Will Modi-led BJP convert the market's wish into a reality?

The BJP's prime ministerial candidate Narendra Modi will need to break several records to emerge victorious in the next Lok Sabha elections. Mayank Mishra reports

Global investment banking firm Goldman Sachs had on November 5 upgraded its rating for Indian markets from underweight to market-weight on the back of what it calls the change in India's political climate.

The latest Goldman Sachs report observes: "Equity investors tend to view the  Bharatiya Janata Party as business-friendly, and the BJP's prime ministerial candidate Narendra Modi (the current chief minister of Gujarat) as an agent of change. Current polls show Modi and the BJP as faring well in the five upcoming state elections, which are considered lead indicators for the general election next year."

The report clearly indicates Modi's victory is a foregone conclusion for share-market watchers, who are taking cues from the various opinion polls that say the BJP has an edge. However, Modi-led BJP will have to break many records to convert the market's wish into a reality.

The BJP got a modest 18.8 per cent votes in the 2009 Lok Sabha elections -- the lowest since 1991. The conventional wisdom is that if the party has to come anywhere close to winning 200 Lok Sabha seats in the next Lok Sabha elections, it has to grab 25-26 per cent vote share. Such a massive positive swing in excess of six per cent has rarely happened in the country's electoral history.

The 1984 Lok Sabha elections, held in the immediate aftermath of the then prime minister Indira Gandhi's assassination, had seen a positive swing of more than six per cent for the Congress. The BJP, too, has seen its vote share increase from 11.4 per cent in 1989 to 20 per cent in 1991, a swing of nearly nine per cent. However, that happened when the Ayodhya movement was at its peak.

The BJP did manage a positive swing of five per cent of votes yet again in the 1998 Lok Sabha elections when it managed to get 25.59 per cent votes and 182 seats.

Analysts attribute the BJP's 1998 performance, the best ever by the party till date, to two factors: Political instability of the preceding two years which saw two prime ministers and the party's association with more than a dozen allies. To come anywhere close to the 1998-mark, Modi has to ensure a record-breaking positive swing of at least six per cent or roughly 30 million votes at a time when his party's vote share has been falling for the past four elections. That too with very few allies.

Is it possible? V B Singh, former director of the Centre for the Study of Developing Societies (CSDS) observes "To repeat 1984 and 1991 in 2014 will be some sort of a miracle. However, ground reports do suggest favourable condition for the BJP. Whether that means a positive swing of six per cent or more is tough to gauge at the moment."

According to him, the BJP can hope to add to its tally in states such as Uttar Pradesh, Bihar, Gujarat, Rajasthan, Haryana, Maharashtra and Delhi, while it may suffer losses in Karnataka.

Positive vote swing is not the only record Modi will have to break. He will also have to ensure his party reaches close to its highest ever conversion ratio of nearly eight it achieved in 1996. The conversion ratio is the ratio of number of seats divided by the percentage of votes, which means the BJP got nearly eight seats for every one per cent of its vote share in 1996. Better conversion ratio ensures large number of seats with incremental gain in votes.

In the 1991 Lok Sabha elections, the BJP had won 120 seats and got 20 per cent votes with a conversion ratio of six. After rising to nearly eight in 1996, the ratio fell marginally in 1998 and 1999 and dropped to nearly six in 2004 and stayed there even in 2009. Analysts attribute such a fall to the BJP's relative decline in states such as Uttar Pradesh where there are multi-cornered contests.

In bi-polar contests, which is the scene in states such as Madhya Pradesh, Rajasthan, Gujarat, Chhattisgarh, Himachal Pradesh and Uttarakhand, increase in vote share does not lead to big gains in the number of seats. However, in multi-cornered contests, even a marginal increase in vote share leads to handsome gains in the number of seats, something the Congress benefited from in Uttar Pradesh in the 2009 Lok Sabha elections.

The BJP can hope to reach the magic mark of 200 seats only with at least 25 per cent vote share and conversion ratio of eight. The party has achieved both these numbers, albeit in different elections. Both these numbers were achieved, thanks to the party's impressive show in the electorally important Uttar Pradesh.

Therefore, it all boils down to what happens in multi-cornered contest states such as Bihar and Uttar Pradesh. The BJP had bagged 48 Lok Sabha seats in the state in 1996 and 52 seats in 1998. In fact, in 1998, the party's vote share touched a high of 37.5 per cent. Since then, it has been a downhill for the party. Its vote share slipped to 17.5 per cent in 2009 and then to a mere 15 per cent in the Assembly elections in 2012. The party, therefore, needs a massive swing in excess of 10 per cent to improve upon its current tally of nine Lok Sabha seats from Uttar Pradesh.

"The Modi wave is an urban middle-class phenomenon in the state, beyond which it does not exist at all," says Badri Narayan, professor at Allahabad-based GB Pant Social Science Institute. According to Azamgarh-based political scientist and CSDS' UP coordinator Sudhir Kumar, massive swing for the BJP seems unlikely in UP. "In the 1990s, the BJP was a major beneficiary of religious polarisation. The state and its voters have moved beyond that now," he argues.

In Bihar, the BJP's best ever performance has been the one witnessed in 2009 when it won 12 seats. The party never touched even the double digit mark in all prior elections, if we exclude parts of what is Jharkhand now. Past results indicate the BJP may find it hard to significantly better the 2009 performance.

Another big challenge for the BJP is to register its presence in more than 150 Lok Sabha seats spread across West Bengal, Tamil Nadu, Kerala, Andhra Pradesh and all north-east states except Assam either directly or through alliance partners. Incidentally, the BJP's best ever performance, 182 seats and 25.59 per cent vote share, was when it fought the elections with more than a dozen allies.

For market's hope to become a reality, Modi's BJP will have to overcome all these challenges in an election which is clearly shorn of any emotional issue.