The Pulse of the Nation: Insights into India's 2024 Election

The ruling Bharatiya Janata Party (BJP) is anticipated to once again lead the National Democratic Alliance (NDA) to triumph, reminiscent of its success in the 2019 elections, during the forthcoming parliamentary elections scheduled between April and June. Projections indicate that the alliance is poised to secure a considerable number of seats, ranging between 305 to 325. Against the backdrop of India's economy showcasing the fastest growth globally, a supportive environment for political stability is evident. Despite the competitive nature of the political terrain, the landscape remains relatively stable, underpinned by robust institutions and a resilient economy.

However, the political arena is characterised by fragmentation, with numerous regional and national level parties actively participating in the upcoming elections. While expectations favour the BJP's victory, potential challenges loom on the horizon. The party may encounter a decline in support from Muslim voters owing to the Ram temple issue, as well as backlash from the farming community over contentious farm laws. Furthermore, the persistent struggle against inflation, particularly in food prices, emerges as a pivotal concern for voters this election cycle.

The opposition bloc has prioritised inflation and alleged encroachments on the autonomy of democratic institutions as its primary campaign issues. Such focus could potentially erode the BJP's popularity and lead to a reduction in its vote share, necessitating the NDA to coalesce and collectively form the government.

Meanwhile, the BJP's campaign maintains its vigour, buoyed by its track record of fostering robust economic growth, facilitating a steady recovery from the Covid-19 pandemic, and enhancing India's international relevance. These factors contribute to the party's resilience and bolster its electoral prospects in the upcoming parliamentary elections

We analyse India’s election outcomes in more detail below.

BJP: A Dominant Force

At the helm of the political spectrum stands the Bharatiya Janata Party (BJP), a stalwart of Indian politics known for its ideology of Hindu nationalism and pro-development agenda. Led by Prime Minister Narendra Modi, the BJP has steered the country through significant economic reforms and social transformations.

In its ongoing term, the BJP has advocated for cultural revivalism and economic reforms, championing issues such as national security, development, and cultural pride. From the abrogation of Article 370 (taking away Kashmir's special state status and dissolving its state constitution) to the construction of the controversial Ram temple in Ayodhya, the BJP has wielded power with a firm hand, appealing to both nationalist sentiments and aspirations for progress.

With a formidable track record and enduring popularity for Mr Modi, the BJP remains a favourite in the upcoming elections. Its manifesto, titled 'Sankalp Patra,' outlines ambitious plans for governance, including the enactment of a Uniform Civil Code, synchronising nationwide elections, and bolstering infrastructure along India's borders. Additionally, the party pledges to address rural poverty through initiatives like free ration schemes and enhanced agricultural support. The manifesto also outlines the BJP’s plans to establish new educational institutions, and implement the Citizenship Amendment Act. The manifesto also emphasises peace initiatives in the Northeast and promises welfare schemes such as free ration and electricity for impoverished households. Furthermore, the BJP vows to empower rural women, ensure comprehensive health coverage for senior citizens, and support farmers through initiatives like PM Kisan Samman Nidhi Yojana. Overall, the BJP is looking to appeal to a large chunk of the voting population by targeting the youth, rural population and female vote. 

INDIA Bloc: A Unified Opposition

On the opposing front, a diverse coalition of 26 parties, collectively known as the Indian National Developmental Inclusive Alliance (INDIA bloc), has emerged to challenge the BJP's dominance. Led by the Indian National Congress and comprising regional heavyweights like the Samajwadi Party and Shiv Sena, the INDIA bloc represents a united front against the ruling party.

The INDIA bloc shares a common goal: to dislodge Prime Minister Modi and his government from power. However, the coalition faces challenges in articulating a cohesive governance vision and selecting a prime ministerial candidate. The coalition's varied composition, marked by a lack of shared ground beyond their mutual aim of ousting the BJP, has dampened its appeal to voters. Additionally, the bloc has struggled to outline a unique vision for governance that sets it apart from the ruling party. Complicating matters, the coalition encompasses factions with historical enmities at the regional level, resulting in hurdles in negotiating seat allocations in certain states. The absence of a clear candidate for prime ministership within the INDIA bloc has also fostered skepticism among voters. While the Congress party may lean towards nominating one of its own, like Rahul Gandhi, non-Congress members perceive him as lacking widespread popularity. On the other hand, opting for Congress president Mallikarjun Kharge could ease tensions, but his appeal among voters remains limited. Voters remain wary of potential instability, recalling the turbulent period of the late 1980s characterised by frequent changes in government, which led to political and economic upheaval. These partisan dynamics are likely to breed suspicion within the coalition and further distance voters, presenting significant hurdles to its electoral prospects.

Election Scenarios: Potential Outcomes

As the nation awaits the election results, three potential scenarios loom on the horizon, each carrying significant implications for India's economic policy trajectory.

Scenario 1: BJP Secures Clear Majority (35% Probability)

The key determinant of the BJP's outlook in the forthcoming 2024 elections is undeniably the enduring popularity of Narendra Modi. Rather than serving as a verdict solely on the BJP's political standing, the election is anticipated to primarily center around Mr. Modi's leadership performance. The BJP's recent successes in state elections towards the end of 2023 further affirm Mr. Modi's sustained appeal among the electorate. Despite overseeing a significant consolidation of authority, shaping a more compliant media landscape, and reducing checks and balances within India's federal structure, Mr. Modi's popularity remains steadfast.

In both the 2014 and 2019 elections, the BJP effectively tapped into majoritarian sentiments, a trend likely to endure in 2024. The party's emphasis on Hindu nationalism continues to strike a chord with the country's significant Hindu majority, especially in the densely populated Hindi-speaking regions of northern India. The inauguration of a Ram temple in Uttar Pradesh in January 2024 underscores the BJP's continued reliance on this strategy, further solidifying its appeal.

Despite sporadic communal tensions with minority groups stemming from this agenda, the BJP remains resolute in its commitment. While the party's economic performance presents a mixed picture, with inflationary pressures impacting the cost of living and modest progress in formal job creation, India's robust growth trajectory and tangible advancements in urban and rural infrastructure are poised to strengthen support for the incumbent.

Welfare programs introduced by the BJP government have garnered substantial backing across various demographic segments, including women, youth, farmers, and migrants. These initiatives are expected to remain instrumental in bolstering the BJP's electoral prospects, potentially expanding further in the upcoming term. Moreover, Mr. Modi's perceived enhancement of India's global standing, demonstrated through prominent foreign policy endeavours like India's G20 presidency, successful lunar missions, and diplomatic engagements with the US, resonate positively with the urban electorate, further tilting the balance in favour of the BJP.

Therefore, a decisive victory for the BJP is a highly plausible scenario. The party itself anticipates securing over 400 seats. However, it is our assessment that this projection is overly ambitious. We expect the BJP to secure between 275-280 seats in the upcoming elections.

Scenario 2: NDA Alliance Secures Majority (45%)

In our assessment, the second scenario appears to be the most likely outcome, which involves the BJP-led National Democratic Alliance (NDA) securing a majority, akin to the results observed in 2019. It is anticipated that the BJP, along with its allied parties forming the NDA, will collectively secure a significant number of seats, ranging between 305 to 325. However, it's worth noting that the BJP may experience a decrease in its vote share among Muslim voters due to the assertive Hindutva stance exemplified by initiatives like the construction of the Ram temple. Additionally, the backlash from the farming community regarding the contentious farm laws is expected to dent the BJP's overall majority.

Another critical factor influencing the electoral landscape is the persistent challenge of inflation within the economy. Particularly, the rise in food prices has been eroding disposable income, particularly among low and middle-income households. This trend is likely to draw criticism from both urban and rural communities, potentially impacting the BJP's popularity. Consequently, there is a possibility of a lower vote share for the BJP independently, necessitating the NDA to collectively form the government

Scenario 3: INDIA Bloc Secures Victory (20%)

There exists a minor possibility that the INDIA bloc could amass adequate vote share across various regions to unseat the BJP. This potential outcome would likely stem from a public desire for change, particularly after two consecutive terms of BJP rule, rather than strict alignment with the manifesto or ideology of the bloc. The dynamics of caste within India's electorate will continue to play a significant role in shaping the election's outcome.

The Congress party has been advocating for a caste-based census at both state and national levels as a countermeasure against the BJP's efforts to consolidate a unified Hindu vote bank. However, the political landscape remains fluid, influenced by the evolving allegiances within the Other Backward Classes (OBCs), constituting the largest single voter bloc in India, comprising approximately 40% of the population.

In the 2019 elections, the BJP garnered support from the OBC community, leading many OBC voters to shift their allegiance away from the traditional Congress party. Nevertheless, there is a possibility that these voters may revert to their traditional choice, potentially altering the electoral outcome.

With diverse manifestos, strategic alliances, and potential electoral scenarios, the stage is set for a democratic spectacle that will resonate far beyond the ballot box. As voters prepare to cast their ballots, India’s economic future is also closely linked with the election outcome. The markets are hopeful of seeing Modi return to power and policy continuity, which would be lost should the INDIA bloc win. Given the varied interests of the parties in the bloc, the market and industry remains wary of policy trajectory should the opposition come to power. Consequently, it would appear that industry too is likely to vote for Modi, and lends credence to our view. A Modi victory will likely see the equity market soar in the aftermath, whereas a significant decline in vote share would dent industry optimism.