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India's Modi Wins State Poll, May Boost PM Ambitions

Thursday, 20 Dec 2012 | 6:53 PM ET
Stockbyte | Getty Images

Narendra Modi won a fourth successive term as the chief minister of India's Gujarat state on Thursday, a victory that could launch the prime ministerial ambitions of one of the country's most popular but controversial leaders.

Modi's Hindu nationalist Bharatiya Janata Party (BJP) won 115 of the state legislative assembly's 182 seats against 61 for the Congress party, which heads India's national government.

The result is likely to have repercussions far beyond the borders of the prosperous western state of 60 million people.

The BJP won 117 seats in 2007 and analysts say Modi needed another convincing victory to present himself as the party's presumptive candidate for prime minister in national elections due by 2014.

(Read More: Indian State Vote May be First Step to Modi Versus Gandhi Face-Off)

Modi's win could fire up the ailing main opposition BJP, giving it a leader who inspires euphoric support for the high growth, uninterrupted power supply and safe streets he is credited with providing in Gujarat.

But the 62-year-old Modi, portrayed by his critics as a closet Hindu zealot, could prove too divisive a figure to become a nationally acceptable leader who would also need to win over enough allies to form a coalition government.

That could play into the hands of the Congress party as it prepares to launch Rahul Gandhi, heir to India's most powerful political dynasty, as the man to take over the reins from Prime Minister Manmohan Singh.

"Markets will now ponder upon whether the PM candidate from the BJP will be Narendra Modi, and whether we are looking at a showdown between Narendra Modi versus Rahul Gandhi in 2014," said Deven Choksey, managing director of K R Choksey Securities.

(Read More: India Lowers Growth Forecast, Says on Track for Deficit)

To his detractors, Modi's reign is overshadowed by Hindu-Muslim riots that tore through his state 10 years ago, killing 1,000-2,000 people. Critics accuse him of not doing enough to stop the violence, or even quietly encouraging it, allegations he has strenuously denied and have never been proven.

But that has not stopped him winning successive elections, touting his credentials as an effective economic manager in contrast to the policy drift in New Delhi that has helped drag India's economic growth to its worst pace in a decade.

Modi's supporters shouted "PM, PM" at his victory speech. He addressed the crowd in Hindi rather than Gujarati, which was seen by commentators as an attempt to address a national audience in preparation for a possible run for higher office.

"I apologize for the mistakes I've made," Modi told the crowd. "You have given me power. Give me your blessings so that I make no mistakes in the future."

Modi first came to power in Gujarat in 2001, and subsequently won elections in 2002 and again in 2007.

Played Down

He has always publicly played down a possible bid to become prime minister, saying Gujarat was his priority.

His supporters' admiration is shared by Indian and foreign business leaders who extol Gujarat's ability to cut through red tape and find cheap land for factories, drawing investment from firms including Ford Motor and Tata Motors.

The question will now turn to whether Modi will secure the backing of the BJP, which has been plagued by internal squabbling and has lacked a leader to galvanize the party's Hindu, middle class "vote bank".

"Modi means development," said Shrikant Sharma, a BJP spokesman. "A lot of Indians expect him to be made the prime ministerial candidate, but that's a call the party will take."

(Read More: Why India Struggles to Deliver Its Growth Potential)

Modi's appeal outside Gujarat is largely untested. Gujarat has been a BJP stronghold since the 1990s and benefited from a weak state-level opposition. But his campaigns on behalf of the party outside his home state have had mixed results.

"Modi has had a history of championing Gujarat, but this reputation for provincialism is obviously a liability if you're aiming to lead a huge, diverse country of 28 states," said Anjalika Bardalai, an analyst at the Eurasia Group.

"His reputation as a Hindu hardliner ... is of course a major potential liability in a country with a non-Hindu population of about 20 percent."

Critics, even within his own party, see Modi as arrogant and divisive. He is also likely to struggle to revive the BJP's fortunes in northern states with large Muslim populations, and could struggle to win regional allies - who rely on religious minorities - to form a national coalition.

That could help the Congress party, although it has seen its popularity slide while in power due to voter anger over slowing growth, high inflation and a string of corruption scandals.

It might be tempted to call an early election next year if the BJP looks weak enough, but analysts said this was unlikely.

"They still have to prepare themselves in other parts of India, which they haven't done yet," said Badri Narayan, professor of politics at G.B. Pant Social Institute in Allahabad. "They need the next one year to boost their policies and pass reforms. It'll take time."

Meanwhile, the Congress party won a consolation prize on Thursday, taking back the mountainous state of Himachal Pradesh from the BJP in the second of two provincial elections.

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