India: Landslide victory for PM Modi

5 min
Manfred Stamer
Manfred Stamer Senior Economist for Emerging Europe and the Middle East

PM Narendra Modi was overwhelmingly re-elected for a second term. His Bharatiya Janata Party secured a majority in the parliamentary lower house with 303 out of 543 seats, up from the 282 seats it got in 2014 when it became the first party since 1984 to independently cross the simple majority mark. The Indian National Congress party which had dominated politics for decades after independence suffered another electoral humiliation, gaining just 52 seats (44 in 2014). It will lead the opposition but its small representation will limit its capacity to block Modi’s legislative agenda. Economic policy is expected to continue to focus on maintaining strong economic growth and job creation through fiscal stimulus measures including infrastructure investment and tax reforms. This poses some risk to fiscal stability as India has posted annual fiscal deficits of more than -7% of GDP over the past decade and public debt stands around 70% of GDP. Modi may also seek tighter control over the Central Bank which, if going too far, could reduce foreign investor confidence in India.