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State polling losses cast shadow over Modi's re-election bid

Indian prime minister's biggest defeat comes months ahead of national voting

"We accept the people's mandate with humility," Indian Prime Minister Narendra Modi tweeted after his Bharatiya Janata Party suffered significant losses in state elections.   © Reuters

JAIPUR, India -- Prime Minister Narendra Modi has suffered his biggest electoral loss since coming to power in 2014, a blow to a re-election bid that will play out in the next several months.

The losses that Modi's ruling Bharatiya Janata Party suffered came at the state level as voters in five states put either the main opposition party or regional parties into power -- a result that is expected to unite and strengthen opposition forces.

Voting took place in five of India's 29 states over the past month. Three of the states are key -- Rajasthan, Chhattisgarh and Madhya Pradesh -- as they are the largest in India's heartland. The main opposition Indian National Congress now holds political sway in each.

"We accept the people's mandate with humility," Modi said in a series of tweets. "Victory and defeat are an integral part of life. [These] results will further our resolve to serve people and work even harder for the development of India."

After Modi assumed power in May 2014, the BJP went on to win elections in state after state, promising a "Congress free" India. Before the votes for the five state elections were counted on Tuesday, the INC held power only in two big states -- northern Punjab and southern Karnataka.

The BJP chief ministers of Rajasthan and Chhattisgarh have conceded and resigned. In Madhya Pradesh, senior INC leader Kamal Nath said his party has secured a clear majority to form a government despite the INC falling short by two seats, which it is confident of filling with support from other non-BJP winners. Regional parties, meanwhile, won majorities in the smaller states of Telangana and Mizoram.

Voting in the five states had been touted as the semifinals to the general elections due by May.

"There was a double anti-incumbency, both against state governments and the central government, which resulted in the kind of [verdict] that we have seen in the three [BJP-ruled] states," said Sanjay Kumar, director of the New Delhi-based Centre for the Study of Developing Societies.

In Chhattisgarh, some exit polls had predicted a BJP victory. "One big factor that swung the election in the favor of Congress [there] was that they promised in their manifesto that if they come to power they will increase the minimum support prices of food grains in 10 days," Kumar said. "So this was the last-minute surge in favor of Congress."

Supporters of India's main opposition Congress party celebrate after initial poll results at the party headquarters in New Delhi on Dec. 11.    © Reuters

In other BJP-ruled states, voters were moved by their dismay with an expanding debt crisis among farmers who had marched to the capital four times within a year to demand loan waivers and higher prices for their crops. India's economic growth softened to 7.1% for the three months ended in September, down from 8.2% for the previous quarter.

"The three key states have largely agrarian populations," Japanese brokerage Nomura said in a note, "and the drubbing suggests that farm distress remains a key electoral worry for the BJP in the upcoming national elections."

The INC's stellar performance, Nomura added, "marks a reversal of fortunes for its chief, Rahul Gandhi, who had earlier suffered a string of losses to the BJP in states."

In Rajasthan, farmers, the Muslim minority community and Dalits, considered a lower caste in India, were "unhappy" with the BJP government, according to political analyst Narayan Bareth. He added that youth are divided, with some drawing inspiration from Modi while others criticize him for not creating employment.

"The BJP fielded only one Muslim candidate in the recent polls despite [Muslims] making up 10% of Rajasthan's population of over 70 million," Bareth said, pointing out that there have been several incidents of attacks against Muslims as well as Dalits in the state in the recent past.

Though state elections are fought on local issues, the BJP losses in the party's strongholds of Rajasthan, Madhya Pradesh and Chhattisgarh indicate Modi's appeal is waning. The three states account for 65 of the 543 elected members in the lower house of Parliament. Most of these seats were won by Modi's party in the 2014 general elections.

Two pratfalls have cost Modi dearly. In 2016, he suddenly demonetized high-value bank notes. A year later, a goods and services tax was implemented. Chaos ensued. Small and midsize businesses were impacted. The country's farm sector fell into distress. And the economy failed to create jobs. All of this cost Modi and his party in the state polls, Bareth said.

Indian Prime Minister Narendra Modi remains popular even though his party is being punished in some states.    © Reuters

The dramatic developments show Modi and the BJP face many obstacles ahead of the 2019 general elections. "Before the results came out, everybody believed the 2019 final would be between two teams which do not match in capacities," Kumar of CSDS said. "[The] BJP was seen as very strong, and it was felt that Congress and other regional parties, even together, would not be able to put up a strong fight.

"These results now indicate that the 2019 contest is going to be interesting because the team which is going to oppose the BJP [will be] much stronger," with the INC in a position to lead an anti-BJP opposition alliance.

However, Kumar added that being "much stronger" is likely not enough to allow the opposition to topple the BJP national government next year. "But definitely we can expect a serious contest coming forward in 2019," Kumar said, adding it will "not be a cakewalk for the BJP."

The state elections as well as the sudden resignation of Reserve Bank of India Gov. Urjit Patel this week have added to the anxiety of investors. As a result, turmoil is likely to rein in Indian financial markets in the run-up to the general election.

In a note issued on Tuesday regarding the BJP's state-level losses, the Eurasia Group, a political risk consultancy, said it continues to believe that Modi, who is by far India's "most popular" politician, "is most likely to win re-election, but at the helm of a coalition rather than with an outright majority of BJP parliamentarians."

"However, the results today increase our certainty that that coalition will be large and unwieldy, substantially slowing movement on difficult economic reforms and creating greater scope for independent power centers to emerge in the cabinet as coalition allies demand control over key economic ministries."

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