Our analysis of the vote share of main parties in key states and constituencies shows that BJP saw a broad-based decline in vote share in North India, Karnataka and Maharashtra, signifying possible broad-based anti-incumbency. It would be interesting to see if BJP 'pivots' its economic agenda based on the weaker-than-expected election outcome.
BJP's weak results stemmed from weakness in its traditional strongholds
The weaker-than-expected performance of BJP in the 2024 general elections stemmed from the loss of seats in some traditional strongholds of North India and Karnataka, even as it gained in East and South India (see Exhibit 1). A decline of 6% vote share in six key BJP stronghold states resulted in a loss of 65 seats on a gross basis. Meanwhile, BJP deepened penetration in states such as Andhra Pradesh, Odisha and Telangana, which helped it broadly maintain overall vote share and recoup losses elsewhere.
Constituency-wise analysis suggests anti-incumbency in many states
Exhibits 2-7 shows the constituency-wise change in BJP's vote share over 2019-24 for a few key states. BJP has seen a large loss in vote share in many of its incumbent constituencies-in states such as Haryana, Karnataka, Maharashtra, Rajasthan and Uttar Pradesh-in the 2024 Lok Sabha elections. The loss of more than 20 sitting ministers of NDA 2.0 would raise the possibility of broad-based anti-incumbency being a key deciding factor in many states.
Decline in voter turnout not large enough to explain the drop in BJP's vote share
According to our analysis, the decline in voter turnout in the 2024 national elections versus the 2019 national elections does not provide any meaningful insight regarding the sharp decline in BJP's vote share across states (see Exhibit 8). States such as Himachal Pradesh, Karnataka and Maharashtra had seen a decent increase in aggregate turnout, but a meaningful decline in BJP's vote share. As such, we believe that any purported failure of BJP's electoral machinery to 'mobilize' voters would not have materially impacted the results.
A number of key state elections in the offing; some populism possible
In our view, the upcoming state elections (see Exhibit 9) may see state governments turning more populist, even as the central government broadly sticks with its current agenda. BJP is currently the incumbent in many such states; the results of the Lok Sabha elections may force a number of state governments to turn more populist. Meanwhile, opposition parties are likely to be further emboldened by these results and continue to up their populist ante. However, we would note that the central government has enough fiscal space (see Exhibit 10) to pursue (1) more aggressive capex, (2) a moderate increase in revenue expenditure (agriculture subsidies and higher farmer payouts possibly) and (3) fiscal consolidation (maintain the FY2025 GFD/GDP target at around 5%). The government can also look to increase its divestment target, given the excitement around PSU stocks (see Exhibit 11 for potential revenues). |
