Bloomberg News

Modi Bolsters Bid to Lead BJP With Crushing Gujarat Victory

December 20, 2012

Narendra Modi won a third consecutive term as chief minister of the Indian state of Gujarat, strengthening his bid to lead the main opposition party into parliamentary polls in just over a year.

Modi’s Bharatiya Janata Party won 115 of the total 182 seats in the provincial assembly, routing the Congress party which heads the federal government in a two-stage vote that ended earlier this week, according to the Election Commission of India. Modi, 62, needs to tighten his grip over the state he’s ruled for 11 years to help counter concern in his party that anti-Muslim riots a decade ago make him incapable of wooing allies ahead of the national campaign due by 2014.

“The focus is solely on Modi’s performance as he seeks to rehabilitate his image and build a platform to become prime minister,” said N. Bhaskara Rao, chairman of the New Delhi- based Centre for Media Studies.

With Prime Minister Manmohan Singh’s administration struggling to reassert its reform credentials, and beset by economic growth slowing to a decade’s low, Modi’s government has been hailed by Tata Group Chairman Ratan Tata, and billionaire Mukesh Ambani, chairman of Reliance Industries Ltd. (RIL), both of which have investments in Gujarat.

Surplus Power

The state’s economy has grown an annual 10.2 percent on average over the last decade, against 7.8 percent for the national economy. Under Modi, Gujarat has raised power generation capacity more than fivefold, while his government says it is the only state in India to have surplus electricity.

Party colleagues, whose seniority makes them prospective candidates for the nation’s top office, have praised Modi and said he is qualified to lead the country. The Hindu nationalist BJP last led the national government from 1998 to 2004.

Modi won 117 seats five years ago, just short of a two- thirds majority in the local assembly. In today’s count, Prime Minister Singh’s Congress party won 61 seats, the commission said.

In the northern state of Himachal Pradesh, in the foothills of the Himalayas, in another other vote counted today, Congress ousted the ruling BJP government, winning 36 out of 68 seats, according to the election commission.

“Congress has not done as badly as some would have feared,” said A.K. Verma, a political analyst at Christ Church College in Kanpur in Uttar Pradesh, India’s most-populous state. “Given all the scams and the unpopularity of some of their policies, they will be given some hope from these results as they prepare for the general elections.”

Stalled Legislation

Two years of corruption allegations against 80-year-old Singh’s officials and ministers, the government’s inability to curb inflation and coalition infighting over his proposals to further open the economy to foreign investment have triggered street protests and stalled legislation in parliament.

There has been no major survey of probable voter preferences since Singh in September began a reform drive to overhaul the economy. A poll published in August by Nielsen Holdings NV (NLSN:US) and India Today magazine forecast that his Congress party alliance would win 181 seats, 78 fewer than it secured in the May 2009 election. The BJP bloc of parties may win as many as 205.

Inflation, Slowdown

India’s $1.8 trillion economy is set to expand 5.7 percent to 5.9 percent in the year to March 31, according to the finance ministry, the least in a decade. Inflation has stayed above 7 percent in all but one of the last 11 months this year, above the central bank’s comfort level.

Singh unveiled his reforms drive to kick start growth after almost 24 months of legislative paralysis, and it included moves to allow foreign investment in multibrand retail outlets, insurance companies and in pension firms.

Modi topped a poll of preferred leaders by the India Today magazine in March, with 24 percent favoring him to be India’s next premier. Congress’ Rahul Gandhi came second with 17 percent.

An opinion poll carried out for News 24 Today Chanakya, a Hindi language TV channel, released earlier this week predicted that the BJP may win as many 140 seats in Gujarat, or 77 percent of those available. The margin of error was 11 seats.

Rioting Mobs

Even after today’s victory, allegations that Modi failed to stop rampaging Hindu mobs as they burned their way through neighborhoods in 2002 may still threaten his emergence as a national leader. The violence left more than 1,000 people dead, most of them Muslims.

The carnage, which left Modi barred from the U.S. and some European nations, followed the killing of Hindu activists in a train fire, a blaze for which Muslims were later found guilty.

A Supreme Court-appointed panel investigating one documented incident found no evidence that Modi took decisions to prevent assistance from reaching those being attacked. Maya Kodnani, a former Modi aide, was jailed in August for her role in the murder of 97 people in a suburb of Ahmedabad, Gujarat’s biggest city.

Modi’s administration said it did its best to maintain law and order during the rioting. Modi hasn’t apologized for the riots, saying “one only has to ask for forgiveness if one is guilty of a crime,” in an interview with the Wall Street Journal this year, according to the paper.

The chief minister of Bihar, Nitish Kumar, has signaled he’ll quit the BJP-led opposition bloc if Modi becomes its face.

Gujarat’s achievements in improving basic services have been less impressive, according to an India Today survey last month. It ranks 12th out of the largest 20 provinces in improvements to its education system and 9th in health care.

Even so, with about 5 percent of India’s population, Gujarat generates 22 percent of its exports and 11.5 percent of the country’s manufacturing, state government data show.

To contact the reporters on this story: Andrew MacAskill in New Delhi at amacaskill@bloomberg.net; Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net

To contact the editors responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net; Hari Govind at hgovind@bloomberg.net


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