State Elections: How the battle for power may impact markets

State polls will soon be held in the three states of Chhattisgarh, Rajasthan, and Madhya Pradesh, all part of the so-called “Hindi belt.”

Oct 12, 2018 07:10 IST India Infoline News Service Krunali Shah |

The election season is upon us! State polls will soon be held in the three states of Chhattisgarh, Rajasthan, and Madhya Pradesh, all part of the so-called “Hindi belt.” These elections whose outcome gets announced around mid-December are thus being touted as a “semi-final” to the high-octane general elections to be held in 2019.

What is the scenario for these three states?

Rajasthan: For this western state, there is major anger against the incumbent Raje government. The CM’s popularity is at rock bottom after one term. Problems of drainage and cleanliness, unemployment, and price rise have the voters concerned. The inaction of the government regarding these issues and factionalism within the BJP have dwindled Raje’s popularity further.

Former BJP leaders such as former Union minister Jaswant Singh’s son Manvendra Singh, lawmaker Ghanshyam Tiwari, Jat leader Hanuman Beniwal, and torch-bearer for the Gujjars, Kirori Mal Bainsla, have left the party. Though they may not have a standing of their own, by swaying their respective strongholds, they could compound Raje’s problems.

For now, it seems Congress’ young gun and state president Sachin Pilot is emerging as the most preferred candidate for the top post, disregarding the probable CM-candidate for the Congress Ashok Gehlot.

Madhya Pradesh: Results of the MP elections are closely anticipated as they will indicate a drift of BJP’s fortunes for the 2019 general elections. CM Shivraj Singh Chouhan’s popularity seems intact, even though he battles allegations of corruption and sloppy development. Here, the anti-incumbency is purportedly focused on sitting MLAs as reports of excesses at lower levels have come to the fore. However, what works in BJP’s favor is the internal factionalism in the Congress ranks as senior leader Kamal Nath, youth face Jyotiraditya Scindia, and former CM Digvijay Singh vie for the top post.

Chhattisgarh: The Congress is trying to overthrow the BJP-led Raman Singh government in Naxal-affected Chattisgarh, which is fighting a 15-yr anti-incumbency. Incidentally, the difference of votes between Congress and BJP during the 2013 elections was merely a 1%. However, here, a triangular contest is expected as Mayawati’s BSP has ties up with Ajit Jogi’s Janta Congress Chhatisgarh. With SC and tribal votes under their belt, the BSP-JCC combined will be a daunting force in the state and may act as the kingmaker.     

What opinion polls say

Opinion polls suggest that Rajasthan is surely tilting the Congress way, owing to heavy anti-incumbency against Vasundhara Raje Scindia. ABP News-CVoter and C fore surveys have predicted that the grand old party will advance with 142 and 124-138 seats, respectively, in the 200-member assembly.

Meanwhile, in MP and Chhattisgarh, where the saffron party has ruled for 15 years, pre-poll surveys suggest a minor swing, indicating that the tide can shift either way. The ABP News-CVoter opinion poll suggests that Congress will win 122 seats and BJP 108 seats in the 230-member MP assembly. The same opinion poll indicates that Congress will win 47 seats, while BJP will grab 40 seats in the 90-member Chhattisgarh assembly.

Meanwhile, the India TV-CNX Opinion Poll shows that Shivraj Singh Chouhan is all set to seize a record fourth term in MP as it projects that BJP may win 128 seats, while the Congress will clinch 85 seats, BSP eights seats, and others nine seats.

So, how will the markets react?

Will BJP’s chief vote-catcher Narendra Modi be successful in working his magic again? His emotive and rhetoric-loaded speeches may work in MP and Chhatisgarh, but it seems that Raje in Rajasthan has angered the voters. The PM might find it difficult to bridge that gap with the voters.

Whatever the case might be, these elections are all set to be a close call between the two biggest national parties.
Meanwhile, the markets will probably be tracking these elections two months in advance. If the BJP loses in one of the three states, the markets will probably remain unaffected and deal with it. But, if it loses in two of three states, it could send markets in a tizzy.

In case BJP loses all the three states, it could lead to an upheaval, casting a dark shadow on the market as wary investors might be concerned about the 2019 Lok Sabha elections.

Thus, as BJP and Congress look for a shot in the arm ahead of the general elections, markets also await the results of these elections with bated breath.

Related Story