Humbled Modi will face challenging third term
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Humbled Modi will face challenging third term

Indian PM will need support of coalition allies as party is poised to lose majority for first time

Indian Prime Minister Narendra Modi gestures as he arrives at Bharatiya Janata Party (BJP) headquarters in New Delhi on Tuesday. (Photo: Reuters)
Indian Prime Minister Narendra Modi gestures as he arrives at Bharatiya Janata Party (BJP) headquarters in New Delhi on Tuesday. (Photo: Reuters)

NEW DELHI - Prime Minister Narendra Modi’s ruling party is poised to lose its majority in India’s parliament, forcing him to rely on political allies to form a government.

The election results deal a stunning blow to a leader who has dominated Indian politics since he first took power a decade ago.

After a six-week, seven-phase marathon of voting, the counting of 642 million votes in the world’s largest election began on Tuesday. Final results are expected early Wednesday.

As of Tuesday evening, Modi’s Bharatiya Janata Party (BJP) was leading in 240 seats, short of the 272 needed to form a government in the 543-seat lower house — and well behind the 303 seats it won in the 2019 election.

The Congress-led opposition bloc, known as the Indian National Developmental Inclusive Alliance (INDIA), was on course to win 229 seats, the results showed. 

Indian stock markets plunged across the board on Tuesday, posting their worst session in more than four years, as voting trends showed the National Democratic Alliance (NDA) headed by Modi’s party would fall well short of a predicted landslide victory.

Modi had set a target of more than 400 seats for the Alliance, but as of Tuesday evening it was leading in only about 290, according to Election Commission data about three-quarters of the way through the count.

The NSE Nifty 50 share index sank 5.9% and the S&P BSE Sensex tumbled 5.7%, posting their steepest decline on an election outcome day since 2004.

The stock market rout came after blue-chip indices surged to record highs on Monday as exit polls had projected a much bigger margin of victory for Modi.

The damage was widespread: 12 of the 13 major indices ended the day lower, while the more domestically focussed small-cap and mid-cap indexes sank 8%.

State-run companies plunged 16.4% and energy stocks sank 12.5% to record their worst day ever. Finance stocks retreated 7.9%, infrastructure sank 10.2% and realty plunged 9%, with the trio recording their worst sessions since March 2020.

While Modi will win a rare third term in office, a smaller-than-expected mandate means he will have to lean more on his allies for support, and that means urgently addressing issues like unemployment, inflation and economic disparities in the world’s most populous nation.

“The BJP’s reliance on allies to form the government is a slap in the face,” said Milan​​​​ Vaishnav at the Carnegie Endowment for International Peace in Washington.

“At this stage, NDA allies will extract their pound of flesh, which will have an impact not just in terms of policymaking but also in terms of the composition of the cabinet. (Earlier) the BJP could dictate terms with very little regard for its coalition partners.” (Story continues below)

Opposition Congress supporters react to initial election results giving their INDIA alliance a surprisingly high number of seats on Tuesday. (Photo: Reuters)

How will the strongman cope?

Modi, a strongman leader by nature, has not had to rely on alliance partners in the past and it was not clear how easily he would cope.

“Modi is not known as a consensual figure,” said New Delhi-based political commentator Arathi Jerath. “So, it will be very interesting to see how he manages the pulls and pressures of a coalition government.”

Populism and welfare policies will “gain currency” as Modi will have to depend on regional leaders like N Chandrababu Naidu in the southern state of Andhra Pradesh and Nitish Kumar in Bihar in the east, who support such policies, said political analyst Rasheed Kidwai.

Modi called the win for his alliance historic and said that “we will continue the good work done in the last decade to keep fulfilling the aspirations of people”.

The BJP, which had campaigned on India’s spectacular economic expansion, its growing international stature and the party’s Hindu-first agenda, has acknowledged unemployment was a factor in the election.

“Employment is a challenge that we also accept and whatever best can be done is being done,” spokesperson Gopal Krishna Agarwal said.

The unemployment rate in India rose to 8.1% in April from 7.4% in March, according to the private think-tank Centre for Monitoring Indian Economy, compared with around 6% before the Covid-19 pandemic.

Modi first came to power in 2014 on the promise of creating 20 million jobs a year, but has fallen far short of that.

Despite India’s impressive economic growth of more than 8%, rural distress has increased as incomes have fallen amid rising food prices.

Such economic growth has meant wealth is concentrated in the richest 1% of India’s population.

Opposition attempts to woo the masses with promises of affirmative action, bigger handouts and more jobs were gaining traction during the campaign, analysts said.

That forced Modi to change tack, they added.

Having earlier focused on economic development, he switched back to accusing the opposition of favouring minority Muslims at the cost of Hindus.

“I believe that the polarising campaign that the prime minister ran this time, the … hyped-up media outreach that he did, I think these were all signs that he was worried,” said political commentator Arati Jerath.

“Modi has seemingly lost his aura of electoral invincibility,” said Michael Kugelman, director of the Washington-based South Asia Institute.

“He remains highly popular, and his party likely would have done even worse if he weren’t leading it.”.

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