Indian Politics: BJP in cruise control

2 Jan 2024 , 02:55 AM

Using the 2019 General Elections data, analysts of IIFL Capital Services ran a stress test analysis on BJP’s likely performance in 2024 elections. They analyzed the impact of the Indian National Developmental Inclusive Alliance (I.N.D.I.A) coming together with 100% vote transferability (a low probability scenario in their view, considering past elections eg: SP-BSP alliance) to evaluate probable outcomes. Out of 543 Lok Sabha seats, analysts of IIFL Capital Services see an incremental loss of only 17 seats for the NDA versus 2019, which means the NDA would still have >300 seats (assuming same vote share as in 2019). Analysts of IIFL Capital Services conclude that just by the virtue of coming together, the I.N.D.I.A may not be able to de-throne the NDA government, given BJP’s strong hit ratio in the seats contested.

Further, so far, the opposition block or the I.N.D.I.A alliance seems to have made no meaningful progress w.r.t a common minimum program, seat sharing, etc., with elections just four to five months away. Further, differences between the alliance partners are out in the open (eg: Samajwadi party and others); that might see ~190-200 Lok Sabha seats witnessing three or four-way contests in general elections, as against the intended two-way contest.

Coalition-wise tally- 2024 versus 2019

Particulars	2024E	2019 Actual	Difference	2019
NDA	310	327*	-17	353
I.N.D.I.A	177	158	+19	91
Neutral	52	54	-2	53
Others	4	4	0	46
Total	543	543		543

Source: IIFL Research 

^*After factoring in loss of Shiv Sena & JD(U) seats and gains from new alliance partners. Actual NDA tally in 2019 was 353 seats

2024 elections may largely be free from ‘fiscally imprudent’ freebies and caste census politics

The recently concluded state elections were increasingly dominated by freebies/welfare schemes targeted towards the sections of the electorate (like women welfare schemes, etc.) Analysts of IIFL Capital Services estimate that these schemes could be 2-4% of the state’s GDP. While the Congress and BRS-led governments tried to counter anti-incumbency in Rajasthan/Chhattisgarh and Telangana respectively through aggressive schemes, only MP saw a return of the incumbent. This does not conclusively prove the effectiveness of freebies/welfare schemes on the electorate, and could help parties realize limitations of welfarism and the freebie culture. This could lead both the sides to be more rational with announcing freebies before the 2024 elections. 

Further, the caste census was expected to be the most potent issue to be used against the BJP as the opposition was looking to bank on it by promising a similar exercise if they came to power. However, the recent state election results have also most likely turned caste census into a non-issue for the upcoming 2024 general elections. 

Strong base for BJP in states after recent wins

Of the five states that went to polls, BJP posted a clear majority in Madhya Pradesh (incumbent), Rajasthan and Chhattisgarh; while Congress bagged Telangana. In all the three states where the BJP won comfortably, most surveys predicted a tougher battle with the Congress. However, Congress failed to build on the anti-incumbency in Madhya Pradesh, and could not retain Rajasthan and Chhattisgarh — especially the latter, which was earlier predicted to be a rather easy win. With wins in the 3 Hindi heartland states, BJP now has a strong base in the states as well. It now has governments in 16 states (11 on its own and 5 in alliance) against just 4 states for Congress. As such, analysts of IIFL Capital Services do not see the recent state elections results having any direct bearing on the 2024 General Elections, as the electorate tends to vote differently in the Centre and state elections. However, it will help BJP set a narrative in its favor — similar to what the Congress did after a thumping win in 2018 state elections. 

Rajya Sabha numbers to be strong too for BJP

Currently, BJP is the single-largest party in the upper house with 94 seats, followed by Congress with 30 seats and Trinamool Congress with 13 seats. The recent assembly elections results is likely to give a further boost to BJP for ruling in the Rajya Sabha due to an improvement in BJP’s seat tally between 2018 and 2023. Increase in BJP’s Rajya Sabha tally will help them pass some crucial legislations. However, BJP’s victory in the assembly polls in Madhya Pradesh, Rajasthan and Chhattisgarh may not be enough for them to get a majority by next year.

BJP currently has governments in 16 states (11 on its own and 5 in alliance), 4 states for Congress