India’s ruling Congress party-led coalition may have won the most seats without securing enough votes to form a government, initial exit polls predicted after a marathon election ended.
Television channels began running exit polls, banned since 714 million voters began casting ballots five weeks ago, with the News X channel forecasting the Congress bloc just ahead of its chief rival headed by the Bharatiya Janata Party by 199 seats to 191, short of the 272 needed for a majority.
Headlines Today and the UTVi business channel broadcast similar figures, raising the prospect of a repeat of 1996 when the new administration collapsed after just 13 days -- at a time the economy is growing at its slowest in six years and militancy is rising in neighboring Pakistan.
“India needs a strong, stable coalition to make the good India story even better,” said Rajeev Malik, a regional economist at Macquarie Group Ltd. in Singapore. “Markets will remain nervous till a clear picture emerges on who will be in the hot seat to drive the economy.”
Early projections pointed to losses for communists in the state of West Bengal and former allies of the ruling Congress in Bihar, whose support may be needed by Prime Minister Manmohan Singh to return to power. A Third Front of smaller parties would win around 100 seats, the polls showed.
Exit polls after the 2004 election by channels including NDTV, Zee News and Aaj Tak overestimated the strength of the then governing BJP and its allies by about 50-70 seats, suggesting they would win days before being dumped from office with just 179 lawmakers in parliament.
Index Slumped
After the last elections, the Bombay Stock Exchange’s Sensitive Index plunged 11 percent on May 17, 2004, the most in more than a decade, as investors feared a government formed by Sonia Gandhi’s Congress party and communist allies would slow the pace of reforms. Trading was halted twice, wiping out $25 billion in market value in a day. The Sensex declined 1.4 percent today.
Congress, the party that has produced three prime ministers for the Nehru-Gandhi family, is battling an alliance headed by the BJP with a loose grouping of regional parties waiting in the wings should they fail to build a majority in parliament. Results will be announced on May 16.
U.S. Ally
India, a Cold War ally of the Soviet Union, moved closer to the U.S. during the administration of President George W. Bush, signing an accord that ended a ban on trade in nuclear fuel and technology imposed after India tested its first atomic bomb in 1974.
The U.S. wants Indian help in its fight against Islamic militancy in the region, especially Pakistan. Prime Minister Manmohan Singh stalled a peace process with India’s nuclear- armed neighbor following last November’s terrorist attacks in Mumbai that killed 166 people.
India says a Pakistan-based militant group, Lashkar-e-Taiba, was behind the raid that raised tensions between the two countries, which have fought three wars. Pakistan has admitted planning took place on its soil. The BJP has accused Congress of being soft on terrorism following the attack and a series of bombings in major cities.
A survey by Star News-Nielsen before the election began indicated the ruling Congress and its allies would win 203 seats in the 545-seat parliament compared with 191 for the bloc headed by the BJP.
Regional Parties
Congress, which won 145 seats in 2004, will hope to turn to regional parties for support in a bid to become the first party to be re-elected after serving a full term since Indira Gandhi won in 1971. The Communists, who withdrew support last year over the nuclear deal that they said threatened India’s sovereignty, have vowed not to back Congress this time.
The BJP, which built itself into a national power from the late 1980s with a campaign to construct a Hindu temple on the site of an ancient mosque, was ousted in 2004 despite exit polls pointing to a clear victory. Its strength fell at the last election to 138 lawmakers.
Whoever voters elect will have to bolster an economy that saw industrial production slump the most in 16 years in March as the global recession forced companies to pare output and curb investments.
Goldman Sachs Group Inc. economist Tushar Poddar predicts a re-elected Congress would expand its rural jobs program and push policies that could boost village demand for cars, telecommunications and consumer goods. A BJP-led government might increase infrastructure spending and restart a privatization program.
Slowing Growth
The International Monetary Fund expects India’s economy to grow 4.5 percent in 2009, while Reserve Bank of India governor Duvvuri Subbarao said April 21 that government stimulus and monetary easing could help expansion recover to 6 percent in the year that started April 1.
Prime Minister Singh says double-digit rates of growth are needed to improve life for the 828 million Indians the World Bank estimates live on less than $2 a day. Singh, 76, is the Congress party’s candidate for prime minister, while Lal Krishna Advani, 81, is the BJP’s pick.
Hunt For Numbers
In today’s final round of voting, a key Congress ally in the southern state of Tamil Nadu is under pressure from Jayalalitha, a former actress and potential power broker to the next administration.
The election is staggered for logistical and security reasons, with police moving around the country to prevent violence or intimidation. Despite that, Maoist rebels active in a dozen of India’s poorest states have killed police officers and polling staff in landmine and gun attacks.
Polling ended at 5 p.m. local time, and television channels were permitted by the Election Commission to begin running exit polls soon after. Pratap Bhanu Mehta, president of the New Delhi think-tank Centre for Policy Research, says Congress or the BJP will need about 140 lawmakers of their own to bring in allies from outside their respective coalitions.
If they fall short of that number, then the alliance of smaller players may be in a position to form a government with the outside support of either Congress or the BJP, Mehta said.
Mayawati, the chief minister of India’s most-populous state of Uttar Pradesh and the champion of those at the bottom of the Hindu caste hierarchy, could emerge as one of several potential candidates for prime minister. (c) Bloomberg
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