India Election Update

An Arranged Marriage in Delhi

With over 900 million eligible Indian voters likely to use their voting rights to elect 543 members for the lower house of the India parliament, a certain level of nervousness on the part of the political class seems natural. The central plot is a spending contest between Prime Minister Narendra Modi and Opposition leader Rahul Gandhi, as to who will cobble together a winning coalition to form the next government - a little like an expensive arranged marriage in Delhi (the last election expense bill in 2014 was a little over USD$5 billion).

Democracy and freedom of choice costs money. With results scheduled to be announced on 23 May 2019, political observers in India have swung from predicting an electoral defeat for PM Modi, after three state governments slipped into the Opposition’s fold in December, to a more cautious Bharatiya Janata Party (BJP) led coalition government after a military skirmish with Pakistan prioritised national security in the minds of the electorate over economic concerns on farm distress, low job creation and weak growth. Whatever the election outcome, a return to coalition politics, a stronger Opposition and the re-emergence of regional parties as power centres in a national Government may appear likely. In FTI Consulting’s 2017 report, we reflected upon anti-incumbency sentiments, which have since strengthened and been responsible for three electoral upsets in December 2018. However, the capital market is betting on a BJP-led coalition government.

Should a coalition-style Government come together in Delhi, what can global investors and corporations expect? FTI Consulting’s India policy experts evaluate some likely policy changes and implications in some of the key sectors over the next five years.