By Rishika Sadam and Shilpa Jamkhandikar
HYDERABAD, India (Reuters) – Indian Prime Minister Narendra Modi is expected to be sworn in for a record third term on June 8, after key allies pledged their continued support a day after a humiliating election verdict that saw his party lose its position. majority in parliament.
Modi, a populist who has dominated Indian politics since coming to power in 2014, will for the first time need the support of regional allies whose loyalties have wavered over the years, which could complicate the government’s reform agenda.
On Wednesday, two allies in his National Democratic Alliance coalition, the Telugu Desam Party, a key regional player in the southern state of Andhra Pradesh, and the Janata Dal (United), which governs the northern state of Bihar, pledged their support.
“We are with the NDA, I will attend the meeting in Delhi today,” TDP leader Chandrababu Naidu told reporters, referring to a meeting of the BJP-led alliance to be held later in the day.
The federal cabinet met on Wednesday morning and recommended the dissolution of parliament, a constitutional formality before Modi can form a new government.
Modi and his new cabinet would be sworn in on Saturday, local media reported.
The NDA won 293 seats in the 543-member lower house, more than the 272 needed to form a government.
Modi’s BJP won 240 seats on its own, a watered-down assessment that could slow India’s fiscal tightening, ratings agency Moody’s said.
The weakened majority for Modi’s alliance could pose challenges to the more ambitious elements of the government’s reform agenda, ratings agency Fitch said.
However, it added: “Despite the smaller majority, we expect broad policy continuity to continue, with the government maintaining its focus on its capital investments, business facilitation measures and gradual fiscal consolidation.”
NATIONAL CONTRADICTIONS
With the party losing most of its ground in rural areas, investors say land and labor reforms expected to unlock value and growth are likely to fail.
Newspapers said Modi’s aura had been dimmed, with the Indian Express headline reading: “India gives NDA third term, Modi a message.”
Modi’s own victory in his seat of Varanasi, considered one of the holiest cities for Hindus, was muted, with his margin of victory falling from almost 500,000 votes in the last general election in 2019 to just over 150,000.
But this diminished victory does not necessarily mean a paralysis of reforms, said the chairman of a public finance panel, Arvind Panagariya, in an editorial in the Economic Times newspaper.
“Despite the reduced majority in parliament, the necessary reforms are entirely feasible. Achieving sustainable growth at an accelerated pace can only strengthen the government’s position in the coming years,” he said.
The opposition INDIA alliance led by Rahul Gandhi’s centrist Congress party won 230 seats, more than predicted. The Congress alone won 99, almost double the 52 it won in 2019 – a surprising jump that is expected to boost Gandhi’s standing.
The INDIA alliance was also expected to meet in New Delhi on Wednesday to discuss a future course of action.
(Reporting on Rishika Sadam in Hyderabad and Bharath Rajeswaran in Mumbai; Writing by Shilpa Jamkhandikar; Editing by Raju Gopalakrishnan and Alex Richardson)
