After the 2017 Gujarat elections, trends forecast a loss of about 40-80 seats for the Bharatiya Janata Party in the 2019 general election. With the recently concluded state elections in Rajasthan, Madhya Pradesh and Chhattisgarh, the vote share trend seems to further strengthen the forecast of a decline in BJP seats from 2014.

To understand how declining vote share differences could impact BJP seats in 2019, a simple model was developed to understand three different scenarios. The below table shows the data of BJP seats and the margin difference from parties in the second position in key states. The optimistic scenario accounted losses of the BJP seats which were won by less than a 5 per cent margin in 2014, and the pessimistic scenario assumed that the BJP would lose seats that they won in 2014 with a margin of less than 15 per cent. The base scenario assumes a loss of seats that were won with a margin of less than 10 per cent. Of the total 282 seats won by the BJP in 2014, the BJP could lose anywhere from 28 seats (optimistic) to 125 seats (pessimistic).  In the base scenario, the BJP seat loss would be 73 seats for a new total of 209 seats.

It is difficult to pinpoint exactly why voters are moving away from the BJP in state elections. Some portion of this could be just the extremely high expectations from 2014 which gave the BJP a disproportionate share of seats in key states such as Uttar Pradesh, Madhya Pradesh, Rajasthan, Gujarat, Bihar and Delhi. A large part of that wave was driven by the promise of “achhe din aane wale hain (good days are coming)”.

However,  the electorate could feel that the good days have not yet arrived. The relative lack of economic growth for the average voter can also be seen in an analysis of S&P 500 vs NSE returns by Raltin, a financial data and research site. The analysis shows that the dollar adjusted NSE return from June 2014 to Nov 2018 and the compounded annual growth rate (CAGR) of 5.45 per cent is worse than the S&P 500 (the US Benchmark)  of 7.07 per cent.

The relatively slower growth of dollar adjusted NSE compared to the S&P 500 is a combination of modest outperformance of the NSE in local currency terms which was dragged down by the Rupee–decline of nearly 20 per cent from 59 INR/USD in June 2014 to 70 INR/USD in Nov 2018. This underperformance of the dollar-adjusted NSE, which gives a good view of the overall Indian economy, is especially disappointing given than that the S&P 500 is supposed to be a slow grower compared to the NSE, which is supposed to reflect the high growth potential of India.

The average Indian voter may not understand these larger macroeconomic factors but is feeling it in their pocketbook and standard of living. This lack of acche din is reflected in key groups moving away from the BJP, a reduction in vote share and ultimately, a decline in BJP seats for 2019. Given the projected deficit of approximately 70 seats (base scenario) for 2019, the BJP may want to start playing nice with existing allies such as Shiv Sena and Janata Dal-United and form post-poll alliances with parties such as Biju Janata Dal and Telangana Rashtra Samithi to support the government.

If this does not happen, then the alternative would be a patchwork of alliances between the Congress and a plethora of regional parties such as the Bahujan Samaj Party, Samajwadi Party, Trinamool etc. Each group has its own competing state-level priorities and the support may become “conditional” depending on the issue. Indian political history has shown that “conditional” support doesn’t necessarily lead to a period of political stability.