May 16 (Bloomberg) -- Narendra Modi’s opposition bloc swept to power with the biggest Indian election win in 30 years as voters tired of sluggish economic growth and corruption handed a historic defeat to the Gandhi dynasty that has dominated politics since the country’s founding.
The Bharatiya Janata Party and its allies were leading in 340 of 543 seats up for grabs, more than the 272 needed for a majority. Rahul Gandhi, who led the Congress campaign, conceded defeat with his bloc leading in 58 seats, which would be the worst ever for a party that has governed India for most of the time since independence in 1947. Smaller regional parties were ahead in 145 seats, according to NDTV television station.
“The era of divisive politics is over and it is time for unification,” Modi, 63, told a rally today in Gujarat, the western state he’s run since 2001. “I see the dawn of a new era for our country.”
The results boosted stocks the most in five years and lifted the rupee to an 11-month high as investors bet a stable government would make changes needed to bolster growth in the world’s largest democracy. While Modi’s opponents accused him of inflaming tensions between Hindus and a Muslim minority that stem from the country’s founding in 1947, on the campaign trail he offered a message of economic development.
“It marks the beginning of a new era in Indian politics,” said B.G. Verghese, a visiting professor at the Centre for Policy Research in New Delhi and a former aide to ex-Prime Minister Indira Gandhi. “This clean break offers a fresh look at basic policies -- economic, security, social -- and that has to be a good thing.”
Rahul Gandhi, the son, grandson and great grandson of Indian prime ministers, congratulated the new government in brief comments today at the Congress party headquarters in New Delhi, saying the BJP and its allies “have been given a mandate by the people of our country.”
“Congress party has done pretty badly,” Gandhi, 43, said as he stood alongside his mother, Sonia Gandhi, the party’s president. “There is a lot for us to think about. And as vice president of the party, I hold myself responsible for what’s happened.”
The BJP was set to win 283 seats, the biggest victory for a single party since Congress won 404 seats in 1984 in the wake of Indira Gandhi’s assassination. India recorded the highest ever turnout in nine rounds of voting at almost one million polling stations stretching from the Himalayas to tropical islands in the Bay of Bengal.
“This is the first time that BJP has been able to expand it social and geographical boundaries,” Rajnath Singh, the party’s president, told reporters in New Delhi today. “The BJP has succeeded in crossing the caste, religion and class divide.”
The best-ever showing for the BJP stems the rise of regional parties over the past three decades as Indians increasingly picked members of their own caste, a millennia-old social hierarchy in India rooted in Hinduism. The trend was seen most dramatically in Uttar Pradesh, India’s most populous state, where the BJP was set to win 73 of 80 seats, up from 10 in 2009.
The Bahujan Samaj Party, which derives its support from the lowest rungs of the caste system, was set to lose all 21 seats it held in Uttar Pradesh. The Samajwadi Party, backed largely by Muslims and a cow-herding caste, was poised to win five seats in the state, down from 23 in the 2009 election.
‘Back in Business’
“The mandate signals the maturing of India’s democracy,” said D.G.A. Khan, who teaches political science at the Banaras Hindu University in Uttar Pradesh. “Voters have backed the message of development instead of the caste preferences and parties who have exploited it for years.”
India’s rupee surged past 59 per dollar for the first time since July. The S&P BSE Sensex increased 0.9 percent to a record 24,121.74 at the close in Mumbai, after swinging between a gain of 6.15 percent and a loss of 0.1 percent.
“India is back in business,” Andrew Holland, chief executive officer at Mumbai-based Ambit Investment Advisors Pvt., said in an e-mail. “Investors will now watch for the new government’s comments on policy issues such as foreign direct investment and the fiscal deficit to take further decisions, but I don’t see a massive downside.”
Celebrations broke out at the BJP’s headquarters in New Delhi, where supporters set off fireworks as religious songs blared over loudspeakers. Crowds watching the results on a 100-inch television screen chanted “300, 300” and “Long Live Modi -- Good Days are Ahead.”
The rise of the BJP bloc, which was set to win 191 more seats than in 2009, has come at the expense of the Congress coalition, which has been in power since 2004 and was poised to lose 175 seats.
“We never imagined in our wildest dreams that it would be this bad,” Ashwani Kumar, a Congress lawmaker in the upper house of parliament and a former cabinet minister, told CNN-IBN. Ragini Nayak, another party spokesman, said in an interview at party headquarters: “We have conceded defeat with the caveat and reminder that we are not going to give up.”
The economy under Congress had slowed in recent years. Gross domestic product probably grew 4.9 percent in the last financial year, near the decade-low of 4.5 percent in the previous 12 months. Consumer-price gains of 8.59 percent in April were the highest after Pakistan among 18 Asian economies tracked by Bloomberg.
A stable government would open more opportunities for “big-bang” changes, such as passing a goods and services tax, making it easier to acquire land and easing labor rules, according to Sajjid Chinoy, JPMorgan Chase & Co.’s India economist in Mumbai.
“These things are going to take time,” he told Bloomberg TV India. “Turning around the investment environment is not going to be easy. It’s going to be a long, tough slog.”
Modi’s power in parliament won’t be unchecked. While the BJP and its allies will have a majority in the lower house, they have only 61 of the 245 members in the upper house, where seats are distributed based on the strength of parties in state assemblies. The upper house must approve major legislation related to tax, foreign investment and constitutional changes.
Modi, the son of a tea seller, is favored by business leaders because of his record in Gujarat, which has attracted companies such as Tata Motors Ltd. and outpaced the national economic growth rate in 11 of the past 12 financial years for which data is available. The state’s per capita income nearly quadrupled during Modi’s tenure to 61,220 rupees ($1,040), rising at a faster pace than the national average.
Opponents of Modi have said he’ll stoke violence between Hindus and Muslims, which has played a defining role in politics since independence. Modi has been accused of failing to stop riots in Gujarat 12 years ago that killed more than 1,000 people, mostly Muslims, and prompted the U.S. to deny him a visa.
He has repeatedly denied the accusations and a Supreme Court-appointed panel found no evidence he gave orders that prevented assistance from reaching those being attacked.
“We have a lot of expectations from Modi,” Bundu Ahmed, 60, a Muslim who runs an apparel shop in central Delhi, said before offering his Friday prayers today. “We want jobs for our children, and that’s our primary concern.”
The BJP has lambasted Congress for jobless growth, promising in its manifesto to stem price gains and expedite foreign investment in most sectors except for multibrand retail. It also plans to give more power to India’s 28 states, create consensus to implement a goods and services tax and develop labor-intensive manufacturing.
“People want growth, people want jobs, people want low inflation and people want less corruption,” said S. Narayan, a visiting senior research fellow at the National University of Singapore. “That’s the message from this mandate.”
To contact the editors responsible for this story: Daniel Ten Kate at email@example.com Peter Hirschberg