likely to be impacted to the same degree.
While those parties who did not have previous information about the move will find themselves starved for cash, those parties who knew about the move would not.
Anyone or party who knew that this step was going to be taken could have switched their funds to either smaller denomination notes such as 100 rupees, or into assets like gold.
This could then be converted back into the new currency.
However, other parties who failed to do this would literally have their money swept away from under them.
This will not just impact the UP elections, but also the continuing functioning of political parties for quite some time, as most of them keep their savings in ‘cash’, or with real estate companies.