Modi-BJP-led alliance poised for narrower victory than expected

The BJP alliance won 353 seats in 2019. If the numbers hold, the BJP would lose around 60 seats from its tally of 303 in the 2019 general elections. The lower house of the Indian Parliament has 543 seats, and the party or the coalition that wins at least 272 forms the government.

“People in India are so eager to see Minister Modi take over the reins. And I think the pressure is on him more than ever,” said Samir Kapadia, CEO of India Index and managing director of the Vogel Group. “He will continue to build India in a way that Indians want to see.”

Modi reportedly said in March that he was confident the NDA would get more than 400 seats.

“Even though Prime Minister Modi remains a popular figure, his luster has faded as the daily realities of unemployment, inflation and governance dominate the minds of voters,” said Yamini Aiyar, former president from the Center for Policy Research based in New Delhi. told CNBC’s “Street Signs Asia.”

According to a survey conducted in April by the Center for the Study of Developing Societies, unemployment was the main concern of 27% of the 10,000 respondents. More than half (62%) of respondents said it had become more difficult to find a job in the last five years of Modi’s second term.

The unemployment rate in the world’s most populous country rose to 8.1% in April from 7.4% in March, according to the Center for Indian Economic Monitoring.

“It remains to be seen whether Modi can attract the kind of labor-intensive jobs that India needs,” said Atman Trivedi, partner and head of the South Asia practice at Albright Stonebridge Group.

India’s benchmark Nifty 50 and BSE Sensex plunged 8% on Tuesday, with trends showing the BJP may not achieve a clear majority on its own.

Market heavyweights Adani Ports and Adani Enterprises both plunged more than 20%, while State Bank of India and ICICI Bank fell 17% and almost 9%, respectively.

On Monday, the Nifty and Sensex both hit record highs and posted their best intraday gains since February 1, 2021, gaining 3.25% and 3.39%, respectively, after exit polls over the weekend- end predicted an overwhelming majority for Modi’s BJP.

The Indian rupee weakened by 0.31% on Tuesday after strengthening by 0.41% on Monday.

Under Modi, India, with a population of 1.4 billion, has seen robust economic growth. The world’s fastest growing economy saw its GDP increase by 8.2% in the 2024 financial year.

The International Monetary Fund projects that India’s economy will grow 6.8% in 2024 and 6.5% in 2025, compared to China’s growth outlook of 4.6% in 2024 and 4.1%. % in 2025.

“Prime Minister Modi will have to flex his muscles against adversaries like China. This will include showing support for domestic defense manufacturing capabilities,” Kapadia stressed.

In the BJP’s manifesto for the next term, Modi said the government would make India one of the world’s top three economies, actively fight poverty, open new avenues for growth and fight corruption.

“We have gone from a country that was part of the Fragile Five to a country that is part of the top five economies in the world,” he said in the manifesto.

While India has seen robust economic growth under Modi, observers and critics have warned of the country’s “democratic decline.”

“The ruling Bharatiya Janata Party (BJP), the Hindu nationalist and anti-pluralist party led by Prime Minister Modi, has, for example, used sedition, defamation and anti-terrorism laws to silence critical,” said the Sweden-based V-Dem Institute. in a 2024 report.

Others, however, pointed to the giant electoral exercise held in the country as a testimony to the strength of its democratic fundamentals.

“The election also shines a spotlight on India as a rising star built on democracy, and I am happy that it is drawing a lot of attention to all the dynamic growth we are currently seeing in the country,” said Malcolm. Dorson, senior portfolio manager and head of emerging markets strategy at Global X ETFs.

— CNBC’s Sumathi Bala contributed to this story.