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India’s Narendra Modi Poised to Lose His Parliamentary Majority

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India's Narendra Modi
India's Narendra Modi: Reuters Image

India’s Narendra Modi and his ruling Bharatiya Janata Party (BJP) are poised to lose their parliamentary majority, forcing him to rely on political partners to establish a new administration. A shock setback to Narendra Modi, who has dominated Indian politics.

Following a six-week, seven-phase marathon election, the world’s largest election began on Tuesday with the counting of 642 million votes. The final findings should be available early today.

As of Tuesday evening, Modi’s Bharatiya Janata Party (BJP) led in 240 seats, falling short of the 272 required to form a government in the 543-seat lower house and far behind the 303 seats it gained in the 2019 election.

The Congress-led opposition alliance, known as the Indian National Developmental Inclusive Alliance (INDIA), was on track to gain 229 seats, according to the findings.

Indian stock markets fell across the board on Tuesday, registering their worst session in more than four years, as vote trends indicated that Modi’s National Democratic Alliance (NDA) would fall far short of a landslide victory.

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

Finance Stocks Fall

The NSE Nifty 50 share index fell 5.9%, while the S&P BSE Sensex fell 5.7%, marking the worst loss on election results day since 2004. The stock market crash happened as blue-chip indices climbed to new highs on Monday, with exit polls predicting a considerably wider margin of victory for Modi.

The damage was widespread: 12 of the 13 major indices closed lower, while the domestically focused small- and mid-cap indexes fell 8%. State-run enterprises fell 16.4%, while energy equities fell 12.5%, marking their worst day ever. Finance stocks fell 7.9%, infrastructure fell 10.2%, and real estate fell 9%, marking the worst day since March 2020.

While Modi will win a rare third term in government, his smaller-than-expected mandate means he will have to rely more on his friends for support, which means addressing concerns such as unemployment, inflation, and economic inequality in the world’s most populous country.

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

“At this point, NDA allies will extract their pound of flesh, influencing not only policy-making but also cabinet makeup. (Previously), the BJP could impose conditions with little consideration for its coalition partners.

India’s High Unemployment

Modi, a strongman leader by temperament, had never had to rely on alliance partners before, and it was unclear how he would handle the situation. “Modi is not known as a consensual figure,” said New Delhi-based political analyst Arathi Jerath. “So, it will be very interesting to see how he manages the pulls and pressures of a coalition government.”

According to political analyst Rasheed Kidwai, populism and welfare measures will “gain currency” as Modi will have to rely on regional politicians who favor such policies, like as N Chandrababu Naidu in Andhra Pradesh and Nitish Kumar in Bihar.

Modi described his alliance’s victory as historic, stating 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 phenomenal economic progress, expanding international reputation, and the party’s Hindu-first policy, has conceded that unemployment had a role in the election.

“Employment is a challenge that we accept, and we are doing our best,” spokesperson Gopal Krishna Agarwal said.

According to the private think tank Centre for Monitoring Indian Economy, India’s jobless rate increased to 8.1% in April from 7.4% in March, up from roughly 6% prior to the Covid-19 outbreak.

Modi came to office in 2014 with the promise of creating 20 million jobs per year, but he has fallen far short of that goal. Despite India’s excellent economic growth of more than 8%, rural misery has intensified as wages decline and food costs rise. Because of this economic boom, the richest 1% of India’s population now controls the majority of the wealth.

Attempts by the opposition to lure the public with promises of affirmative action, larger subsidies, and more jobs gained momentum throughout the campaign, according to analysts. Having previously focused on economic development, he returned to accusing the opposition of favoring minority Muslims at the expense of Hindus.

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