Modi

Bloomberg News

Narendra Modi's opposition bloc is poised for the biggest Indian election win in 30 years, giving him a mandate to overhaul Asia's third-biggest economy as his message of development resonated across social divisions in a country with a third of the world's poor.

The Bharatiya Janata Party and its allies lead in 334 of 543 seats up for grabs, more than the 272 needed for a majority. A Congress spokeswoman conceded defeat with the party-led bloc leading in 65 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 144 seats, according to NDTV television station.

'India has won,' Modi said in a Twitter message as the results came in. Television images showed him in his home state of Gujarat touching the feet of his mother as she applied a streak of sacred vermilion powder on his forehead, a traditional blessing in India.

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 India's economy. Growth near a decade low and Asia's second-fastest inflation have eroded purchasing power in a nation where more than 800 million people live on less than $2 per day.

'It marks the beginning of a new era in Indian politics,' 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.'

Stocks Surge

The BJP's best-ever showing 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.

'People want growth, people want jobs, people want low inflation and people want less corruption,' S. Narayan, a visiting senior research fellow at the National University of Singapore. 'That's the message from this mandate.'

India's rupee surged past 59 per dollar for the first time since July, while the benchmark S&P BSE Sensex gained 3.9 percent as of 12:29 p.m. in Mumbai, the most since 2009, after Congress emerged victorious the last time Indians voted in a national election.

'Back in Business'

'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.'

'This is a revolution,' Prakash Javadekar, a BJP spokesman, said by phone from New Delhi. 'India's people have voted for Narendra Modi with hope, and this is exactly what we're promising.'

The BJP's rise has come at the expense of the Congress party, which has been in power since 2004. The Congress campaign was led by Rahul Gandhi, the 43-year-old vice president of the party and son, grandson and great grandson of Indian prime ministers. Sonia Gandhi, the party's president, plans to address reporters at 2 p.m., NDTV reported.

'Never Imagined'

'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.

'Tough Slog'

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, the son of a tea seller, is favored by business leaders because of his record in Gujarat, which has 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.

Violence between Hindus and Muslims 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.

Modi 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. Even so, regional party leaders such as Mamata Banerjee have blasted Modi over the riots on the campaign trail and said they wouldn't join a government led by him.

Modi Mandate

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. After voting ended on May 12, U.S. President Barack Obama said in a statement that he looked forward to 'working closely with India's next administration.'

'Modi and the BJP were essentially pushing on an empty door,' said Milan Vaishnav, an associate in the South Asia program at Carnegie Endowment for International Peace in Washington. 'There was nobody on the other side to provide any kind of resistance to what they were doing.'

To contact the reporters on this story: Andrew MacAskill in New Delhi at amacaskill@bloomberg.net; Unni Krishnan in New Delhi at ukrishnan2@bloomberg.net

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