(Bloomberg) -- Prime Minister Narendra Modi’s party looks set to retain power in his home state of Gujarat, a result that’s key to sustaining momentum ahead of India’s national elections early 2019.
The Bharatiya Janata Party will win 99-146 seats in the 182-seat legislature, according to five surveys published after voting closed on Thursday. That’s higher than the 92 needed for a majority and compares with the 115 the BJP won at the previous election in 2012, when Modi was still leading the state. The main opposition Congress party is projected to win 36-82 seats before the official tally on Monday.
The electoral contest had gotten bitter over recent weeks as the Congress tapped into vocal discontent against Modi’s economic policies, causing anxiety in the financial markets. If the exit polls are correct, this victory will help boost Modi before the national vote and embolden his party enough to continue overhauling business and economic policies through like-minded administrations at the provincial level.
"It will be a sigh of relief for the markets," said Tirthankar Patnaik, Mumbai-based chief strategist at Mizuho Bank Ltd. If the official results Monday show about 110-115 for the BJP it will be considered "business as usual," he said, but if they "get a figure much to the north of 120, then we’re talking of different things, we’re looking at a very positive surprise to the markets."
Gujarat has long been a bastion of BJP support. The party has held Gujarat for two decades with Modi at the helm for about 12 of these, developing a reputation as a capable administrator. He campaigned for national office in 2014 largely on his record in Gujarat, promising to bring similar economic development to the rest of India.
The BJP will also wrest control of the small Himalayan state of Himachal Pradesh from the Congress, most polls predict. Doing so would extend the party’s hold to 19 of India’s 29 states.
"If the exit polls are accurate -- and let me emphasize ‘if’ -- they confirm what we already know: it is very difficult to defeat Modi on his home turf," said Milan Vaishnav, senior fellow at the Carnegie Endowment for International Peace in Washington. Given that Modi’s administration is focused on turning around India’s investment cycle amid as many as eight state elections next year, the Gujarat result won’t "move the needle too far in any direction," he said.
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