Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) has lost its outright parliamentary majority for the first time in a decade, compelling the party to seek support from smaller allies within the National Democratic Alliance (NDA) to form a government.
The BJP secured 240 seats in the 543-member Lok Sabha, while the NDA coalition reached a total of 293 seats, surpassing the 272 required for a majority.
Despite this, the election results represent a significant political setback for Modi, who has led India since 2014. The opposition INDIA bloc, led by the Indian National Congress, performed better than anticipated, winning 234 seats.
The stock markets reacted sharply to the election outcome. On Tuesday, the NSE Nifty 50 and BSE Sensex indexes plummeted by 5.93% and 5.74%, respectively, marking the steepest single-day decline in four years. Both indexes experienced further losses on Wednesday morning but rebounded in the afternoon, each gaining over 3%.
Shares of companies linked to Modi-allied tycoon Gautam Adani also saw a recovery after significant losses. Adani Enterprises rose by 6.02%, and Adani Ports and Special Economic Zone increased by 8.59%.
In response to the election results, leaders of the NDA unanimously elected Modi as their leader. He met President Droupadi Murmu to tender his resignation ahead of forming a new government, which is expected to be sworn in on Saturday.
Modi has pledged to focus on eradicating corruption and poverty. Analysts believe that the reduced majority could make it challenging to enact bold reforms in labor and land use, essential for transforming India into a manufacturing hub and attracting investment from China. However, it may also prompt the BJP to shift focus towards economic reforms and job creation, moving away from its nationalistic agenda.
Indian media reflected on the electoral outcome with headlines such as “India gives NDA third term, Modi a message” from The Indian Express, and “India Cuts Modi Down” from The Telegraph in Kolkata. Important regional allies reaffirmed their support for the NDA, ensuring a stable coalition government.
The election, the world’s largest, spanned seven phases over six weeks, with nearly a billion registered voters participating. As Modi prepares for his third consecutive term, the new political dynamics introduce significant uncertainty, affecting investor confidence and shaping India’s economic future.
