Modi’s party loses outright majority

India’s Prime Minister Narendra Modi looked set to retain power at the head of a ruling coalition, but his Hindu nationalist party lost its outright majority for the first time in a decade as voters defied predictions of another landslide.

The outcome spooked investors, with stocks falling steeply as emerging results showed that Modi would, for the first time since sweeping to power in 2014, depend on at least three disparate regional parties whose political loyalties have wavered over the years.

This, analysts say, could introduce some uncertainty into policymaking after a decade in which Modi has ruled with an authoritative hold.

Modi’s Bharatiya Janata Party (BJP) won a majority on its own in 2014, ending India’s era of unstable coalition governments, and repeated the feat in 2019.

Modi said people had placed their faith in the BJP-led coalition for a third time and it was historic, in his first comments since counting of votes began.

Markets had soared on Monday after exit polls on June 1 projected Modi and BJP would register a big victory, and the ruling National Democratic Alliance (NDA) was seen getting a two-thirds majority and more.

TV channels showed the NDA was ahead in about 290 of the 543 elective seats in the lower house of parliament, where 272 is an overall majority, with counting nearing its end.

Results showed BJP accounted for around 240 of the seats in which the NDA was leading, compared with the 303 it won in 2019.

“The NDA will form the government for the third time. PM Modi will be sworn-in for the third time.

Congress will sit in opposition for the third time,” BJP spokesperson Jaiveer Shergill said, referring to the main opposition Congress party.

Two key regional allies in the NDA endorsed Modi as the next prime minister, rejecting speculation that they could be wavering in their support or possibly switch sides. The Telugu Desam Party (TDP) and Janata Dal (United) said their pre-poll alliance with BJP was intact and they would form the next government.

The BJP’s numbers were likely pulled down by the party’s poor showing in the country’s most populous state, Uttar Pradesh, which also sends 80 MPs to parliament.

The party was leading in 33 seats in the state, down from the 62 it won there in 2019, with analysts saying bread-and-butter issues had overshadowed the BJP’s appeal to the Hindu majority.

A grand temple to Hindu god-king Lord Ram that Modi inaugurated in January had not boosted the BJP’s fortunes as it was expected to, they said.

The opposition INDIA alliance led by Rahul Gandhi’s centrist Congress party, was leading in over 230 seats, higher than expected. Congress alone was leading in nearly 100 seats, almost double the 52 it won in 2019 – a surprise jump that is expected to boost Gandhi’s standing.

Gandhi said Congress would hold talks with its allies on Wednesday and decide on the future course of action, when asked if the opposition would try to form a government.

Investors had cheered the prospects of another Modi term, expecting it to deliver further years of strong economic growth and pro-business reforms, but the margin of victory emerged as a worry.

“The key question is whether BJP can retain a single party majority. If not, then would its coalition be able to deliver economic development, particularly infrastructure?” said Ken Peng, head of investment strategy, Asia, at Citi Global Wealth in Singapore.

Cape Times