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Narendra Modi’s Bharatiya Janata party is set to lose its parliamentary majority in a shock election result that would force the Indian prime minister to rely on smaller allies to secure a historic third term.
Share prices slumped in Mumbai on Tuesday after vote counts showed the BJP and its National Democratic Alliance allies performing much worse than expected.
As of Tuesday evening, the BJP was on course to take about 240 seats out of the 543 in India’s lower house, falling short of the outright majority Modi’s party won on its own at the previous two general elections. Together with its NDA allies, the ruling party was ahead in 292 seats.
The prime minister had set a target of 400 seats for the alliance but brushed aside the setback.
“I am indebted to citizens for their love and blessings,” he said in a victory speech at the BJP’s New Delhi headquarters that was punctuated by chants of “Modi, Modi”.
“The NDA is set to form a government for the third time. Citizens have expressed their absolute faith in the BJP-led NDA,” he said.
The partial counts showed the opposition INDIA alliance, led by the Indian National Congress, performing better than expected, winning 233 seats.
“The people have not given a majority to any single party,” said Congress party president Mallikarjun Kharge. “The mandate is against Modi . . . This is the moral defeat of the person who has been seeking votes in his own name.”
Analysts said the election result was a blow to a forceful leader who had dominated India’s political scene for the past decade. Failure to win a majority would make it more difficult for the BJP to implement economic policy and could make Modi more beholden to his smaller allies.
Pratap Bhanu Mehta, senior fellow at the Centre for Policy Research in New Delhi, said Modi had been punished for “overreaching”.
“I don’t think it’s a total repudiation, but a certain distaste for his hubris seems to have set in,” said Mehta, adding that if the result was confirmed, it would mean a return to the “alliance politics” and negotiated government that characterised India from 1989 to 2014.
Shares plunged in companies owned by the powerful billionaire Gautam Adani, who has tied his infrastructure empire to Modi’s development plans and has a long-standing relationship with the prime minister.
Adani Enterprises and Adani Ports and Special Economic Zone, the conglomerate’s flagship operations, dropped 19 per cent and 21 per cent at the close of trading, making them the biggest losers on the benchmark Nifty 50 index.
The overall index closed 6 per cent down on the day after having surged to a record high on Monday following exit polls that indicated Modi would win the election comfortably.
The early vote count was “absolutely” a shock for markets, according to Amit Khurana, head of equities at Dolat Capital Market in Mumbai. “Assuming the BJP has less than a majority [on its own], then obviously it leads to a lot of speculation over how much leeway [Modi] has to run the government.”
Exit polls released over the weekend had projected the ruling alliance winning between 353 and 401 seats.
Many Indians had expected a clear Modi victory in an election seen as a referendum on his decade in office and following a campaign focused largely on the personality of the 73-year-old prime minister. A victory would make him India’s first PM to serve three consecutive terms since independence leader Jawaharlal Nehru.
Government officials had trumpeted an ambitious economic reform agenda. India has been one of the world’s fastest-growing economies since the end of the Covid-19 pandemic, and the prime minister set a target of India becoming the world’s third-largest economy, from the fifth biggest at present, during his third term in office.
But job creation has failed to keep pace with new entrants to the workforce.
The partial results showed the BJP losing seats in its northern Hindi-speaking political strongholds, including the most populous state of Uttar Pradesh (UP). It suffered a humiliating defeat in the key constituency of Faizabad in Ayodhya, just four months after Modi kicked off his campaign by consecrating a Hindu temple there.
As Modi spoke in Delhi on Tuesday evening, the phrase “Shame on UP” trended in comments below the broadcast on his YouTube channel, which has almost 24mn subscribers.
“In 10 years we have become used to a stable government,” Swapan Dasgupta, a rightwing commentator, told India’s CNN-News18 channel. The expected voting results, he said, augured “instability in the [NDA] dispensation”.
Final results from the staggered six-week election process that began in April were expected by Wednesday morning. The Election Commission of India said 642mn of almost 1bn registered voters had cast their ballots.
The result will boost the Congress party, which had been widely seen as a waning political force after losing seats in India’s previous two general elections.
Opposition politicians had accused the Modi government of a pre-election crackdown after some Congress bank accounts were frozen and two opposition figures jailed in corruption probes.
However, some commentators said Tuesday’s result showed Indian voters were still free to exercise their will.
“Indian democracy is not in peril, and I don’t think the institutions were captured like the opposition was making it out to be,” said Sugata Srinivasaraju, an author and journalist.
Additional reporting by William Sandlund in Hong Kong
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