Indian Prime Minister Narendra Modi has reason to feel less confident about the coming general election than he once might have. His popularity has suffered as a result of declining confidence in the economy -- something his government helped engineer via a chaotically implemented sales tax and the sudden withdrawal of most bank notes from circulation. More recently, state election defeats and the surprise resignation of India’s top central banker have dealt Modi some high-profile blows, prompting his party to come out with some populist policies. The opposition, mostly in disarray since Modi’s resounding victory in 2014, is also beginning to unite. But even with those setbacks, polls suggest Modi’s ruling coalition is likely to retain power, albeit with a reduced majority.

1. When exactly is the election?

The first quarter of 2019, likely in April, since the next government must be in place by mid-May and voting is spread over the course of several weeks. That’s a consequence of the daunting logistics of overseeing the world’s largest electorate: roughly 875 million voters stretching from the remote Himalayas in the north to the tropical jungles of the south.

2. Who is Modi up against?

The main national opposition is the Congress Party, which has ruled India for most of its independent history and is led by Rahul Gandhi, the scion of the Nehru-Gandhi dynasty. Polls suggest the 48-year-old Gandhi alone doesn’t present much of a threat, although his party’s performance in recent state polls has buoyed his supporters. Congress is also now aggressively pursuing alliances with opposition parties with the aim of striking a pre-election alliance and perhaps agreeing on a common platform. Those allegiances would be with the powerful anti-BJP leaders of some of India’s huge states, many with populations larger than most western countries. Several already teamed up to take on the BJP -- most notably in by-elections in Uttar Pradesh and Bihar, and in state elections in Karnataka, where Modi’s party won the most seats but lost power to a coalition.

3. Will Modi retain power?


India’s politics are difficult to predict, and Modi has slipped in the polls, but he’s still the favorite. The country’s $2.6 trillion economy is recovering, his reputation as an incorruptible leader is largely intact (surviving a scandal over fighter jets) and his Bharatiya Janata Party, or BJP, has expanded its control over powerful state governments since the last general election. No other political leader is as popular as the 68-year-old Modi, who has nurtured an image as a humble son of a tea-seller single-mindedly dedicated to modernizing the country. One poll in 2017 showed close to 90 percent of Indians surveyed had a favorable view of him. But those policy misfires and an anemic job market have clouded the water. The BJP has lost coalition partners in two states (Andhra Pradesh and Kashmir) and suffered high-profile defeats in three provincial elections (Rajasthan, Madhya Pradesh and Chhattisgarh) in December. An India Today poll in January showed Modi remained more popular than rivals, but that Gandhi had narrowed the gap. The survey also showed rising concerns about unemployment, an issue that has haunted Modi after he failed to deliver on promises to create 10 million jobs a year.

4. So Modi’s party is struggling?

Not exactly. Despite recent losses, the BJP still controls 17 out of 29 states, including the most populous (Uttar Pradesh) and the richest (Maharashtra, whose capital Mumbai is India’s financial hub). Under Modi and BJP President Amit Shah, the party has made inroads beyond its traditional northern support base, amassed corporate donations, expanded a successful social media unit and deployed thousands of grassroots activists to shepherd voters to the polls. Modi is better organized, better funded and enjoys more widespread support than any single rival.

5. What about social issues?

As Hindu nationalism has flourished under Modi, attacks against Muslims and so-called lower-caste Hindus have proliferated. In December, a mob protesting cow deaths killed a police officer in Uttar Pradesh. There’s also been an epidemic of violence against women, including the rape and murder of young girls. Modi’s image has suffered because of the reaction by senior party members (one minister presented garlands to a lynch mob) and by his own slow responses. Social tensions are likely to remain high, or escalate, if the election is tight. In a closely contested state election in late 2017, Modi accused the BJP’s adversaries (including a former prime minister) of colluding with India’s arch-enemy Pakistan. All the same, Indian voters historically have been moved more by the price of onions and tomatoes than political shenanigans. (Economists expect inflation to accelerate next year.)

6. And national security?

A major terrorist attack in Kashmir on Feb. 14 lifted national security and foreign policy higher up the political agenda. Modi and his government have blamed Pakistan for the suicide attack that killed at least 40 security personnel and promised a “befitting reply.” Politicians from across the spectrum have called for unity, but the issue could become a focal point for criticism of the government -- as well as a way for Modi’s administration to shore up support with a tough response.

7. How might the voting pan out?

Replicating the BJP’s single-party majority in the lower house, the first such majority in 30 years, will be tough, judging by the polls. A reduced majority seems increasingly likely, an outcome that would probably imperil Modi’s economic reforms, raise the likelihood of party infighting and strengthen his coalition partners’ leverage. The January poll by India Today forecast the BJP-led coalition could fall from 336 seats to around 237 seats, more than the 166 seats predicted for the opposition coalition but short of a majority in the 543-member lower house. Although polls in India are often wrong, such an outcome would result in protracted coalition negotiations and a potentially unstable arrangement. Much depends on whether India’s myriad opposition parties can maintain a united front. If Congress can join with big regional parties, the opposition could be in striking distance of forming the government. However, it’s worth remembering the BJP has surprised on the upside before. And if the party gains a similar or larger mandate, Modi could be emboldened to tackle more controversial reforms such as making it easier for companies to acquire land and fire workers.

8. What would a poor result for Modi mean for investors?

Markets would take it badly. In recent state elections, the prospect of BJP victories has rallied markets while predictions of defeat have sunk them. Investors see Modi as a relatively predictable pro-business leader dedicated to pushing through economic reforms -- even if those policies occasionally veer toward populist. Whether Modi is as pro-business as investors think is a matter of debate in India, with many arguing he’s more concerned about consolidating power than carrying out genuine reforms. On the other hand, the stock index has significantly outperformed most other emerging markets since 2014. And Modi has sought to address longstanding issues such as bad loans at banks and indebtedness at state-owned companies, while luring record foreign investment and pushing through badly needed tax reform.

To contact the reporter on this story: Iain Marlow in New Delhi at imarlow1@bloomberg.net

To contact the editors responsible for this story: Ruth Pollard at rpollard2@bloomberg.net, Grant Clark

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