INDIA AFTER
THE ELECTIONS
JULY, 2024
Introduction
The results of India’s latest general election, which concluded at the start of June, proved to be closer
than most observers anticipated before voting began. It was an underwhelming victory for the National
Democratic Alliance (NDA), led by Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP),
while the opposition INDIA (Indian National Developmental Inclusive Alliance) performed more
strongly than expected. This will impact the priorities and compromises Modi needs to make as he
moves forward with his new administration.
This paper provides key takeaways from our recent webinar on India after the elections, looking at the
issues facing the government as it seeks to steer India through the next five years.
Election outcome
In summary, the results were as follows:
● The NDA won 293 seats in the 543-member lower house, down from 353 in the 2019 polls.
● The BJP won 240 seats, compared with 303 in 2019.
● The next-best performers in the alliance were N Chandrababu Naidu's Telugu Desam Party
(TDP), with 16 seats, and Nitish Kumar's Janata Dal (United) or JD(U) party, with 12 seats.
● The INDIA bloc won 234 seats, with the main opposition Congress party securing 99 of these,
a marked improvement on the party's tally of 52 in 2019.
Modi has been sworn in for his third successive term, together with 30 cabinet ministers and 41 junior
ministers. For the first time since independence, there is no Muslim in the cabinet. The NDA faces a
much-diminished majority in parliament’s lower house and the BJP has lost its single-party majority.
Political landscape
High inflation, falling incomes and lack of jobs were key issues for the electorate. These cost Modi
votes even if he personally commanded support. The result – including the defeat of the BJP in
Ayodhya, where in January it had inaugurated a grand new temple to the deity Rama – signals that
communal politics has lost appeal and that polarization is growing as economic development slows.
Whether the BJP has received this message or not remains to be seen.
While the Congress party performed more strongly in head-to-head battles with the BJP than in the
2019 elections, the BJP made inroads in southern and eastern India, enhancing its position as a truly
national party. Interpreting the election results therefore requires a more nuanced approach given the
BJP’s sizeable vote share in the south.
It is unclear whether the INDIA front will remain united. The Congress party, a major component of the
bloc, focused considerably on inequality, highlighting the concentration of wealth at the very top of
society and Modi’s vocal support of billionaires. Key Congress figure Rahul Gandhi was able to deliver
a message on inequality – especially caste inequality – that hit the spot with voters who want a
government that focuses on their needs and economic development. But Congress will need to avoid
being overbearing towards its partners if the INDIA front is to maintain unity.
Looking ahead, there are five state elections worth watching: Maharashtra, Haryana and Jharkhand
this year, and Delhi and Bihar next year. BJP wins could be used to strengthen its current position; or
the opposition could capitalize on its success to show that India is not a single-party state.
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The BJP’s two most significant partners, the TDP and the JD(U), have not been reliable allies in the
past. If the BJP loses its key partners, it may look for a candidate from within to replace Modi as prime
minister – someone with diplomatic skills, who is adept at peer-to-peer politics. Nitin Gadkari, currently
minister of road transport and highways, has been touted as a possibility.
There is some speculation that if Modi does not remain prime minister, he may attempt to become the
president, India’s head of state. Incumbent President Droupadi Murmu’s term ends in around three
years’ time.
Economic landscape
The BJP has been focused less on economic policy than on consolidating a majoritarian vote.
Consequently, NDA economic policy under Modi has so far been an eclectic mix, including:
1. Capital expenditure to build infrastructure, although several accidents on upgraded railway
infrastructure suggest investment has so far fallen short.
2. A set of welfare programmes, including providing free cooking gas and food to a large section
of the population under the National Food Security Act. Such allocations, however, are as yet
not meeting real levels of need.
3. Trying to enable India to achieve a genuine manufacturing transition. But by favoring a few
corporate and business groups, the government has failed to develop essential home-grown
technological and production capabilities that would make such a transition possible.
Under the Modi government, finances have been centralized by removing surcharges and cesses
from the pool of taxes divisible between the center and the states. The promised benefits of the
Goods and Services Tax (GST) regime have not manifested; the center clearly does better than the
states, most of which are losing out considerably.
The center has also come down heavily on the ability of the states to borrow, including from
corporations. This squeezing means the states are not able to undertake as much infrastructure
spending as they would like.
The TDP and JD(U) may demand ‘special status’ for their states – and Modi could channel funds to
these states. Bihar is India’s poorest state, and Kumar, along with Naidu, wants more loans as well as
assistance in education and job creation. Power is a major issue; Naidu faced protests because of
high electricity tariffs in his state.
Capital and social expenditure will both be prominent in the budget next month. Apart from
centralizing revenues, the Modi government has mobilized resources in other ways, for example
getting the Reserve Bank of India (RBI) to provide the center with its dividends. However, the RBI is
close to the limits of what it can provide.
Foreign policy
India’s relationship with the United States has grown closer in recent years. It has been fairly lucrative
in terms of business and transfer of technology, especially in the aerospace sector and clean energy
technology development, which has ramped up due to interest on both sides in solar and wind energy.
Washington sees Beijing as its foremost strategic competitor, and this makes India an important
partner in the Indo-Pacific region. The outcome of the US elections will impact the relationship. If
Donald Trump becomes president again, Delhi will have to brace itself on two issues: trade and
immigration.
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India has a huge trade deficit with China. Crucial industries such as pharmaceuticals depend on the
supply of cheap Chinese ingredients. There are repeated tensions at the border. When India feels
geopolitically threatened by China, it strengthens its ties with both Russia and the United States.
In both Delhi and Brussels, there is a sense that India-EU relations are struggling to reach their
potential. There are technical barriers to a bilateral free trade agreement. Among European countries,
France has a notably strong relationship with India on matters such as defense technology transfer.
India is keen to strike trade deals like those it has agreed with Australia and the United Arab Emirates.
In terms of India-Pakistan relations, both governments are likely to be more inward-looking than
interested in engaging with each other. If the BJP finds itself in a relatively weak position, it may ramp
up anti-Pakistan rhetoric as a distraction.
India and the climate agenda
India has made several promises about net-zero and expanding renewables. However, it is very
dependent on coal for cheap power, which is essential for any manufacturing transition. Corporate
players close to the government have invested considerably in coal, including in Australia, and they
regularly import coal, even as they announce ambitions for green energy. Coal is very much part of
Modi’s capital accumulation strategy.
In international negotiations, India has focused on climate finance issues. It is unlikely to go down the
route of a Just Energy Transition Partnership (JETP), but it may try to procure climate finance
transfers for favored corporations.
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