India’s national elections, held from April through June, resulted in a coalition government after almost a decade of one-party rule. Prime Minister Narendra Modi will remain in office but will be forced to negotiate with coalition partners for the first time in his career. Although India’s foreign and economic policies remain consistent, we can expect changes on the domestic front as the ruling Bharatiya Janata Party (BJP) and the opposition alliance face off in the approaching state elections.
India views the current global geopolitical landscape as favorable for its domestic, economic and foreign policy goals. The United States-China rivalry, the potential for a multi-polar world order and the rise of the global majority (sometimes referred to as the Global South) all increase India’s international leverage. At a time when popular sovereignty seems to be under fire, India’s elections have reinforced its status as the world’s largest democracy. On the economic front, it remains the fastest growing big economy, in spite of the array of challenges posed by market forces, protectionism and populism.
Modi’s coalition
The election result was a surprise. Instead of a clean sweep, Mr. Modi’s party won only 240 out of 543 seats in the lower house of parliament. Although still the largest party in parliament, the BJP will need the support of the two other big parties in its National Democratic Alliance (NDA) coalition – Janata Dal United or JUD(U), led by Bihar Chief Minister Nitish Kumar, and the Telugu Desam Party (TDP) of Andhra Pradesh Chief Minister Chandrababu Naidu – as well as smaller groups. It will face strong opposition from the Indian National Developmental Inclusive Alliance (INDIA), led by Indian National Congress (INC) leader Rahul Gandhi.
The election results cast a shadow over Mr. Modi’s personal achievement of being elected for a third term – a feat previously managed only by India’s first prime minister, Jawaharlal Nehru. To deliver effective governance, Mr. Modi and his advisors will need to put their commitment to Hindutva ideology on the back burner. This step away from the party’s ideals, combined with the need to manage its coalition partners, will pose a new challenge for the prime minister.
Still, managing demanding coalition partners may prove easier than dealing with a reinvigorated opposition. For the last decade, the BJP’s dominance meant that there was little resistance to the government’s policies in parliament. Now, parliamentary debate will be robust, as was apparent in the monsoon session held in July and August. The recent rollbacks of three contentious pieces of legislation – on the broadcast bill, on the Waqf amendment and on lateral entry all show that the government will find it easier to advance populist welfare policies than to trudge through contentious legislation on social or economic issues.
Control of the upper house of parliament is at stake in the upcoming elections in India’s 28 states and eight union territories. Polls are due before the end of the year in Jammu and Kashmir, Haryana, Maharashtra and Jharkhand, as well as in Delhi and Bihar in 2025. The BJP needs to retain power in Maharashtra and Haryana, and make gains in others, to garner sufficient support in the upper house to prevent the opposition from impeding legislation.
Reforms stymied
Though historically unstable, coalition governments in India have generally been capable of implementing some changes in the economy; the last major reforms, in 1991, were carried out by a coalition government. But the demands of electoral politics may prevent large-scale change in the coming months. The election result suggests that much-needed reform of the markets for land, labor and capital will be difficult to implement. Although India seeks to become more integrated into global supply chains, a strong protectionist tradition makes it skeptical of foreign trade.
The swing to the opposition revealed widespread economic distress despite India’s status as the world’s fastest growing emerging economy. Unemployment stands at 6.1 percent and youth unemployment is at 45.4 percent. In large parts of the country, first- or second-time young voters indicated that they were not impressed by the prospect of India becoming the world’s third largest economy by 2030, as they were unlikely to benefit from the growth. In the months ahead, the government might embrace welfare economics to improve the ruling party’s electoral appeal.
Multipolar world
One area where the effect of the election will be minimal is foreign and security policy. India continues to pursue its ideal of a multipolar world, maintaining close ties with all major powers, as well as countries in East Asia, Southeast Asia and especially the Middle East.
During Mr. Modi’s third term, India will continue to favor the U.S. as its partner of choice in order to solidify its position as a regional counterweight to China, acquire advanced technologies and expand the economy. Closer alignment between the U.S. and India has garnered strong, bipartisan support in both countries, but India still seeks to maintain its strategic autonomy and is unlikely to give in to U.S. demands to minimize ties with Russia.
In addition to India seeing Russia as its continental backer on the Asian landmass, providing balance against the rise of China, over 62 percent of India’s military hardware is of Russian origin and Russia has remained a major oil supplier. The hope is to prevent Russia from becoming so dependent on China that it begins to disregard India’s interests.
Four years after heavy border clashes, India and China seem ready to advance their commercial relationship. China is one of India’s largest trading partners. However, India is weary of China’s persistent aggression, exemplified by its bolstering of infrastructure along the land border and strategic encirclement in South Asia and the Indian Ocean. There has been insufficient progress after 29 rounds of talks about border issues, and another Chinese military incursion would provoke a strong response.
The same applies to India’s troubled relationship with Pakistan. Diplomatic ties, suspended after the 2019 terrorist attacks India blamed on Pakistan, are unlikely to resume soon. There has been a spike in terror attacks inside Jammu and Kashmir, though the 2021 ceasefire along their border has thus far been maintained. However, another large-scale attack traceable to a Pakistan-based group on Indian territory would lead to escalation. A coalition government cannot appear weak, either to the opposition or to voters in the upcoming state elections.
Scenarios
Although the BJP has fewer seats this term than after the 2014 and 2019 elections, it still has more MPs than it did during the 1990s. The new government is dependent upon coalition allies, but those allies know that their parties will have access to power and the resulting benefits only if the government remains stable. Although the opposition is invigorated, they need to demonstrate that they are holding the government accountable. For now, no side has any incentive to rock the boat, as neither one wants to face the voters again so soon.
Most likely: BJP largesse
There will be a continuation of the same when it comes to foreign and security policies. The most probable scenario is that the BJP continues its policy of government giveaways to strengthen its position. The focus on upcoming elections in key states will mean a continuation of populist welfare policies to appease voters, keep coalition partners happy and opposition at bay. The “special packages” for Bihar and Andhra Pradesh reflected this as they aimed to please the BJP’s two large coalition partners. The July budget with its focus on agriculture, social justice, manufacturing and upgrading workers’ skills was an attempt at easing economic distress. The ruling party will also find it difficult to pass any controversial legislation, however, especially those with a social focus.
Less likely: Coalition fracture
A less likely scenario is that the BJP-led NDA coalition will be handicapped by the withdrawal of one of its allies. Mr. Kumar is often referred to as an “electoral bellwether,” someone who knows which way the wind is blowing. If he thinks he has a better chance of winning his state’s elections in 2025 by cutting ties with the BJP, he may do so. That would cost the coalition 12 seats, trimming its majority to 281 and significantly curbing the government’s power.
Both Mr. Naidu and Mr. Kumar’s parties have support from minority communities, including Muslims. If the Hindu nationalist BJP tries to introduce legislation on social or identity issues, such as a Uniform Civil Code that does away with Muslim-specific laws, tensions between the coalition partners may rise. That would weaken the government, if not lead to its collapse.
Least likely: Early elections
The least likely scenario is early elections. If Mr. Modi and his advisers believe their allies’ demands are preventing them from achieving their economic and social goals, and if the BJP does well in state assembly elections, then they could call for early elections in 2025 or 2026. However, Mr. Modi would do so only if he felt confident about winning a clear majority.
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