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India Strategy - 2019 General election analysis #1: NDA gains ground

With this note we initiate a series on notes on general elections, where we intend to look at – a) underlying trends in voting patterns, b) coalition dynamics, c) expert inputs and d) economic implications of the election outcome, in detail. In current note we look at – how Pulwama attack has shaped the narrative in last fortnight along with development of regional coalition trends in last couple of months. Our next note in the series would cover expert insights on how political landscape is shaping up.

The recent Pulwama terrorist attack led surge in nationalist sentiment looks favourable for the incumbent National Democratic Alliance (NDA) government, according to opinion polls. We expect political narrative management by parties along with their coalition efforts (these tend to be fragile) to drive electoral preferences over next 60 days. Out of 10 states with highest Lok Sabha seat share, electoral preferences in 7 states are driven by regional party dynamics. Depending upon the coalition announcements so far: a) regional parties in three states (UP, WB and AP) would either go solo or collaborate among themselves, b) in the case of other four states (Bihar, Maharashtra, Karnataka and TN), regional parties have so far aligned either with the UPA or the NDA camp and c) the remaining three (Rajasthan, MP and Gujarat) are primarily Congress versus BJP plays. On impact of outcome of elections, our analysis of long term policies and structural reforms indicates that irrespective of which party is elected to form the central government, policy continuation hasn’t been a challenge. Hence we expect don’t expect any roll backs on the recently announced welfare schemes by government. Moreover, we have seen a surge of global populism on account of increasing income inequality, in recent years, which is more likely here to stay for near future.

Opinion polls: As per various opinion polls, the recent Pulwama attack has led to a surge in nationalist sentiment across the country, particularly in three key Hindi speaking states - UP (prone to religious polarisation), Rajasthan and MP. While March opinion polls by most agencies point to a hung parliament, NDA, nonetheless, still emerges as the biggest alliance falling short of mid-way 272 seat mark by 10-15 seats. Pre-Feb, the shortfall was pegged at 40-50 seats (Exhibit 2-6). Hence, we believe the mandate may not be as fractured as was earlier made out to be. However, this verdict hinges upon the narrative management by key parties in next 45-60 days.

Dynamics of states and regional parties: Given India’s vast culture, land and languages, regional parties make up an important front in national politics. UPA and NDA’s coalition dynamics with these parties could be the game changer, especially in Bihar, UP, Maharashtra, West Bengal (WB), Karnataka, Andhra Pradesh (AP) and Tamil Nadu (TN), in our view. Our detailed outlook on some of the states below

• With 80 seats share in Lok Sabha, UP commands a special focus in national politics. UP’s voting tends to be dominated by religious sentiments followed by casteism, in that order. Recent SP and BSP coalition has led to a development of strong third front, thus, saving division of caste based votes. However, Pulwama attack has changed narrative as nationalist sentiments seem to be have overtaken caste sentiments, leading to BJP gaining ground in the state over last 20-25 days
• Rajasthan is another state which has seen surge of nationalist sentiment post Pulwama attack. Post Dec-2018 state elections, Congress seemed to have gained stronger ground in the state owing to anti-incumbency. However, given the higher participation of north India in armed forces has led to favourability for Mr. Modi in the state, who’s being projected as a decisive leader.
• West Bengal and Andhra Pradesh are other states with strong regional parties which are amongst the biggest players on third front and have decided not to enter any pre-poll alliance. Both TMC and TDP are going solo, fielding candidates on all the seats in their respective states.
• Tamil Nadu and Maharashtra are amongst two biggest states where regional parties have aligned themselves with UPA or NDA and UPA seems to be a having a lead over NDA in opinion polls. While Maharashtra is expected to be a relatively closer competition between BJP +Shiv Sena and Congress + NCP, Tamil Nadu seems to a stronger forte for UPA led by DMK (which is benefitting from anti-incumbency sentiment against AIADMK).

·      In Bihar, NDA (JD (U) + BJP) seems to be having an upper hand. The coalition, however, hangs in a fine balance.