NEW DELHI, June 4 (Reuters) - Indian Prime MinisterNarendra Modi is set to win a rare third term in office, but asmaller-than-expected mandate means he will have to lean more onhis allies for support, and that means urgently addressingissues like unemployment, inflation and economic disparities inthe world's most populous nation.
Unlike the last two elections, Modi's Hindu nationalistBharatiya Janata Party (BJP) will need its alliance partners tocross the 272 majority mark in the 543-seat lower house ofparliament, according to the running vote count on Tuesday.
Modi had set a target of more than 400 seats for hisNational Democratic Alliance (NDA), but it is currently leadingin only about 290, according to Election Commission data aboutthree-quarters of the way through the count. The BJP itself wasleading in 239 seats, compared with 303 at the last election in2019.
Final results are expected to come later on Tuesday or earlyWednesday.
"The BJP's reliance on allies to form the government is aslap in the face," said Milan Vaishnav at the CarnegieEndowment for International Peace think-tank in Washington.
"At this stage, NDA allies will extract their pound offlesh, which will have an impact not just in terms ofpolicymaking but also in terms of the composition of thecabinet. (Earlier) the BJP could dictate terms with very littleregard for its coalition partners."
Modi, a strong leader, has not had to rely on alliancepartners in the past and it was not clear how easily he wouldcope.
"Modi is not known as a consensual figure," said NewDelhi-based political commentator Arathi Jerath. "So, it'll bevery interesting to see how he manages the pulls and pressuresof a coalition government."
Populism and welfare policies will "gain currency" as Modiwill have to depend on regional leaders like N. ChandrababuNaidu in the southern state of Andhra Pradesh and Nitish Kumarin Bihar in the east, who support such policies, said politicalanalyst Rasheed Kidwai.
Naidu's Telugu Desam Party and Kumar's Janata Dal (United)said they would endorse Modi for prime minister.
Modi called the win for his alliance historic and said that"we will continue the good work done in the last decade to keepfulfilling the aspirations of people."
The BJP, which had campaigned on India's spectaculareconomic expansion, its growing international stature and theparty's Hindu-first agenda, has acknowledged unemployment was afactor in the election.
"Employment is a challenge that we also accept and whateverbest can be done is being done," spokesperson Gopal KrishnaAgarwal said.
The unemployment rate in India rose to 8.1% in April from7.4% in March, according to the private think-tank Centre forMonitoring Indian Economy, compared with around 6% before theCOVID-19 pandemic. Modi first came to power in 2014 on thepromise of creating 20 million jobs a year, but has fallen farshort of that.
Government estimates for the latest January-March quartershow that the urban unemployment rate in the 15-29 age groupticked higher to 17%, from 16.5% in the prior quarter.
Despite India's impressive economic growth of more than 8%,rural distress has increased as incomes have fallen amid risingfood prices.
Such economic growth has meant wealth is concentrated in therichest 1% of India's population.
While headline inflation hovering around 5% is relativelylow, food inflation of above 8% since November 2023 has hit thepoor hard. Prices of vegetables and cereals have risen by doubledigits for most of the last year.
TURNOUT TROUBLE
Modi was seeking one of India's biggest mandates in thesix-week-long election after most opinion polls conducted beforevoting began had predicted a big victory for him, driven by hispersonal popularity, free cereal for the poor, new roads andbridges, and his courting of majority Hindus.
But a fall in voter turnout in the first stage of the seven-phase election worried the BJP, several party officials said. Apollster, who declined to be named citing private conversations,said he got calls from "panicked" BJP officials asking if"something was going wrong. Why aren't people coming."
At the same time, some analysts told TV debates thatopposition attempts to woo the masses with promises ofaffirmative action, bigger handouts and more jobs were gainingtraction.
That is when Modi changed tack.
Having earlier focused on economic development, India'simage and such issues, he switched back to accusing theopposition of favoring minority Muslims at the cost of Hindus.
"I believe that the polarizing campaign that the primeminister ran this time, the kind of, you know, hyped-up mediaoutreach that he did, I think these were all signs that he wasworried," said political commentator Arati Jerath.
The BJP said Modi was their best bet to put their messageacross.
"We discussed internally how our work, economic development,India's global image and such things sometimes do not set thenarrative," said spokesperson Agarwal.
"The politics is such that other things dictate thenarrative, and the BJP must also respond accordingly. For ournarrative to work, the prime minister is the best communicator."
However, with the BJP falling short of a majority on itsown, its promises like a uniform civil code for all religions,opposed by some Muslims, and simultaneous state and nationalelections, will likely be put on the back burner. They could bereplaced by policies aimed at more bread-and-butter issues asits allies could demand.
"Modi has seemingly lost his aura of electoralinvincibility," said Michael Kugelman, director of theWashington-based Wilson Center's South Asia Institute thinktank.
"He remains highly popular, and his party likely would havedone even worse if he werent leading it. This is a leader whohas repeatedly bounced back from political and policy setbacksand retained large public mandates. With the results we'reseeing today, that narrative of resilience has been dealt a bigblow."
(Reporting by Krishna N. Das, Aftab Ahmed, Rupam Jain, NikunjOhri, Jatindra Dash, Shivangi Acharya, Saurabh Sharma, ToraAgarwala, and Subrata Nag Choudhury; Editing by RajuGopalakrishnan)
