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State assembly polls: Tempest in the tea pot

Why state poll results won't mean much for BJP's prospects at the centre

Manu Kaushik  |  Mumbai 

Off-late equity market has been abuzz with 'Namo Namo' chant while benchmarks gun for a piece of the moon each time the M-word is mentioned.

opened with a gap-up on Thursday after exit polls results hit the headlines, a day earlier. With Wednesday’s polls in Delhi, state assembly polls came to an end.

If exit polls are anything to go by, the Bharatiya Janata Party (BJP) is likely to come to power in at least three — Rajasthan, Madhya Pradesh, Chhattisgarh — of the five states where Assembly elections have just ended, leaving Congress panting with far east northern state of Mizoram in its kitty, a political pygmy by its weightage at the centre.

Exit polls conducted by various agencies projected a BJP win in at least three out of five states where state assembly polls were conducted in the month of November and December. Final results of these state elections will be announced on December 8.

BSE Sensex shot up 250 points to end at 20,957.81 and NSE’s Nifty gained 80 points, to close the day at 6,241, after touching a high of 6,300.55 on Thursday.

India VIX, which is key measure of volatility in the market, plunged 8.6 per cent to 21.68, showing stability returning to after a long spell of volatility.

Investors seem to be placing their bets on the notion that a good performance by the BJP in the state assembly polls will reflect in party’s prospects at the centre.

But this seems to be a tempest in the teapot situation suggests a Bank of America Merrill Lynch report. According to the report, the states where exit polls positioned BJP ahead of others are already BJP strongholds. And the joker in the pack remains that these states account for 72 seats in the Lok Sabha which is a mere 13% of the total 543 seats, a minimum of 272 seats are required to form a majority. The same seats accounted for 30% of total seats won by the national right-wing party in 2009 elections and 41% in 2004 elections.

BOFA-ML negates the hypothesis that doing well in these four states will set the stage for a grand BJP victory at the national level in 2014 elections.

In an earlier report, the global investment bank said the outcome of the assembly elections may not necessarily reflect in the national elections.

“Does the voting in the assembly elections reflect the eventual outcome of the Lok Sabha elections? The voting of the assembly elections generally reflects in the Parliament elections in the same states if they are just 6 months away. However, as the 1999 experience taught us, this is not necessarily the case.”

“Doing well in these states is not enough to indicate the direction of the 2014 election; it only indicates a direction where these 13% seats could go.“ said Jyotivardhan Jaipuria, Head of research, Bank of America Merrill Lynch.

Positive results for BJP in the assembly polls before the 2014 general elections will boost the party's morale and at best help in attracting allies. But this does not corroborate a potential good performance at the national level, show past elections. In 2003, BJP won three out four of these larger states and yet failed to win at the centre.

By now it’s a known fact that market participants right left and centre of the spectrum are placing their bets on Modi. Many-a-foreign brokerages, beginning with Goldman Sachs to Nomura have placed their bets on the man super who once claimed to rescue thousands of Gujaratis from Uttrakhand’s calamity in a kryptonite fashion.

In a report titled 'Modi-fying our view', Goldman Sachs upgraded its rating on Indian equity market to marketweight from underweight on hopes that BJP-led National Democratic Alliance "could prevail" in the 2014 elections.

In Rajasthan, BJP is projected to win 125 seats out of 200 while Congress, which is currently the incumbent, is predicted to bag around 55 seats. This will see Rajasthan slipping from Congress’ dream led by Ashok Gehlot to Narendra Modi-led party. BJP currently has 78 seats while Congress has 96 seats in the state.

For Madhya Pradesh, BJP, which is the incumbent, is predicted to be re-elected for a third-term. BJP gets 141 seats while Congress has to make do with 77, according to exit polls. 115 is needed for getting the majority in the state.

In Chhattisgarh, BJP with Raman Singh is likely to make a comeback for a third-term with 52 seats, while 45 is required to form a government there. Congress is seen getting 35.

In Delhi, where 35 is needed to form the government, BJP is likely to get 34, Congress 17 while Aam Aadmi party is seen making a strong debut with 17 seats.

For Delhi, the polls on Wednesday veered between a hung House prediction and a slim majority for BJP. No poll saw the Congress even close to returning to power in the capital.

New Delhi constituency recorded its highest voter turnout well above 70 per cent led by participation from youth.

According to the exit polls, the Aam Aadmi Party (AAP), contesting its maiden election, may win between 6 and 31 seats in the 70-member Delhi House.

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First Published: Fri, December 06 2013. 17:44 IST
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