Modi wins in West Bengal for the first time

Indian Prime Minister Narendra Modi’s Bharatiya Janata Party achieved a historic election win in West Bengal on Monday, strengthening its grip on power as the country grapples with economic challenges and a pressing need for reforms.  

Modi’s popularity was seen to be waning when, in June 2024, his party failed to secure an outright majority in the national polls and had to form a coalition government for his third term as prime minister.

Since then, the Indian government has been spending money on populist welfare schemes and, more recently, on fuel subsidies, but reinforcement of Modi’s political popularity could provide room to rationalize some of that spending, experts said.

The latest results of state polls have dispelled worries of Modi losing political momentum as the BJP won 206 seats out of 294 in West Bengal, forming its first-ever government at the state level.

In a post on X following the results, Modi declared: “The Lotus Blooms in West Bengal!” a nod to his party’s symbol. “People’s power has prevailed and BJP’s politics of good governance has triumphed,” he said.

Out of the 11 state elections since 2024, the BJP and its allies have retained power in four states and gained power in two others, reflecting “continued popularity of PM Modi and his party,” global brokerage Citi noted in a note on Monday.

“Markets would hope that a strong political mandate and easier coordination with state [governments] will facilitate better implementation of various policy and process reforms,” Citi said.

India’s economic growth this year is expected to be hit by the prolonged conflict in the Middle East. Its current account deficit is also expected to widen in the financial year ending March 2027, as the Iran war causes higher energy prices to soar and disrupts exports.

The Indian government has been reluctant to pass on the rising energy costs to consumers and has instead taken a “huge hit” on tax revenues by cutting the central excise duties on fuel to prevent pump prices from rising.

Alongside the fuel subsidies, the government has also been spending money on populist measures. More than a dozen Indian states plan to spend up to 2.5 trillion rupees ($26.2 billion) or 0.5% of GDP on unconditional cash transfers to eligible women to help cover household expenses, Bernstein Research said in a report on April 23.

“The win certainly strengthens the government politically to take tough decisions in a time of economic crisis caused by the Middle East war,” said Ashok Malik, partner at public policy think tank The Asia Group, on a…