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Paved Road Near Rail Factory Shows India Spoils Up for Grabs

Photographer: Punit Paranjpe/AFP via Getty Images

Narendra Modi’s Bharatiya Janata Party and its allies will win 249 to 340 seats, according to six exit polls released May 12, with 272 needed for a majority. Close

Narendra Modi’s Bharatiya Janata Party and its allies will win 249 to 340 seats,... Read More

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Photographer: Punit Paranjpe/AFP via Getty Images

Narendra Modi’s Bharatiya Janata Party and its allies will win 249 to 340 seats, according to six exit polls released May 12, with 272 needed for a majority.

Two years ago, Dhanyashree Basak lived off a mud road in India’s West Bengal state in a house with daily power outages and an unreliable water supply. A new factory next door that makes railway parts changed all that.

“This has brought development,” said Basak, 34, pointing to the plant outside her home in Dankuni, which now has regular electricity and water and sits beside a paved road. She credits Mamata Banerjee, the head of the All India Trinamool Congress that rules the state and who headed the railways ministry when the factory was approved: “Our village is Trinamool territory,” Basak said.

While most exit polls project that the bloc led by Narendra Modi’s Bharatiya Janata Party will win or come close to a majority when results are announced on May 16, pollsters have overestimated its strength in the past two elections. Fewer-than-forecast seats for the BJP alliance would leave regional parties such as Trinamool holding the balance of power in forming a coalition government.

That would put Banerjee and other state leaders in the nation of 1.2 billion people in a position to vie for key ministries like steel, telecoms, and railways, which has a separate budget and has been held by regional parties for much of the past 18 years. No party has ruled Asia’s third-largest economy alone since 1984, and Congress-led government now in power has seen four parties bolt since elections in 2009.

‘Wish Away’

“One cannot wish away the regional parties,” said Maidul Islam, who lectures on political science at Presidency University in Kolkata and predicts the bloc led by Modi will end up about 40 seats short of the 272 needed for a majority. “They would want ministries like railways and coal in return for their support.”

The prospect of a BJP-led government has boosted Indian stocks to a record this week and propelled the rupee to a nine-month high. The currency gained the most in almost three weeks in offshore markets today, as local trading is shut for a public holiday.

Exit polls project Banerjee’s Trinamool, which isn’t affiliated with the ruling Congress party, and J. Jayalalithaa’s All India Anna Dravida Munnetra Kazhagam in Tamil Nadu state, will be the biggest regional parties, with both winning 20 to 31 seats among the 543 up for grabs nationwide. Parties unaffiliated with the BJP or Congress blocs are forecast to win 146 to 165 seats, down from about 180 seats now, the polls showed.

Kolkata Largesse

The Biju Janata Dal party, which rules the eastern state of Odisha, may consider giving support to a BJP-led coalition in return for financial assistance to the cash-strapped state, Jay Panda, a party leader, told the CNN-IBN television channel today. The BJD is forecast to win 9 to 16 seats out of the 21 in Odisha, according to exit polls.

Under the Congress-led government, in power for the past decade, smaller allies have held the farm, aviation and renewable energy ministries. The alliance headed by the party is poised to win 70 to 148 seats, compared with 249 to 340 seats for the BJP-led bloc, six exit polls released on May 12 showed.

Banerjee, 59, a part-time poet and painter who became chief minister of West Bengal three years ago, has participated in BJP and Congress-led governments since 1999, twice heading the railways ministry. Elevated rail lines have sprung up around Kolkata, the state’s capital, in the past two years after an expansion plan of about $2 billion was approved while her party controlled the ministry.

Dirt Lot

During Banerjee’s second term as railways minister, about 80 percent of funds for metropolitan railway projects in the financial year ended March 2011 went to Kolkata, according to budget documents on the railways ministry website. The project in Dankuni, where Basak lives, went from a dirt lot to a sprawling factory in 34 months. It is planned to provide employment for about 100,000 workers, including jobs at ancillary units.

The largesse has helped Trinamool consolidate its power in recent years. In 2011, the party won 184 seats in the 294-member state assembly, more than six times the 30 it secured in 2006. The party is projected to win about half of West Bengal’s 42 seats in the national election, according to exit polls.

“When the railways ministry was with us, we did announce a lot of projects targeting Bengal because Bengal had not gotten many projects in the past,” Partha Chatterjee, a Trinamool member and Bengal information technology minister, said in a phone interview. “However, we also kept the interest of other states in mind.”

Boeing Plant

Access to government ministries has helped other regional parties develop the states where they are based. Heavy Industries Minister Praful Patel, a leader in the Nationalist Congress Party, with its stronghold in Maharashtra, was aviation minister when Boeing Co. announced in 2006 it was setting up a facility for aircraft maintenance in his home state, which includes Mumbai.

D.P. Tripathi, a spokesman for the Nationalist Congress Party, said that none of the ministries controlled by his party had favored Maharashtra. “Development of civil aviation has been across the country,” he said.

During his tenure as railways minister in the late 1990s, Ram Vilas Paswan, head of the Lok Janshakti Party in the eastern state of Bihar, set up a divisional headquarters for the railways ministry in his constituency of Hajipur. The division, created in 1996, today employs 80,000 workers. Two calls made to the party headquarters in Delhi weren’t answered.

Local Impact

Banerjee said on the campaign trail she won’t support Modi and called him an instigator in the 2002 riots in the state of Gujarat that killed about 1,000 people, mostly Muslims. The Trinamool leader counts her state’s 20 million Muslims among her supporters. Modi has been chief minister of Gujarat since 2001.

Modi has denied wrongdoing over the unrest, which erupted after Hindus died in a train fire. A Supreme Court-appointed panel said two years ago it found no evidence that his decisions prevented victims from receiving help.

Regional leaders tend to focus on issues that have a local impact. Banerjee quit the BJP-led coalition in 2001 over cabinet posts and also abandoned the Congress-led government in 2012, because it allowed foreign direct investment in supermarket chains.

“Past experience shows that they are disruptive and end up opposing crucial decisions like fuel price increases and FDI decisions,” N. R. Bhanumurthy, an economist at the National Institute of Public Finance and Policy in New Delhi, said of regional parties. “They end up putting a strain on finances.”

A fragmented coalition that leads to increased spending on subsidies and weaker growth would put India at risk of a credit-rating downgrade, Standard and Poor’s said last month.

For Basak, who lives next to the railway parts factory, the choice to back Trinamool was simple.

“Every party comes with promises around election time,” she said. “I don’t care for them. My vote is for the party that’s developed my village.”

To contact the reporters on this story: Unni Krishnan in New Delhi at ukrishnan2@bloomberg.net; Pradipta Mukherjee in Kolkata at pmukherjee7@bloomberg.net

To contact the editors responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net Peter Hirschberg

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