Modi wins in West Bengal for the first time
NEW DELHI, INDIA – MAY 4: Bharatiya Janata Party (BJP) leader and Prime Minister of India Narendra Modi (C) greets people as he arrives at the party headquarters to deliver a victory speech on May 4, 2026 in New Delhi, India. The BJP emerged victorious in the tally of West Bengal and Assam state assembly election results. (Photo: Imtiyaz Khan/Anadolu via Getty Images)
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Indian Prime Minister Narendra Modi’s Bharatiya Janata Party scored a historic election victory in West Bengal on Monday, strengthening its grip on power as the country grapples with economic challenges and the urgent need for reform.
Modi’s popularity appeared to have waned in June 2024 when his party failed to win an outright majority in national polls and was forced to form a coalition government for his third term as prime minister.
The Indian government has since spent money on populist welfare programs and, more recently, fuel subsidies, but strengthening Modi’s political popularity could provide room to rationalize some of that spending, experts said.
The latest results of the state polls have put to rest concerns about Modi losing political momentum. BJP won 206 out of 294 seats He forms his first state-level government in West Bengal.
In a post on X following the results, Modi announced: “Lotus Blooms in West Bengal!” a nod to his party’s symbol. “People’s power has prevailed and the BJP’s policy of good governance has triumphed,” he said.
Of the 11 state elections held since 2024, the BJP and its allies retained power in four states and gained strength in two others; which reflects “the continued popularity of Prime Minister Modi and his party”, global brokerage. Citi It was stated in a memo on Monday.
“Markets are hoping for a strong political mandate and easier coordination with the state [governments] “Citi will facilitate better implementation of various policy and process reforms,” he said.
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The Indian government has been reluctant to pass on rising energy costs to consumers and has instead cut central excise taxes on fuel to prevent pump prices from rising, taking a “massive hit” to tax revenues.
Besides fuel subsidies, the government is also spending money on populist measures. More than a dozen Indian states plan to spend up to 2.5 trillion rupees ($26.2 billion), or 0.5% of GDP, on unconditional cash transfers to eligible women to help cover household expenses, Bernstein Research said in an April 23 report.
“This win certainly empowers the government politically to make difficult decisions at a time of economic crisis caused by the Middle East war,” Ashok Malik, partner at public policy think tank The Asia Group, said in an interview with CNBC.
The government will have the opportunity to “increase prices” on energy products, he said, adding that rationalizing some of the populist spending or social aid spending will also be on the agenda.
But experts say more needs to be done to accelerate reforms to address the economy’s fundamental weaknesses as long delays push foreign investors into alternative markets.
Need for reform
India’s net foreign direct investment flows are “close to an all-time low of $0.5 billion” in the 12 months ending January 2026, Morgan Stanley said in its April 22 report. This trend is likely to continue, the bank said.
Foreign portfolio investors also They are exiting the Indian stock markets in record numbers. Since January this year, they have sold Indian equities worth more than $20 billion, according to data from the central depository; This surpasses the $18.9 billion sold in all of 2025. NSDL.
Rising fuel prices and the flight of foreign investors weakened the market. rupee It is causing record lows against the dollar and deepening economic troubles.
Meanwhile, white-collar jobs in India’s information technology sector are shrinking as global AI technology advances, and manufacturing jobs are not growing enough. Close to 45% of India’s population continues to depend on agriculture, a sector that contributes only 15-16% to the economy.
The government’s last attempt to reform agriculture failed in 2021 after facing intense protests from farmers.
“Having a grip on the electoral map necessarily translates into faster reforms,” said Shumita Sharma Deveshwar, chief India economist at financial analytics firm GlobalData TS Lombard, adding: “India really only reforms when it is in crisis.”
The electoral victory in the state polls now gives the BJP and its allies a close to two-thirds majority in the upper house of parliament, but it still lacks the strong mandate needed to pass tougher reforms in the lower house, according to experts interviewed by CNBC.
