[Salon] The Beginning Of the End for Modi Raj?



Bloomberg, June 4, 2024

The Beginning Of the End for Modi Raj?

Rural Indians have just taught Modi and the stock markets a tough lesson — that millionaires are no measure of a country’s prosperity. 

That’s one key reason for a loss of seats in India’s Hindi heartland, especially Uttar Pradesh, that many thought had been won over permanently by Mandir and Muslim politics.

Modi’s party looks set to win less than 272 seats (the minimum needed to form a government on its own) and much below the 303 it won in 2019. 

To be clear, the Bharatiya Janata Party is still the single largest party by seats but regional allies, namely the Telugu Desam Party in Andhra Pradesh and the Janata Dal (United) in Bihar, will have more leverage in government formation.

The election result, contrary to the Modi-sweep that exit polls forecast over the weekend, set off a landslide in stocks — the benchmark Nifty50 has now lost all the gains it made this year. Bonds and the rupee weakened too.

As I write this, the BJP continues to trail in Faizabad, the constituency home to Ayodhya’s Ram temple — inaugurated by Modi with great pomp earlier this year. Voters have told Modi, keep your Hindu-Muslim nonsense and give us jobs, Praveen Chakravarty, chairman of the Congress Party’s analytics cell said to me. 

Source: Election Commission website late evening

Modi, 73, wanted a place in history, but at this point his future and that of the BJP’s hang in the balance. 

He is no Vajpayee, the BJP prime minister who had the political savvy and accommodation to lead an alliance government for five years until rising economic inequality ousted it in 2004. Modi prefers hoarding power, often leaving even cabinet colleagues shorn of any real decision making ability. Carrying allies along may require a significant change in his style of governance especially. The JD (U) switched from the opposition alliance to BJP just weeks before the election.

Modi may do it, he is a survivor. Besides, this low seat strength may just serve as an opening balance for the next five years. After all, his team has a history of splitting political parties and acquiring rival legislators,  equipped with funds many times higher than what other parties have accrued through political donations.

Add to this mix of ifs and buts the widening gap between Modi’s BJP and its parent, the RSS — whose cadre has played a critical role in the leader’s ascent. How the Hindu nationalist social organization perceives this near miss may impact leadership at its political arm.  

Some of Modi’s fanciful ideas like one nation, one election will have to be put on the backburner now as he focuses on the nitty gritty of governance, Rajdeep Sardesai, television news anchor and author of two books on the 2014 and 2019 elections, said to me.

 Narendra Modi, when he was chief minister of Gujarat, with Adani Group Chairman Gautam Adani. Photographer: Mint/Hindustan Times

The verdict is a reminder that although India is home to two of Asia’s top billionaires, it also has 800 million Indians who rely on free grain.

If Modi’s $142 billion food drive wasn’t enough to secure a thumping win, then his economic policies may need course correction.

While the government’s fiscal discipline and infrastructure investment-led approach has been appreciated by investors and ratings agencies, with private investment yet to pick up significantly, jobs and consumption remain weak. 

This newsletter had in March pointed out that while billionaires such as Ambani were shining, things were looking gloomier for the average Indian.  

Sajjid Chinoy, chief India economist at JPMorgan, wrote in an op-ed earlier this week that focus must turn to structurally boosting demand through employment, consumption and exports. Indeed, consumption stocks were among the few gainers today in anticipation of that.

Congress party’s Rahul Gandhi with his mother, Sonia Gandhi at a polling station. Photographer: Prakash Singh/Bloomberg

India’s opposition parties — from the Congress to Trinamool Congress — have won a new lease on life. 

The Congress is set to double its tally to about 100 seats and will occupy the leader of the opposition seat in the Lok Sabha — it has remained vacant for a decade.

Having tasted blood this time, every state election from here on (think Maharashtra, West Bengal) will be fought harder by opposition parties. 

And though the BJP looks set to win Odisha and its ally has trumped in Andhra Pradesh, saffron (the color of the BJP’s flag) territories on India’s map may be in decline.

This serves as good news for democracy, even if many believe it could slow India’s economic growth and pace of reform.

Earlier this week, in an op-ed, Modi called on Indians to “dream new dreams”. He may need a new vision of his own.  



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