Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) faced an unexpected defeat in the recent elections, despite previously enjoying robust support from voters. This shift is seen as a result of widespread economic discontent among the populace, particularly in Uttar Pradesh, India's most populous state.
In the early June elections, Modi's BJP secured 240 seats in the lower house, far short of expectations and significantly below the majority mark of 272 seats. Consequently, Modi now requires the support of allies to form a government, which dilutes his control over the Lok Sabha and the Cabinet. This outcome introduces potential instability and challenges to policy implementation within the coalition government.
A critical factor in Modi's electoral loss was the defection of voters in Uttar Pradesh, a traditional BJP stronghold. Economic issues played a pivotal role in this shift. Many voters, particularly in the poverty-stricken regions, felt left behind by Modi's economic policies. Digambre Jitangre, a farmer in Uttar Pradesh, exemplifies this sentiment. Earning less than $150 a month, Jitangre expressed his disenchantment with the BJP, noting that despite supporting Modi in previous elections, his economic situation had not improved, and he still lacked access to clean drinking water.
When Modi first took office a decade ago, he promised sweeping economic reforms to uplift the Indian populace. Under his leadership, India's GDP indeed grew rapidly, creating numerous billionaires and a burgeoning middle class. The government even claimed to have nearly eradicated extreme poverty. However, the reality is that a significant portion of India's 1.4 billion population did not benefit from this growth. Around 600 million Indians still live on less than $3.65 a day, defined by the World Bank as below the poverty line.
The stark disparity between the wealthy elite and the struggling masses became a major obstacle for Modi in this election. In Uttar Pradesh, where economic hardship is pervasive, voters were particularly disillusioned by rising prices and stagnant incomes. This discontent translated into a significant loss of support for the BJP.
Contrasting sharply with the plight of ordinary citizens is the prosperity of India's oligarchs. During Modi's tenure, economic reforms and substantial infrastructure investments have significantly increased the wealth of India's top business magnates. According to The Wall Street Journal, the top five oligarchs in India control vast sectors of the economy, including 25% of the ports, 45% of cement production, one-third of steel production, nearly 60% of telecom users, and over 45% of coal imports.
This economic dominance has also bolstered the stock market. In the 2022 fiscal year, the top 20 companies listed on the National Stock Exchange generated 80% of the profits among all listed companies. As of the 2023 fiscal year, the combined market value of companies owned by these oligarchs represented about 18% of the total market capitalization of the Bombay Stock Exchange.
For instance, the Tata Group's market value reached $249.1 billion, up 188% from 2012, representing 8% of the total market value. Similarly, the Aditya Birla Group, Reliance Industries, and the Adani Group have all seen substantial growth in their market values, reflecting their significant influence on the economy.
Economists like Viral Acharya of New York University argue that these powerful conglomerates, known as the "Big Five," are skewing the Indian economy, making it difficult for small and medium-sized enterprises to thrive. Their monopoly over key sectors means that ordinary Indians are often unable to benefit from the country's economic growth.
Thomas Piketty, a renowned economist, highlighted that during Modi's first decade in power, income inequality worsened, with the wealthiest 1% controlling 25% of the nation's wealth-the highest concentration since the 1920s. The combined wealth of India's two richest men, Gautam Adani and Mukesh Ambani, exceeds the country's annual defense budget more than twice over.
The vast economic disparity and social division are crucial factors behind the disenchantment of Uttar Pradesh voters with Modi. The perception that the government favors wealthy elites over ordinary citizens has driven many to withdraw their support, posing a significant challenge for Modi's political future.
