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India election

India's mom-and-pop merchants lean toward Modi's BJP in election

Many in community of 70m see incumbent as best bet after bank-note ban and new tax

NEW DELHI -- With India's monthlong general elections underway, the country's influential merchants appear to have thrown their weight behind Prime Minister Narendra Modi, despite having suffered from his government's demonetization drive and a chaotic rollout of a goods and services tax.

The drastic demonetization aimed at curbing untaxed wealth, corruption and counterfeit currency was particularly painful as it took roughly 15.4 trillion rupees ($221.2 billion) worth of large-denomination bank notes out of circulation in the cash-heavy economy, which had a huge impact on India's tens of millions of merchants, traders and shop owners.

"It is true that our business was affected during the ban on high-value bank notes in 2016 and also when the GST came into force in 2017, but it was a temporary disruption," said Suneet Goyal, a mom-and-pop store owner in New Delhi, which votes on May 12 in a seven-phase election across the country that began on April 11 and ends on May 19. All ballots will be counted on May 23.

Several months after the demonetization drive, the launch of the GST, which replaced over a dozen different taxes, caused further disruption in the economy. Almost all goods and services are now subject to one of four GST rates: 5%, 12%, 18% or 28%. While the goal was to simplify the tax structure, the new multitiered system caused much trouble for merchants who found it difficult to adjust.

"There was a lot of anger, especially among small merchants, during those days. Now, things are back to normal," said Goyal, who believes Modi is the "best choice" to run the country because his government has generally done much good work to improve infrastructure, lift up the poor and crack down on corruption.

Many in the merchants community -- who in the 2014 elections also voted overwhelmingly for Modi's ruling Bharatiya Janata Party, which was perceived as pro-business -- hold the same views.

"If Modi is at the helm again, the country will be in safe hands," said Sanjeev Arora, who runs a cake and pastry shop, referring to the February airstrikes on militants in Pakistan that came in response to a deadly terrorist attack on the Indian section of the disputed territory in Kashmir.

Arora, a supporter of the main opposition Indian National Congress, however, does not feel merchants like him benefited much since Modi became prime minister.

"If I want the country to progress, I should go with the ruling [Hindu nationalist] Bharatiya Janata Party of Modi, and if I just want to see myself prosper I should not vote for it," he said. "Eventually, I feel if the country progresses, all its citizens progress, too," Arora added, indicating that he might vote for Modi this time.

The Confederation of All India Traders, which says it represents nearly all 70 million traders across the country, said small-business owners will play a crucial role in the elections.

The merchants, traders and shop owners employ a total of 300 million workers and are expected to consolidate the entire community into a major voting bloc that has the potential to impact the outcome of 195 of the 543 seats being contested in parliament.

Praveen Khandelwal, the confederation's secretary-general, said merchants are likely to favor the BJP again as its poll manifesto has given them due importance. The party has promised a national policy for retail trade and pensions for their social security, among other things. "They have incorporated many of our [demands]," he said.

The BJP's declaration that it will help facilitate easy bank loans for small businesses also is a very positive step, he said

Khandelwal added that merchants are angry at the Congress party's leader, Rahul Gandhi, who Khandelwal claims said that the country's "businessmen are thieves," from whom he will take money and give it to the poor. The Congress party has not addressed the accusations.

Some merchants, however, continue to feel the pain they faced during the demonetization and might not be willing to forget it. Babbu Mirza, who sells decorative ceramic products in Gajraula town of the politically crucial northern Uttar Pradesh state, is among them.

"In these elections, only two parties are prominent -- BJP and Congress," he said the day before Gajraula voted on April 18, the second phase of the polling.

"Modi has done a lot of good work for the poor by providing them free cooking gas and electricity connections, but his demonetization move left small merchants like me almost out of a job as our business runs mostly on cash," Mirza said, signaling that he is not siding with Modi's party.

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