HAT-TRICK TRIUMPH

Three state wins solidify BJP's 2024 hopes, paving the way for policy continuity

The outcome of the recently held state elections in Madhya Pradesh, Rajasthan, and Chhattisgarh surprised the stock markets. The Bharatiya Janata Party (BJP) registered a landslide victory in these significant state elections. These states account for a substantial proportion of Lok Sabha seats. The elections in these large states were touted as a semi-final before the Lok Sabha elections of 2024. With this win, the markets expect the BJP to return to power in 2024. This would ensure policy continuity and is seen as beneficial for the country’s long-term growth.

While Indian voters tend to vote differently in national and state elections, an increase in vote share in these states is seen as a morale booster for the BJP. This signals a firm standing of the political party in the 2024 elections. The election outcome also reinforces that the BJP’s policies have a strong resonance among voters. Politically, this is significant as it will eventually translate into higher representation for the BJP in the Upper House (Rajya Sabha). This will ensure the faster passage of key legislation.

In a way, the markets felt relieved about the election results, as increasingly political parties have been relying on freebies to attract voters, which have often proven to be bad for fiscal math. Markets were worried that if the ruling BJP had put up a bad show in the state elections, the political party would have relied on appeasement politics ahead of the general election slated in May/June next year. Now, after positive state election results, there is no pressure on the central government to announce any large fiscal stimulus.