BJP set to hold Gujarat, take Himachal

State elections in India’s states of Gujarat and Himachal Pradesh have resulted in a double victory for the Bharatiya Janata Party (BJP), retaining its control of Gujarat, and also claiming Himachal Pradesh from the incumbent Congress government.

Background

Gujarat, which current Prime Minister Narendra Modi has previously served as Chief Minister from 2001 – 2014 has been a BJP stronghold since 1995. But despite a strong base of support for the BJP, recent moves by the central government have not proved popular with local citizens. In addition to this the chief opposition party, the Congress, after a long period of giving ground to the BJP has been eager to get back on the offensive and take advantage of the BJP’s perceived loss of momentum.

Analysis

At the time of writing, in Gujarat, the BJP currently lead in 99 of the 182 seats being contested while the Congress leads in 80 and independents lead in the remaining 3 seats. In Himachal Pradesh the Congress is trailing with leads in only 21 out of the 68 seats while the BJP are leading in 44 with the remainder currently claimed by independents.

The sudden demonetization of the Rs.500 and Rs.1000 notes in November, 2016 and the ambitious but messy implementation of the new unified goods and services tax (GST) is thought to have cost the BJP some support, particularly in urban areas and among the wealthy and influential trader communities of Gujarat.

The Indian indices, which had already priced in a BJP victory in Gujarat and Himachal Pradesh based off exit polls on Friday sank sharply when, at one point, the Congress was leading during the counting and it appeared possible that they may in fact win the state in a major upset with the BSE Sensex losing 850 points. However, it recovered promptly as the count continued and the BJP once again emerged as the likely winners, eventually ending the day up by 138 points along with the Nifty which ended the day up 55 points.

Despite ultimately losing in both states, the gains made by the Congress in Gujarat are certainly the most notable development of the entire round. Newly appointed party head Rahul Gandhi led the campaigning in Gujarat and are being lauded by some for making significant in-roads there. Others however, argue that the gains made by the Congress were not a show of genuine support for them or their message, but more likely a protest vote against the policies of the Modi-led central government to show their dissatisfaction with their leadership.

However, in Himachal Pradesh, the Congress, even with the missteps of the central government that are claimed to have contributed to their gains in Gujarat, were unable to hold out against the BJP which are on route to major victory in the state. This loss brings the number of states and national territories under congress control to just 5.

Assessment

Our assessment is that despite claiming victory in both states, the thin margin of victory for the BJP in Gujarat, winning fewer seats than it did during the last round of state elections in 2012 is an important indicator that it cannot afford any degree of complacency. If the Congress, which fought a fierce campaign in Gujarat is able to learn from this experience and also replicate the results in the next round of State elections, it will definitely put a great deal of pressure on the government going into the general elections in 2019. We feel that the Congress was handicapped not to have strong local leaders who could challenge the BJP.