South Asia

Modi secures key ally support after election setback

A crucial ally of Indian Prime Minister Narendra Modi pledged support on Wednesday, enhancing his prospects of forming a coalition government after a surprising election result left his party without an outright majority. Modi’s Bharatiya Janata Party (BJP) will rely on partners within the National Democratic Alliance (NDA) to secure a third term in office.

The Telugu Desam Party (TDP), a significant regional player in Andhra Pradesh, confirmed its allegiance to Modi and the NDA. “We are with the NDA, I will be attending the meeting in Delhi today,” TDP leader Chandrababu Naidu announced.

The NDA secured 293 seats in the 543-member Lok Sabha, surpassing the 272 needed to form a government. However, the BJP itself won only 240 seats, causing concern among investors and casting doubt on the government’s reform agenda. The TDP contributed 16 seats, with other allies making up the rest of the NDA total.

A weakened majority could challenge the government’s more ambitious reforms, according to Fitch Ratings. Nevertheless, Fitch anticipates policy continuity, highlighting ongoing efforts in capital expenditure, ease of doing business, and fiscal consolidation.

“Despite the slimmer majority, we do expect broad policy continuity to persist, with the government retaining its focus on its capex push, ease of doing business measures, and gradual fiscal consolidation,” the agency stated.

Media reactions reflected a shift in public sentiment. The Indian Express headlined, “India gives NDA a third term, Modi a message,” suggesting a tempered endorsement of Modi’s leadership. Modi’s victory in Varanasi, a key constituency, saw his margin decrease significantly from nearly 500,000 votes in 2019 to just over 150,000.

Arvind Panagariya, chairman of a government finance panel, argued in the Economic Times that necessary reforms remain achievable despite the reduced majority. “Delivering sustained growth at an accelerated pace can only strengthen the government’s hand in the coming years,” he wrote.

The opposition alliance, INDIA, led by Rahul Gandhi’s Congress party, exceeded expectations by winning 230 seats. Congress alone secured 99 seats, nearly doubling its 2019 tally, which is likely to bolster Gandhi’s leadership. The INDIA alliance was also set to meet on Wednesday in New Delhi to discuss its future strategy.