India's exit polls may be more noise than signal

Prime Minister Narendra Modi is set for a landslide victory in India's general election. Or so claims nearly every exit poll released since the end of voting on Saturday evening. Yet, these surveys have proved spectacularly wrong in the past, and they must be read even more cautiously this time around because of the Modi government's outsize sway on the television stations that commission them.

Mind you, the actual count on Tuesday may well give enough seats to the Bharatiya Janata Party-led National Democratic Alliance for it to stake a claim for a third straight five-year term. But 350-plus NDA lawmakers in a 543-member parliament, as predicted by nearly every exit poll, sounds like an unrealistically large mandate. It ought to be taken with a pinch of salt by investors intending to join the stocks rally that's almost certain to take off Monday.

A 350-seat haul will be a repeat of NDA's 2019 performance. Back then, Modi had turned airstrikes on a terrorist training camp in Pakistan into the central plank of his reelection bid. This time, however, national security was not an election issue. Yes, Modi did consecrate a controversial Hindu temple to expand his vote base. But that project was done and dusted by January. In 2024, the right-wing leader turned his muscularity inward: Muslims, the biggest religious minority, faced nonstop dog whistles and complained of large-scale voter suppression.

However, such tactics are unlikely to have led to a dramatic consolidation of Hindu votes, not when the opposition INDIA alliance ran a spirited campaign focused on surging youth unemployment, high cost of living, and rampant crony capitalism. Modi chose to elevate himself above such earthly concerns. "I'm convinced that God has sent me," he told a TV channel owned by tycoon Mukesh Ambani. In another interview — to a station controlled by Gautam Adani, the centi-billionaire from his home state of Gujarat — Modi spoke of his 1,000-year vision.

Ambani and Adani are Asia's richest businessmen. The Adani Group's market value has soared by $25 billion since polling began in phases on April 19.

A generous mandate for the NDA is a ringing endorsement of Modi, such is the Indian prime minister's personality cult. And if that is really the outcome, then it means the welfare benefits that a big section of the population already receives — free food, cooking-gas subsidy, some cash for small farmers, and handouts for constructing village homes and toilets — are preferred by voters to any alternative based on new rights, such as the urban employment guarantee or expansion of affirmative action proposed by the Congress Party.

This is good news for markets. Investors reckon that while Modi's social policies may be deeply polarizing, his fiscal stance will be conservative, which will help India attract capital away from China. A massive ramp-up is expected in infrastructure and private capital expenditure under Modi 3.0, despite constrained mass consumption and inadequate household savings.

The opposition grouping, however, believes that the people's real preferences are very different, and that the exit polls are nothing but psychological warfare. If so, it is working. Rahul Gandhi's Congress first decided to boycott discussions of exit polls, and then did a U-turn.

The anti-Modi coalition of more than two dozen parties has proved surprisingly resilient despite not having a prime ministerial candidate yet. The absence of an alternative leader may have dissuaded voters who wanted to see a credible challenger.

With several of its prominent leaders in jail ahead of the elections, and the taxman freezing bank accounts of the Congress Party, the alliance fought hard — both on the ground and in social media. For a government that has already enjoyed a decade in power to return with its majority intact will leave political opposition dispirited and irrelevant. It may not be able to keep the flock together for another five years. Muddying the picture still further, the less-than-transparent conduct of the Election Commission has also come under a cloud.

As has the partisan role of media moguls, though not exactly for the first time. The 2004 exit polls were also wrong. They gave the ruling NDA coalition between 240 to 275 seats in a fresh election. It ended up with 187, and the government was booted out. What makes this year's surveys highly unusual is that at least three of them are projecting the NDA to snag as many as 400 seats, a forecast that happens to match the slogan given by Home Minister Amit Shah, Modi's No. 2.

Although Modi has denied any such plans, INDIA alliance leaders have warned that 400 seats for the Modi government may mean a change in the country's secular constitution. Irrespective of whether they have some signal value or are pure noise, the exit polls have at least put the idea of an eventual Hindu state into play.

Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services in Asia.

Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.