Prime Minister Narendra Modi looks on after inaugrating Kishanganga Power Station (330 MW) Bandipora, during a function at SKICC in Srinagar. (Source: PTI)

India's Opposition Sees Path to Ousting Modi as Prime Minister

(Bloomberg) -- India’s main opposition Congress party sees only one viable path to take down Prime Minister Narendra Modi in elections due by May: Make as many friends as possible.

Congress is working with local politicians in some of India’s biggest states to form a broad anti-Modi coalition, according to P. Chidambaram, a senior party leader and former finance minister. Congress is the only nationwide political organization in India apart from Modi’s ruling Bharatiya Janata Party.

“If we have strong state-specific coalitions, it is possible to win a majority in parliament,” Chidambaram said on Sept. 6 as a monsoon shower thundered down outside his residence in a leafy, upscale neighborhood in New Delhi. “That is the clearest way to have a fair chance of dislodging the BJP.”

Right now, it’s an uphill battle: Congress still has no formal agreements with the parties it needs to have a realistic shot at ousting Modi, who remains India’s most popular politician and would easily defeat a fractured opposition. But it is starting to make progress, linking up with regional parties to defeat the BJP in recent local elections and building a more concerted attack on Modi’s handling of the economy.

Despite boasting the world’s fastest economic growth for a major economy, India’s stocks and currency have been battered in the recent emerging markets rout. The Congress party joined with other opposition groups earlier this month in backing a nationwide strike over rising fuel prices as the rupee reached a record low of 72.5 to the U.S. dollar.

“While the probability of a ‘grand coalition’ government remains low, it is a risk that investors are monitoring,” said Priyanka Kishore, head of India and South East Asia, Macro and Investor Services at Oxford Economics. “There is a general consensus that reforms will suffer in the absence of a BJP-led government at the center. This wouldn’t bode well for the economy, which is already grappling with several challenges.”

Neck and Neck

Polls show that Congress could pull off a surprise win if it links with other parties. An India Today survey in August showed the BJP easily winning a majority if it fights the same Congress-led alliance that run in 2014. But, it said, the race would be neck and neck if Congress links up with the two major regional parties in Uttar Pradesh, India’s most populous state, and another one in West Bengal, a state with more people than Germany.

Congress has shown signs it could build such an alliance. In May, Congress and a regional party linked up to stop the BJP from forming a government in the southern state of Karnataka. After the victory, opposition leaders from across India showed up to fete their new chief minister at his swearing-in ceremony in Bengaluru, formerly known as Bangalore.

Widely-published photos showed the disparate group on stage hugging and holding hands aloft with Congress leaders in a show of strength. They included the powerful chief ministers of Andhra Pradesh and West Bengal (who have both separately sparred with Modi), and two former chief ministers from the state of Uttar Pradesh who suspended a fierce rivalry to defeat the BJP in two closely-watched by-elections.

“People want to see that the team or the coalition they’re supporting has a chance to be the winner -- and that message is emanating from Uttar Pradesh,” said Ghanshyam Tiwari, a former McKinsey consultant who is now a national spokesman for the Samajwadi Party in Uttar Pradesh. “This gives a message to the country: that one can beat the BJP if the coalition and the leadership is right.”

The BJP ridicules the idea that Congress can form a grand coalition against Modi. The by-election victories they had in northern India were fought on local issues, and had no broader significance, while the Karnataka election was an opportunistic post-election alliance, said G.V.L. Narasimha Rao, a BJP spokesman.

“Their talk of a grand alliance only manifests their insecurity, and their desperate effort to stay afloat,” he said, adding that the BJP is rolling out development programs for the poor that will increase its support at the next election.

Modi will have a tough job replicating his 2014 victory, which was the first time in three decades a single party won a majority in India. Since then, he passed the country’s most significant tax reform since independence, contained inflation and lambasted the opposition as he extended the BJP’s rule over 20 of India’s 29 state governments.

Rising Tensions

Even so, opponents have questioned his management of the economy and moves they say have stoked tensions between the Hindu majority and Muslims. While growth rates are high compared with other emerging markets, Congress says Modi’s move to invalidate almost all of India’s cash on a whim led to significant job losses while doing little to achieve its objective of weeding out illicit funds.

Several obstacles stand in the way of a grand opposition alliance, however, including the question of who would be prime minister. Rahul Gandhi, the scion of the Nehru-Gandhi dynasty that led India after independence from the British, remains less popular than Modi and may struggle to hold the alliance together.

Powerful leaders such as West Bengal’s fiery Mamata Banerjee, who fights for the rights of her Bengali voters, and Andhra Pradesh’s N. Chandrababu Naidu, who withdrew his support from the BJP when Modi’s government didn’t grant his state special status, may not want to take orders from Gandhi’s Congress party, according to Shailesh Kumar, Asia director at the risk firm Eurasia Group in Washington, D.C.

“The only thing that would hold this alliance together is being against the BJP,” Kumar said. “Which isn’t good enough.”

©2018 Bloomberg L.P.