India election: economic slowdown looms even as Narendra Modi celebrates resounding victory
- Win marks the first time since 1971 an incumbent leader is re-elected with a majority, domestic issues will keep his second term busy with tough times ahead
- Modi will have to steer the country through an inevitable economic slowdown, address youth employment and deal with national security issues such as terrorism
The BJP, together with its allies, is expected to win more than 330 of 542 lower house seats, inflicting a humiliating loss on the opposition, the Indian National Congress. Rahul Gandhi, Congress’ chief, has conceded defeat in Amethi, which is one of two seats he was contesting and a constituency in Uttar Pradesh that has long been his famous family’s stronghold.
As vote-counting continued into the night, Congress looked to have won just 50 seats. It was decimated in most of India’s electorally significant states such as Uttar Pradesh and Tamil Nadu, putting a question mark over the resistance that Modi’s government will face when it rolls out its policies.
For instance, the Modi government had brought in a controversial law that amended rules around refugees obtaining citizenship. The law proposed to only grant citizenship to non-Muslim refugees, triggering a political storm. While the law was put on hold amid protests, the BJP has promised to bring the law back, if re-elected.
Indeed, since Modi’s performance on the economic front has been questionable, many wonder if his results seem like a validation of the BJP’s politics over the last five years – from routinely engaging in communally polarising rhetoric to often backing those accused of inciting violence against minorities.
The BJP retained its grip on its strongholds and made fresh inroads across the country in areas where the party has had little organisational strength so far, from West Bengal, where it was slated to win up to 18 of the total 42 seats, to Odisha, where it is set to win nine of the 21 seats.
Activists are now wondering how emboldened the Hindu nationalist party will be.
We cannot deny that a critical mass of Indians seem to be backing the hate politics that the BJP has practised
“We are worried that there will be a permanent state of alienation among one community,” says Teesta Setalvad, activist and secretary of the Citizens for Justice and Peace, a non-governmental body which works on issues of communal harmony.
“The BJP’s actions, in giving tickets to candidates accused of hate speeches, is symbolic of their support to such politics.”
Setalvad believes the BJP’s communal polarisation has reaped electoral dividends. “We cannot deny that a critical mass of Indians seem to be backing the hate politics that the BJP has practised.”
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She believes the BJP had intended to send a message with the candidature of Pragya Singh Thakur, accused of involvement in a terror attack targeted at a Muslim locality in a town called Malegaon, killing six. Thakur had controversially called Mahatma Gandhi’s assassin a “patriot”; Modi and his party have defended Thakur’s candidacy.
Hence, many like Setalvad wonder if the BJP would want to abandon this brand of Hindu nationalism and rhetoric.
This brand of politics has also earned Modi critical coverage globally. During the elections, he was featured on the cover of Time magazine, which called him “Divider in Chief”, referring to the divisive rhetoric that he has employed.
On Thursday, when his victory became clear, Modi called for an “inclusive” India.
“Together, we will grow. Together we prosper. Together we will build a strong and inclusive India. India wins yet again!” Modi wrote on Twitter.
“Modi’s image, outside India, has taken a severe beating. From his recent actions, it seems like Modi might not employ divisive tactics any more and, instead, focus on delivering what he had promised,” says Sudha Pai, a retired professor in political science from the Jawaharlal Nehru University in New Delhi.
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According to Pai, Modi has a tough time ahead in dealing with domestic issues. Data shows the economy is in poor shape, with an economic slowdown appearing inevitable. The country is in the throes of a 45-year-high unemployment rate, and its consumer demand is down. In addition, large parts of the country face a severe drought.
“We are hurtling towards an economic disaster and all indications show that it will be a period of low growth,” she said. “Hence, Modi’s immediate priority will be to ensure that jobs are created or else we will see jobless growth.”
For now, though, India’s stock markets seem to be cheering Modi’s re-election, surging by more than 700 points on Thursday.
Globally, financial experts believe that a stronger mandate will mean Modi will implement structural reforms in the Indian economy that could make it more open to global markets.
“The stronger mandate handed to the [BJP] would certainly quicken the pace with which Prime Minister Narendra Modi can implement his structural reforms,” said Leong Lin-Jing, Asian fixed income investment manager at Aberdeen Standard Investments.
“That means we would be assured of a prudent attitude towards social spending, further privatisation of the public sector and continued efforts to simplify and strengthen the Goods and Services Tax (GST).”
Apart from the economy, for Modi the next five years could mean a careful mix of social welfare, hard nationalism and taking a hard line on issues of national security.
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His party’s manifesto, for instance, strives to achieve this balance, promising social welfare schemes such as pensions for marginal farmers, a home for every family by 2022 and a cash transfer plan targeted at poor farmers.
The manifesto has also committed to “firmly continue” its military policies to combat terrorism, including allowing the armed forces the freedom to conduct military operations, pointing to the two cross-border military actions by the Indian forces inside Pakistan.
These come, even though there remains a question mark around his government’s delivery of the promises that the party made in 2014.
Pai said Modi might be more inclined to fulfil his promises this time. “There is a sense that Modi’s second term will be tempered because he has now firmly established himself. Many of his actions were towards winning a second term,” she said.
India’s foreign policy, often invoked by Modi to show India’s strong political standing globally, will also see continuity, according a senior bureaucrat of India’s ministry of external affairs.
“We will surely see great continuity because the government’s foreign policy has been largely successful, be it in isolating Pakistan or navigating troubled waters with the United States under President Donald Trump,” said the bureaucrat, wishing to remain unnamed.
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In fact, India successfully test-fired a supersonic cruise missile on Wednesday amid the tensions with Pakistan. As if in response, Pakistan successfully tested its surface-to-surface ballistic missile capable of carrying a nuclear warhead on Thursday, even as the counting of votes was on in India.
The bureaucrat says that the recent military action against Pakistan by India means that ties are unlikely to normalise any time soon.
“One thing is clear, the Modi government’s military action against Pakistan is a benchmark,” the official said. “So, if there is such a terror attack again, such an option is not off the table any more.”
