Modi to press on with reforms despite crushing poll loss

India’s finance minister has vowed to push ahead with much-needed reforms after his party’s drubbing at a key weekend state poll hiked fears of a slowdown in the government’s agenda.

NEW DELHI: India’s finance minister vowed on Monday (Nov 9) to push ahead with much-needed reforms after his party’s drubbing at a key weekend state poll hiked fears of a slowdown in the government’s agenda.

The ruling Bharatiya Janata Party (BJP) suffered a shock defeat at assembly elections in one of India’s biggest and poorest states after a campaign fronted by Prime Minister Narendra Modi.

India’s third most populous state, Bihar, was the battleground between Mr Modi’s BJP party and a grand alliance of his opponents over the last five weeks.

But voters overwhelmingly rejected the mandate of the BJP-led National Democratic Alliance, and instead gave the socialist coalition a powerful two-thirds majority to form the state government.

Analysts said the loss was a blow to Modi’s appeal as an invincible vote-winner after he stormed to power at last year’s general election with the biggest mandate in 30 years.

The defeat has led many opponents of PM Modi to claim that the rising intolerance towards minorities in India was denting his image.

Lalu Prasad, Chief of Rashtriya Janata Dal, said: “All the people of Bihar – the backward and the lower caste – united to thwart an attempt by Modi to win.”

Meanwhile, BJP leaders claim that their coalition’s defeat was not a wider reflection on the policies of the Modi government, but the strength of the opposition and regional parties.

BJP leader Mukhtar Abbas Naqvi said: “The state elections are never the report card of the central government’s performance. We won assembly polls in Mahrashtra, Jammu and Kashmir, Jharkhand and Haryana, but never labelled them as the reflection of our government’s performance. So this loss does not reflect whatever the Modi government is doing.”

The defeat is likely to weigh heavily on the Prime Minister’s mind as he needs a majority in the upper house of parliament – whose members are selected by the state assemblies – to push through key economic and political reforms.

Galvanised opposition parties are now expected to step up efforts to derail the Modi government’s plans to push promised economic reforms through the national parliament.

India’s stock exchange fell as much as 2.3 percent in Monday’s morning session on the BJP’s defeat before recovering some losses.

Finance Minister Arun Jaitley said the government would press on with initiatives including a long-awaited national sales tax despite lacking the numbers in parliament’s upper house.

Jaitley also denied the election was a referendum on the Modi’s government 17 months in power, while also saying “each one of us will take the blame”.

“I don’t see it as a setback to the economy … structural reforms will continue. They should continue at a rapid pace,” Jaitley said in an interview with ET Now TV network. “Every election is not a referendum. A state election is not a referendum. You are not contesting on any one issue,” he said.

A coalition of rival, regional parties clinched 178 seats in the 243-seat Bihar assembly, more than triple the number of the BJP on 53.

BJP ‘WEAKENED’

Modi turned the month-long election into a test of his popularity, fronting some 30 rallies during the campaign and promising billions of dollars in investment for the impoverished state.

“Narendra Modi no longer seems like the juggernaut we saw when he came to power in 2014,” analysts from the Centre for Policy Research wrote in the Hindu newspaper. “The drubbing in Bihar significantly weakens the BJP’s position at the centre. Many policies that it had hoped to push through are now likely to be blocked or compromised,” they also said.

Modi, with his one-man leadership style, won over legions of voters at the general election, storming to power promising sweeping reforms to revive the faltering economy.

Growth is now purring along at seven percent. But complaints have been mounting about his failure to nail down major reforms to boost investment and help create jobs for India’s tens of millions of young people.

The defeat also damages Modi’s longer term goal of securing control of the upper house by winning a series of upcoming state elections. Seats in the upper house are allocated according to political parties’ strength in India’s state assemblies.

The loss is the second after the BJP suffered a humiliating defeat in February elections for the Delhi state assembly. It comes as Modi heads to Britain on Thursday for talks with his UK counterpart and to address a massive crowd of Indian diaspora at Wembley Stadium.

Some analysts say Mr Modi will now need to hard-sell his ‘Make in India’ campaign during his upcoming visit to the United Kingdom. In international circles, Mr Modi is seen as a mascot of change in India. But in domestic ones, his promise of ‘development for all’ may now take longer to deliver.