(Bloomberg) — Indian Prime Minister Narendra Modi is preparing for coalition talks after his party lost its majority in parliament, forcing him to rely on allies to form a government for the first time since taking power , a decade ago.
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Modi’s Bharatiya Janata Party needs to secure the support of two regional, albeit notoriously unreliable, allies to remain in office for a third term. The BJP-led National Democratic Alliance is expected to hold a meeting in New Delhi on Wednesday afternoon.
Official results on Tuesday showed the BJP-led coalition secured enough seats to form a government if it remains united, although the party remained short of a 272-seat majority on its own.
Modi claimed victory for his coalition, telling supporters at his party headquarters that the “NDA has won a mandate to form the government” for a third consecutive term. “We are very, very grateful to the people who have reposed full faith in the BJP and the NDA,” he said.
“The coalition partners are going to extract a pound of flesh that will have political implications,” said Irfan Nooruddin, professor of Indian politics at Georgetown University. “I think for the BJP itself there will be a very serious reckoning.”
The opposition alliance led by the Indian National Congress will also meet on Wednesday night to bolster support from its partners and potentially find a path to forming its own government.
Indian stocks had their worst day in more than four years on Tuesday as it became clear that the election result would be much closer than expected. Markets hit a record high on Monday after exit polls released over the weekend showed Modi would cruise to an easy victory in the marathon six-week election. Before voting began on April 19, the prime minister boldly predicted that his alliance would win an impressive 400 seats.
Modi now needs to secure the support of two key members of the NDA coalition who control around 30 seats – enough to change the balance of power in parliament. The leaders of these two parties have a history of switching sides and only joined Modi a few months ago, leaving it unclear whether they will remain with him or support the opposition bloc. A spokesman for allies the Telugu Desam Party in the southern state of Andhra Pradesh said support for Modi’s coalition.
The opposition bloc, led by the Congress Party’s Rahul Gandhi, increased its support by tapping into voters’ concerns about India’s growing inequality, widespread unemployment and the rising cost of living.
The result is a stunning disappointment for the 73-year-old leader, who has been the main face of the BJP’s election campaign and built the party largely around himself. In addition to raising questions about Modi’s future as prime minister, a weak coalition government will likely make it difficult for him to carry out tough economic reforms or promote his Hindu nationalist agenda if he returns to power.
The lackluster performance marks the first major setback in national polls for Modi. He appeared unbeatable before the elections, backed by one of the world’s fastest-growing economies and the fulfillment of key promises that appealed to India’s Hindu majority, including building a temple on the site where a 500-year-old mosque was built. demolished.
Signs of trouble for Modi emerged after the first of seven rounds of voting. A drop in turnout triggered a broad vote-getting effort that saw Modi adopt a more strident tone, inciting his Hindu nationalist base with divisive anti-Muslim rhetoric and attacks on the opposition’s social welfare policies.
Many of the BJP’s alliance partners do not share the Hindu nationalist views that are central to the BJP’s agenda. This means the BJP may be forced to tone down some of its divisive rhetoric and set aside ambitions to more aggressively reshape India into an openly Hindu nation. A weakened coalition could also force the BJP to offer cabinet posts and other concessions to alliance partners, while it may struggle to implement ambitious economic reforms needed to boost growth.
Even with a shortened mandate or a change of government, India’s growth trajectory is expected to remain largely positive. Business leaders from Elon Musk to Jamie Dimon have hailed India’s potential as an alternative to China, with some economists projecting that the country’s $3.5 trillion economy could become the biggest contributor to global growth. over the next five years.
Modi’s weakened mandate “will make it more difficult to pass controversial economic reforms,” said Shilan Shah, an economist at Capital Economics. The new government “can still do enough to keep potential growth between 6% and 7%,” he said. That would leave the economy “on track to more than double in size over the next decade,” he predicted.
–With assistance from Dan Strumpf.
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