Indian Prime Minister Narendra Modi (L) flashes the victory sign as he celebrates victory in India's general elections, in New Delhi on May 23. Photo: AFP/Money Sharma

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Prime Minister Narendra Modi has won a historic second term in what was one of the bitterest electoral contests ever fought in India. But instead of “To the victor goes the spoils” the appropriate comment might be to wonder, “Will the victory be spoiled?” – by, for example, severe economic problems.

While it was largely expected that Modi and his Bharatiya Janata Party would win, there were doubts as the opposition parties stitched up alliances in key states that mattered. The BJP alone won 303 seats, setting a national record for highest count ever. Other member parties in its National Democratic Alliance (NDA), won 48 seats, for an alliance total of 351. The results indicate, besides an unprecedented win for the BJP, overwhelming approval of keeping Modi in power – validating the BJP’s campaign’s relentless focus on the man, not the party.

Even compared with 2014 when Modi won a full majority, the first in 30 years, 2019 has proved to be more momentous. He managed to shape a political narrative in the face of critical economic reviews. For years the economy was showing signs of stress, but none of that seems to have dampened the enthusiasm of the BJP’s supporters.

This ensured that the BJP gained more seats than its 2014 tally. It also managed to knock down the Indian National Congress, the principal opposition party, while sidestepping key local alliances. Nothing demonstrated this better than the loss of Rahul Gandhi, the Congress president and scion of the historic Nehru-Gandhi dynasty, in Amethi. He lost there to a relative newcomer, Smriti Irani, a former television actress who has rapidly risen in the BJP. This is an indication of how thoroughly Modi has established himself as India’s biggest politician in three decades.

Making History

This was most visible in the key electoral state of Uttar Pradesh, which sends 80 parliamentarians. Three powerful regional parties, built on the most numerically dominant castes, came together for the first time since 1993. But they didn’t stand a chance against Modi. For the first time since the 1990s, the state saw the creation of a pan-Hindu vote that trumped the usual caste formations. Even though the BJP faced marginal losses, getting 52 seats as compared to 71 in 2014, it was still an impressive show.

The elections also entrenched a majoritarian and populist narrative. This helped the BJP make major dents in states where it barely had a presence a decade ago. West Bengal, which elected a communist party to power for decades before it was dislodged by a regional formation, had resisted the BJP until now. The state holds 42 seats and was a crucial part of the BJP’s strategy to make up for losses in UP. The BJP won 18 seats while the ruling regional party was left with only 22.

In the other Northern states the BJP managed to retain its majority by sweeping most seats.

A Failing Economy

But the historic win for Modi poses challenges.

The economy, which has been sputtering for a long time, needs an urgent focus. Many political and economic observers anticipate that mismanagement of the economy by Modi in the last five years will come to haunt him in the next five.The new government will have to immediately deal with economic and unemployment crises. While unemployment at the moment is at its highest in 45 years, the Indian economy is contracting.

Several of Modi’s controversial economic steps, such as the infamous demonetization of 2016, were expected to play a major role in these elections. With destruction of nearly 87% of the cash overnight, India’s growth rates of upwards of 7% took a major hit. It also led to massive loss of jobs in the formal and informal sectors of the economy. Political pundits feel that this will eventually hurt Modi politically.

The biggest hit to the economy was demonetization when 86% of India’s currency was declared illegal. Information available now shows that the decision was taken by Prime Minister Modi without any discussion with the Reserved Bank of India’s board. This led to the announcement being made on December 8, 2016 by Modi an hour after a hastily gathered RBI board had cleared it formally.

The move devastated the informal economy and led to massive job losses. The GDP plunged. Industrial production is down and a report of the Ministry of Finance acknowledges that the country is facing an economic slowdownVehicle sales, a major indicator of the economy’s health, have been consistently down across segments. This shows a number of sectors have been hit hard. What the new government under Narendra Modi will do to pull India out of a looming recession remains to be seen.

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