What if Narendra Modi loses?

It may not be the outcome with the highest probability, but with less than a week to go for the results, one that deserves consideration – after all, nothing is ever certain with election verdicts.

For what it’s worth, the thought has already started weighing on the psyche of punters, with the stock market appearing moody and the satta bazaar (betting market) pulling back odds of a Modi sweep significantly from where it had been pegged in March after February’s Indian Air Force strikes in Balakot, Pakistan.

Bharatiya Janata Party leader Ram Madhav is talking openly about the need for coalition partners and these partners are rubbing their hands in anticipation of a National Democratic Alliance government reliant on them, so that they can knock back some of the hubris of the last term. To be fair, these are only murmurs, with the overwhelming expectation (or fear) still of Modi returning as prime minister, albeit with a reduced tally. But then, what if.

Loss or loss of face?

First, it is important to define what would constitute a loss. A tally of around 200 seats, even just under, clips Modi’s wings a bit, but will still be enough for a BJP-led National Democratic Alliance government. There would be less bluster from the saffron brigade and no wild celebrations, just a muted sigh of relief, with Opposition parties claiming moral victory at the reduced majority.

This won’t be a defeat for Modi, only a loss of face. He will be quiet for a few weeks and then return to his usual rampaging self. But, if the BJP tally were to slip to say, under 175, and the National Democratic Alliance fails to cobble up the 100 additional seats from its allies and elsewhere, then we may actually have a different prime minister.

This generally unexpected outcome – it is May 23 and Narendra Modi is gone – is what lends itself to interesting analysis.

Financial markets

The first reaction will be from the financial markets, which hates surprises almost as much as Left-leaning governments. The Sensex will tank, may even hit a lower circuit with trading halted, as Modi-loving investors and brokers swoon at the debacle. It will seem like a great calamity has befallen the nation, one from which it will never recover. But then, markets are impetuous beasts, which soon recognise the folly of overreactions.

In May 2004, the Sensex tanked 20% in two days after the election results brought in the Congress-led United Progressive Alliance government, which unseated Atal Bihari Vajpayee’s BJP-led regime. By December, however, it had rallied 20% from the pre-results level and 50% from the post sell-off lows. The calamity was forgotten. If markets tank following a Modi defeat, this lesson from history will be worth remembering.

Modi did nothing to change the course of markets in his five years at the helm and therefore his departure – or continuation – has little or no bearing on the trajectory of corporate earnings, which ultimately the markets are slave to. Emotions, though, are a different matter.

What happens to the economy?

The next big round of chest beating will be about the economy. If Vikash Purush (development hero), is gone, who will save India?

Again, any lamentation will be a gross overreaction, glossing over hard facts of the Modi tenure. One can only be disappointed at someone’s departure if that person delivered miracles at the helm. Modi promised he would, but did not. It is a fair wager that India would have continued to grow at the same pace in the last five years, regardless of who was prime minister. Of course, without demonetisation, it may have been a bit faster.

Whoever wins on May 23, we should restrain our celebration or despair.

The Goods and Services Tax – the backbone of our tax structure – is in place, and that ensures that any tinkering by the next government will only be on the margin. But, whether it is Jaitley or Chidambaram or someone else, that person has their job cut out.

The country faces deep structural problems that need to be addressed. More immediately, there is a well-entrenched cyclical slowdown under way, which demands urgent attention.

So far, none of the potential prime ministerial candidates have said anything to suggest that they have the foggiest idea about solutions, but any dispensation would have to tend to this – either through a well thought out fiscal stimulus and credit enhancement blueprint or NYAY or some form of basic income guarantee.

That is the hard reality of running the country, shorn of the rhetoric of the last few months. Modi or no Modi, it does not matter. India has a jobs problem, a farm crisis, a manufacturing problem, an exports mess, investment freeze and rural demand slowdown, all of which have only become worse over the last five years. Why do you think Modi speaks only about the departed these days?

Stability of new government

Once the initial shock has played out, the discussion will inevitably turn to one of the government’s stability. This is an important issue as it is not an imagined one.

If the Congress manages to somehow get between 125 and 130 seats, it is conceivable that we could have a Congress-led United Progressive Alliance government with support from other regional parties who despise Modi. This may not be that unstable.

Or there could be a Third Front government supported by the Congress, which is unquestionably shakier. This, frankly, is the only downside of a Modi defeat – the prospect of the next government not lasting the distance, and during its tenure not being able to coordinate well enough to address the looming policy issues. Much will depend on the numbers of the second largest party.

Social changes

While economically, the verdict may not change much unless it is a totally fragmented coalition, socially it will.

The grave wounds of the last five years may begin to heal, slowly. Mob lynchings are likely to stop. The destruction of institutions may be arrested. Hate will not go away, certainly not in North India, but hopefully diminish.

Is political instability an acceptable price for this healing? Perhaps it is. It depends on where you are in the social ladder.

Will heads roll?

Finally, what would such an outcome mean for members of the BJP?

If Modi loses, it would only be if he has lost Uttar Pradesh, and that probably means curtains for Chief Minister Adityanath in the next state polls in 2022.

Will BJP president Amit Shah continue to be allowed a free hand over the party, or will he be the fall guy?

What about Modi, who has not spent a solitary day outside of power since 2001? Will he be able to stare at himself in the mirror and live with the humiliation of defeat? Can his 56-inch chest bear it?

But then maybe, after May 23, he will be able to spend quality time with his new bestie – Akshay Kumar. Or better still, suck on mangoes as he dreams of clouds over Pakistan. Only if.

Udayan Mukherjee is a financial commentator and author of the novel Dark Circles.