India’s Modi emerges weakened

The world’s largest democratic exercise has ended, with a twist. Some 642mn Indians cast their votes in the seven-phase, multi-week poll in the midst of a heatwave. The Bharatiya Janata party leader, Narendra Modi, announced on Tuesday, as expected, that he would come back for a third consecutive term — the first such hat-trick since independence prime minister Jawaharlal Nehru. But he returns humbled.

The BJP is on course to lose its own outright majority, and with its allies it is set to take fewer seats in India’s lower house than in 2019 — well short of the resounding win exit polls had suggested. It leaves Modi weakened, and more beholden to coalition partners and the opposition. Businesses and investors were banking on continuity and a stronger majority. Stocks, bond prices and the rupee tumbled.

The surprise outcome could, however, prove to be supportive to the long-term development of the world’s most populous nation and fastest-growing major economy. Indeed, if it encourages the hubristic, Hindu nationalist BJP to engage in more deliberative policymaking and enlivens Indian democracy, just when many feared it was flickering, it could strengthen the country’s rise.

Winning a historic third term shows Modi remains popular. Many Indians still approve of his decade-long leadership. Since his first term in 2014, road, rail and energy infrastructure has boomed across the country, India has created a digital welfare state and the nation’s confidence on the world stage has grown. But, this vote shows that Indians want more from their government.

Despite impressive reductions in poverty, income and wealth inequality is among the world’s highest. Indians are worried about the lack of jobs and high inflation. The BJP must now address these grassroots issues — alongside its grand vision to turn India into a developed country by 2047 — if it wants to stay in power. Clearly, efforts to amplify Modi’s chaiwala-turned-world-leader image, reinforce Hindu nationalism and heighten polarisation — all evident during the campaign — have produced diminishing returns at the ballot box.

For the BJP, the vote is also a wake-up call that it cannot block dissent and govern effectively. Over the past decade, the party and its supporters have muzzled the free press, intimidated opponents and discriminated against Muslims. Any fears that the BJP might amass a two-thirds majority, which would allow it to reform the constitution too, are now also allayed. The opposition, despite divisions, made gains, underlining the growing discontent.

The election result is likely to slow some of the BJP’s economic reform agenda. But it is also an opportunity to fix underlying strains, which can put India’s rise on firmer foundations. For that, the BJP will need to work with other parties to ensure India’s growth is more inclusive. That means improving education, empowering more women to enter work and undertaking liberalising market reforms — which ought to have support across the political spectrum.

If it wants to be more responsive to all voters’ needs, the BJP must also reverse its democratic backsliding. That means encouraging, not hindering, independent media, stopping discrimination against Muslims and investing in credible national statistics. A more transparent and peaceful India only raises its investment appeal.

A strong and democratic India matters, for its people — and the world. The nation has one of the largest and youngest workforces, its consumers are already a major market, and multinationals consider India central to “China plus one” supply-chain strategies. Voters have also shown that its democracy is resilient. Over the next five years, a weakened Modi can still help turn India’s vast economic potential into reality, but only if he takes the right message from these polls.