Modi’s BJP-led alliance set for narrower-than-expected win

Indian Prime Minister Narendra Modi will have to seek power-sharing agreements for a historic third term in power, with his Bharatiya Janata Party falling short of an outright majority in the country’s lower house of Parliament.

Completed vote counts by the Election Commission of India showed that Modi’s BJP won just 240 seats. India’s Parliament has 543 seats, and the party or coalition that wins at least 272 forms the government.  

The surprise shortfall raises questions over his popularity — and risks stifling any immediate policies that the BJP was hoping to implement. Instead, Modi will have to look to smaller allies in the wider BJP-led National Democratic Alliance, or NDA, which is set to get a combined 294 parliamentary seats, according to local media.

Meanwhile, the opposition Indian National Developmental Inclusive Alliance, or INDIA, led by the Indian National Congress, won 233 seats — a much better result than previously predicted.

The BJP therefore lost 63 seats compared with its 2019 general election tally of 303. The wider BJP-led alliance won 353 seats in 2019. Modi reportedly said in March that he was confident that the NDA would secure more than 400 seats.

Modi declared victory late Tuesday, despite the reduced majority. “People have placed their faith in NDA, for a third consecutive time! This is a historical feat in India’s history,” Modi said on X as counting was nearing a conclusion.

“As much as Prime Minister Modi remains a popular figure, the shine has worn off as the everyday lived realities of unemployment, inflation and governance are dominating voters’ minds,” Yamini Aiyar, former president of the New Delhi-based Centre for Policy Research, told CNBC’s “Street Signs Asia.”

According to an April survey conducted by the Centre for the Study of Developing Societies, unemployment was the top concern for 27% of 10,000 people surveyed. More than half (62%) of respondents said it had become more difficult to find a job in the last five years during Modi’s second term.

The unemployment rate in the world’s most populous country rose to 8.1% in April compared with 7.4% in March, according to the Centre for Monitoring Indian Economy.

Shilan Shah, deputy chief emerging markets economist at Capital Economics, said in a note that Modi will begin his term with a weakened mandate “and that will make the passage of contentious economic reforms more difficult.”

“But he will still be able to work as the head of a stable coalition,” Shah said.

“And the broader embrace across the political spectrum of the value of economic reform means the new government could still do enough to…