Elephant in the room
With opinion polls predicting around 200 seats for the ruling alliance, NDA will need a different path to government formation in the Lok Sabha polls. The Congress tally is unlikely to cross 120 seats, says Kotak Institutional Equities

The ruling National Democratic Alliance coalition may need a different path to government formation in the forthcoming general elections. Two recent opinion polls on the 2019 general elections to be held in April-May predict that the NDA will fall short of the required majority. We note that the BJP/NDA will have to contend with (1) a revived Indian National Congress in some states, (2) regional pre-poll alliances in others and (3) possible anti-incumbency despite the unabated popularity of Prime Minister Narendra Modi.

Difficult for the BJP to reprise the 2014 template; recent surveys put BJP at around 200 seats:

Two recent opinion polls (ABP News-CVoter Survey and India Today-Karvy Survey) on the 2019 general elections and results of recent state elections suggest that the BJP will find it harder to repeat its phenomenal victory of 2014 and the ruling NDA coalition may need a different path to 272+ seats compared to the 2014 elections. Both the opinion polls forecast about 200 seats for the Bharatiya Janata Party and about 235 seats for the ruling NDA coalition. We note that the BJP has 153 of the 171 seats in Chhattisgarh, Gujarat, Madhya Pradesh, Rajasthan and Uttar Pradesh. (1) A revived INC (Congress) in Chhattisgarh, MP and Rajasthan, (2) a credible pre-poll alliance of Bahujan Samajwadi Party and Samajwadi Party in UP and (3) anti-incumbency may make it tougher for BJP to replicate its 2014 performance in these five states.

BJP faces a stronger INC in Chhattisgarh, Madhya Pradesh and Rajasthan:

Our hypothetical exercise based on extrapolating the votes of BJP and INC in the assembly seats of Madhya Pradesh and Rajasthan in the 2018 state assembly elections into their corresponding Lok Sabha constituencies shows that the BJP will likely win around 15 seats in Madhya Pradesh and around 10 seats in Rajasthan in the 2019 general elections, thereby notching 25 seats less than its cache in the 2014 general elections in these two states alone. The risks could be accentuated if other smaller players were to support the INC in these two states, given its recent upsurge, in a bid to thwart the BJP nationally. We would note that the BJP’s vote share in rural Madhya Pradesh fell below the INC’s. However, we note that our exercise is purely hypothetical as issues relevant to the general and state elections may be quite different.

Pre-poll alliance of BSP-SP in Uttar Pradesh will pose a strong challenge to the BJP:

Our hypothetical exercise for Uttar Pradesh based on votes of the major parties in the 2014 general elections shows even more intriguing possibilities. We club the votes of BSP and SP together in each LS constituency to re-compute the votes of each party and ‘alliance’. Our hypothetical exercise shows the BJP’s seats declining by about 35 (50%). We see a similar ‘outcome’ based on the vote shares of BJP and BSP + SP in the 2017 state assembly elections in Uttar Pradesh. The BSP and SP have fairly dedicated and separate voter bases.

Significantly more difficult for INC to reach 140-150 seats to form an INC-led UPA government:

The two opinion polls suggest the INC winning about 110 seats and the UPA coalition 166-167 seats. We find it implausible for the INC to cross 140-150 seats, which we believe would be necessary for an INC-led UPA-III government. The INC has 48 seats in the current Lok Sabha. Even if it were to gain 10-15 seats each in MP, Maharashtra and Rajasthan at the cost of the BJP and 20-30 seats elsewhere, it will likely not cross 120 seats without a major improvement in Andhra Pradesh, Bihar and UP. It does not have much of a presence in Bihar and UP (with four seats in these two states), which together account for 120 of the 543 seats in the Lok Sabha.

—Kotak Securities