As votes in India’s six-week general election were counted on Tuesday, it quickly became clear that Narendra Modi was on course for his third term as prime minister. That’s where his satisfaction will end.
The early results also showed that Modi’s Bharatiya Janata Party will lose its majority for the first time since 2014 – a stunning blow to the authority of India’s strongest leader in decades and one that would leave him dependent on junior partners in his National Democratic Alliance to to rule. .
On Tuesday evening, the NDA was ahead on 291 of the 543 seats in India’s lower house, far below the more than 350 seats before the vote and the 400 that Modi had set as a target. A motley coalition of anti-BJP opposition parties, known by the acronym INDIA, was on track to almost double its numbers to 234.
Confirmation of the shock result would leave Modi in a weakened position from which he can tackle the enormous economic challenges facing India and implement the difficult reforms needed to help the world’s most populous country secure its status as a rising global power to set.
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Modi had lost his “aura of invincibility,” said Ronojoy Sen, a political scientist at the National University of Singapore.
‘The knives won’t be out, but…’ . . Modi is in and out of the party [could] against a blow,” he said, adding that the BJP’s coalition partners would “take their pound of flesh”.
Before the results, Modi’s government exuded confidence. At his final campaign rally last week, the prime minister prematurely crowed about scoring a ‘hat-trick’ of absolute majorities in three consecutive elections. Exit polls published this weekend also predicted a resounding victory.
Modi brushed aside concerns about the outcome on Tuesday evening. “Our opponents together have not won as many seats as the BJP alone,” he told a crowd of supporters, referring to the roughly 240 seats where the ruling party was leading in partial counts. “The country will write a new chapter in the third term with many big decisions.”
International banks and investors, who have bet on India as a crucial ‘China plus one’ economy and growing consumer market, will be keeping a close eye on how sustainable a coalition government Modi can build.
Modi has sold himself to both the Indian public and foreign investors as a strong, decisive leader capable of implementing tough reforms and maintaining a stable government. But analysts warned that reliance on its NDA partners, including several smaller regional parties, could force the BJP to make concessions, such as offering ministerial posts and dropping politically unpopular reforms.
The early results triggered a sharp sell-off in Indian shares on Tuesday, with the benchmark Nifty 50 stock index falling 6 percent.
Emkay Global, a real estate brokerage, warned in a client note that key parts of the BJP’s reform agenda, including privatization and the kind of labor and land market reforms foreign manufacturers are demanding, would be “off the table” if it loses the majority of the BJP would disappear. confirmed.
Shumita Deveshwar, economist at GlobalData.TSLombard, warned that coalition politics could push the BJP – which has touted its responsible fiscal policy to foreign investors – into “competitive populism”.
“Any hint of political volatility makes markets nervous,” she said. “The markets see that if the BJP does not have a majority, it will be more difficult to push reforms through parliament.”
Both the BJP and the INDIA alliance could now try to shift the balance of power by pushing rival MPs to defect to their side.
“It will go back to before 2014. . . There will be coercive actions from coalition politics,” said Seshadri Chari, a pro-BJP commentator. But he added that the Prime Minister knew the “art of management”.
“Politics is about management. I don’t see any problem as far as Modi is concerned in handling the situation,” Chari said.
Modi contested the elections, which ran from April to June 1, and enjoyed wide popularity thanks to his potent mix of Hindu nationalist politics, economic reforms that support big business, and development spending.
His government has talked of building a $10 trillion economy by the mid-2030s, more than twice its current size, and pledged to elevate the country to developed economy status by 2047.
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But analysts said Modi appeared to have misjudged the depth of anti-incumbency sentiment and economic discontent. The BJP appeared to be struggling during its campaign, while the opposition seized on India’s rising inequality.
Modi, who has failed to effectively tackle widespread unemployment despite rapid economic growth, responded by doubling down on polarizing religious rhetoric about India’s Muslim minority. But the prime minister’s margin of victory, even in his own constituency of Varanasi, was on track to decline on Tuesday from previous elections.
The Indian National Congress, the BJP’s main rival, ran on a platform of boosting social spending and creating more government jobs.
“I am happy with the verdict,” said Sumit Kumar, a 22-year-old job seeker in Delhi. “I didn’t vote for Modi because he couldn’t give jobs to the youth.”
But some foreign investors were optimistic about Modi’s prospects. “I don’t expect Modi to change his policies,” said Alessia Berardi, head of emerging macro strategy at European asset manager Amundi’s research department. “Even if we continue with what we’ve had so far, I think this is good for investors and for business.”