After a fiercely-contested election that spanned over two months, Indian voters have delivered a decisive message: “PM Modi once more.”
At around 7 p.m. local time, the election commission announced that Modi’s party – the Bhartiya Janata Party (BJP) – had won 37 seats and was leading in 266, an unassailable lead over his nearest rival Congress’s 49 (including leads). Voting was held for 542 seats in which about 600 million Indians voted. The simple majority is 272.
In 2014, his party won 282 seats and formed a government with its traditional and new allies that formed the National Democratic Alliance (NDA).
Responding to the overwhelming response by the voters, Modi tweeted on Thursday: “Together we grow. Together we prosper. Together we build a strong and inclusive India. India wins again.”
Modi’s rival Rahul Gandhi, who repeatedly referred to him as a “thief (chor, in Hindi), during campaigning, conceded defeat. “The people have given their decision. In these polls, Narendra Modi and BJP have won. I congratulate them,” Congress president Rahul Gandhi said at a press conference.
World leaders have sent in their congratulatory messages in the form of tweets and phone calls. In two separate conversations, China’s President Xi Jinping and Japan’s Prime Minister Shinzō Abe congratulated Indian PM Narendra Modi on his victory. “On the occasion of the National Democratic Alliance winning the 17th Lok Sabha election of India under your leadership, I would like to extend my heart-felt congratulations,” Jinping was quoted as saying in a letter by Indian news agency PTI.
Israel’s PM Benjamin Netanyahu tweeted his wishes to Narendra Modi. “The election results are a re-approval of your leadership and the way you lead the world’s greatest democracy. Together we will continue to strengthen the great friendship between us and India and Israel and lead it to new heights,” said in a post on Twitter.
Pakistan’s PM Imran Khan also tweeted his wishes and eagerness to work with Modi. “I congratulate Prime Minister on the electoral victory of BJP and allies. Look forward to working with him for peace, progress and prosperity in South Asia,” he posted.
Markets hit record high, retreat later
As news started trickling in of a thumping majority for Modi’s BJP, stock markets gave a thumbs-up, pushing the benchmark index S&P BSE to a record high of 40,000 but lost gains due to profit-booking to close at 38,811.39, a loss of 298 points. The broader index Nifty 50 also closed in the red at 11,657.05, before hitting 12,000, a new high.
Foreign funds have purchased $9.5 billion of Indian shares this year, the most after China, while rupee bonds have seen outflows of $447 million. The MSCI gauge of Indian stocks trades at nearly 18 times its estimated 12-month estimated earnings, 56% higher than a similar index of emerging market rivals, according to data compiled by Bloomberg.
Experts hail verdict, see hope for reforms
The mandate has been hailed as a major relief by India Inc. and analysts. Research analysts Sonal Varma and Aurodeep Nandi of Nomura Securities said the mandate would see a different BJP at the helm. “We believe that, unlike the BJP’s first term, where prudence came at the cost of growth, the policy priority in the second term will be reigniting growth with prudence as a secondary priority,” they said in a note. “The election results is a medium-term positive for INR (Indian rupee), but global factors remain a near-term negative risk,” the analysts added.
Another expert saw the verdict as a “significant” positive to attract investments. “The clear mandate removes a big overhang of uncertainty over the markets. An incumbent with a large majority winning again in a big way is a historic milestone. This is a significant positive for market sentiment and for attracting global investors,” Mihir Vora, Director& Chief Investment Officer, said in a note.
Real estate advisory Colliers International India said investors see as it a “reassuring” mandate. “The NDA government’s return to power with a decisive mandate will reassure global and domestic investors of stability, certainty and continued focus on growth,” Aashish Agarwal, senior director, valuation and advisory, said in a note.
Fastest-growing economy
India’s gross domestic product (GDP) growth rate is poised to grow at a clip that it will keep the country as the world’s fastest-growing economy, notwithstanding global headwinds such as US-China trade tensions and Brexit. “Gross domestic product (GDP) growth in India is projected to strengthen to close to 7.25% in FY19 and close to 7.50% in FY20,” Paris-based think-tank Organization for Economic Cooperation and Development (OECD) said recently.
