12 March 2017
India Politics
UTTAR PRADESH
BJP sweeps Uttar Pradesh and Uttarakhand
Reaffirms Mr. Modi's popularity at half way mark; big boost for reform agenda
In the first major state elections post demonetization, BJP, the ruling party at the
center, has swept Uttar Pradesh (UP) and Uttarakhand, with a four-fifth majority, an
unprecedented victory. BJP’s vote share in UP has gone up from 15% in 2012 to 39% in
2017. In Punjab, Congress has come back to power after 10 years with a two-thirds
majority. In Goa and Manipur, Congress has emerged as the single largest party,
tantalizingly short of the majority mark.
Uttar Pradesh is India’s largest and most populous state, sending to the Lok Sabha 80
MPs – the highest among all states, and is crucial from the perspective of Rajya Sabha
arithmetic. The magnitude of BJP’s victory in UP has beaten the highest exit poll
predictions (285 seats predicted by Chanakya). Post demonetization, BJP has
witnessed a series of electoral successes, be it in the assembly bye-elections or various
local elections in Maharashtra, Orissa, Gujarat, Rajasthan, and Punjab.
PUNJAB
Uttar Pradesh to be ruled by a national party after 15 years
UTTARAKHAND
Uttar Pradesh would be governed by a national political party after 15 years. Over
2002-2017, regional parties like Samajwadi Party and Bahujan Samaj Party ruled the
state. Also, for the first time in 15 years, UP and the center would have the same
ruling party at the helm.
State election results reinforce Mr Modi’s popularity
The just-concluded elections in five states were the most important polls post the
2014 general elections and almost coincided with the half-way mark of Prime
Minister, Mr Narendra Modi’s term at the center. A resounding victory with four-
fifth majority in India’s largest and politically most crucial state reinforces Mr Modi’s
popularity and further weakens the opposition, in our view. Another important
trend emerging is the unequivocal and decisive mandate by the electorate, be it
general elections or state elections (Bihar, Delhi, Assam, Maharashtra, Haryana, and
Jharkhand), bringing down curtains on coalition politics.
MANIPUR
Reform momentum should continue; light election calendar ahead
BJP now rules the highest number of states. This should facilitate decision-making
pertaining to significant reforms (land, labor, tax), going forward. It would also
speed up decision making on strategic policies and enhance the transmission of
GOA
economic policies in a smoother fashion, in our view. We expect the reform
momentum (demonetization, GST, FDI liberalization, direct benefits transfer,
financial inclusion, etc) to continue and gather more steam, as this victory should
boost the confidence of BJP at the center, especially after an uncertain phase
following demonetization. Additionally, the lack of credible opposition at center and
in key states should help BJP. Also, the election calendar going forward is light, with
the next state elections (Gujarat) almost nine months away. We believe this would
ensure complete focus on economics. Implementation of GST remains a key event
to watch out for in FY18.
Gautam Duggad
(Gautam.Duggad@MotilalOswal.com); +91 22 3982 5404
Nikhil Gupta
(Nikhil.Gupta@MotilalOswal.com); +91 22 3982 5405
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