Emerging Markets

Indian elections: the people’s definitive message

India’s electorate decisively voted to keep in power the BJP party and Prime Minister Narendra Modi, the man characterised by many Western media outlets as ‘the most divisive leader’ in Asia
June 2019

Risk Disclaimer

Views and opinions expressed by individual authors do not necessarily represent those of BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

Indian elections: the people’s definitive message

India’s electorate decisively voted to keep in power the BJP party and Prime Minister Narendra Modi, the man characterised by many Western media outlets as ‘the most divisive leader’ in Asia, often calling him contentious, right-wing and a hard-line religious nationalist.

In what was the largest demonstration of democracy globally, with around 600 million citizens expressing their view on the political landscape, the incumbent Prime Minister, Narendra Modi, achieved the remarkable feat of returning to power with a higher vote share (6% higher compared to 2014’s general election) with an absolute majority, an occurrence last seen about five decades ago.

Risk Disclaimer

Views and opinions expressed by individual authors do not necessarily represent those of BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

BJP gained 21 new seats in 2019 election victory

2019 general election result

BJP

Other NDA

Congress

Other UPA

Others

2014 general election result

BJP

Other NDA

Congress

Other UPA

Others

Source: BBC, Election Commission of India, 24 May 2019

Ever since the victory, it has been suggested that the result can simply be attributed to Modi’s strong response and retaliation against Pakistan after the killing of 44 Indian soldiers by alleged Pakistani terrorist groups, perhaps reflecting that Modi displays his Indian nationalism proudly along with his religious beliefs. However, this is hugely disparaging to the largest democracy in the world, which has now voted in two consecutive general elections in resounding support of Modi. While the 2014 victory could be described as an uprising of the electorate against the corruption-ridden tenure of previous Prime Minister Dr Manmohan Singh, the 2019 election was a vote for the continued leadership of Modi. What has baffled the many (mainly foreign) critics and ‘political analysts’, is how Modi managed such a commanding victory when the economy is supposedly stalling, life has been arduous in rural areas, as well as the challenge of rolling out two of the most significant reforms in years (demonetisation and the implementation of a nationwide goods and services tax). Surely the only explanation can be the war mongering and nationalism…!

Polls and commentary was well wide of the mark…

In recent years, it has been increasingly common for political commentators and official survey polls to incorrectly call major elections – think Australia in mid-May, Malaysia in 2018, lest we forget the UK’s EU referendum and the US elections. This could perhaps be an occupational hazard of “desktop research”…

What led the BJP to improve its vote share?

While increased nationalism fuelled by the military air strikes was opportune from a timing perspective, we certainly do not believe it was a major factor in the election result.  It is also somewhat insulting to the intellect of the electorate by assuming that hundreds of millions of people would be swayed by one event.

In our view, the elite did not see what the common person saw. While the upper classes were busy attempting to besmirch Modi’s image, claiming he increased religious violence, unemployment and a dangerous centralisation of power in the Prime Minster; the common person was witnessing a meaningful uplift in quality of life. Numerous examples illustrate this: the number of toilets built, bank accounts opened, cooking gas connections made, crop insurance schemes rolled out, medical coverage, rural electrification, brick houses built, female empowerment, access to cheap reliable mobile phone data, uninterrupted power supply, and yes, a pride in the growing global stature of their PM – the hardworking common man who rose from amongst them; Modi – the tea-vendor, whom the political establishment mocked.

The ability to successfully engage the masses

Another important ability of Modi is to connect directly to the masses. He does this through maximum use of technology and social media where he has his own app as well as a monthly podcast.

Finally, a key to any successful election is voter engagement, particularly with those who have participated less in the past. Here, again, Modi and the BJP had resounding success with the female electorate. It was the women in India who came out and voted for BJP in force and, for the first time in history, the female vote turnout matched that of their male counterparts.

 

Not much of an opposition

Of course, an election is a competition between different groups and we shouldn’t forget that Modi has had it relatively easy in terms of political opposition, where there is a leadership vacuum. We know this is not good for democracy in general but this is an issue for the opposition to address. Having said this, there is no current opposition candidate that has the unifying personality of Modi. It will be interesting to see if someone will emerge with the capacity to organise and unite the opposition in the coming electoral cycle. We hope they do, as it only further strengthens the democratic process. 

What lies ahead?

The potential of India is clear, though the past few years have been less than exciting. Some major reforms (which did have issues in terms of rollout) certainly contributed to this. Now we have had the implementation of the goods and services tax, the bankruptcy law and real estate law, these big reforms should begin to streamline bureaucracy (“Max governance, Min government”) and judicial efficiencies. Ultimately, without judicial improvement and the clearing of the backlog in the courts, as well as the reliable ability to enforce a contract, India cannot aspire to become a developed economy. The challenges are significant, but we feel India is up to it.

Finally, with this mandate, Modi should be able to unleash a much needed infrastructure build-up to kick-start the economy again and further increase the ease of doing business for the private sector. We sincerely hope that the opportunity and mandate given by the electorate is not frittered away. India has the potential and Modi has the opportunity to take India across the $5 trillion GDP mark over the next five years.

A nation to take note of

India is often unduly overlooked. It is the largest global democracy with a young population. It has an independent judiciary, one of the largest armies, which has never interfered with the democracy, an independent election commission that ensures free and fair elections, freedom of speech and freedom of expression, a strong and long history of capital markets, and an electorate that has demonstrated that it is sure of what it wants and who it wants to be governed by.

Subscribe to our Insights

Related articles

No posts matching your criteria
VIEW MORE