
The Phase 4 of the ongoing Lok Sabha elections saw 67.3 per cent voter turnout, which was lower than 69.6 per cent in 2019 general elections, continuing the trend of dip seen in the first three phases. The recent turnout figures, to an extent, made stock investors a bit nervous, as the market has been factoring in a stronger mandate for the BJP-led NPA alliance this time.
But there are no obvious correlation trends between voting percentage versus election outcomes, based on past elections, said Bernstein said adding that one should not to read too much into the turnout numbers, at least so far.
Bernstein said it would take a lot more than just a drop in vote percentage for BJP tally to be significantly dented for India Inc to start factoring in a case of non-continuity. A 2-3 per cent decline in voters along with anti-incumbency would likely lead to figures just below the 2014 tally, Bernstein said.
"A large decline (over 5 per cent) without much anti-incumbency should see them repeating figures of 2019 with minor up/down revisions. Only the case of a large vote share decline (over 5 per cent) and significant anti-incumbency is where the elections become a market-defining event. The fact that the opposition is more united nationally this time should start having meaningful repercussions only at this stage," it said.
Besides, Bernstein said the data released on voter turnout the same day does not include the ballot voting, resulting in an apples-to-oranges comparison with 2019. Once ECI released the final data for the first 2 phases, including the ballot votes (11 days delay for Phase 1, which did result in a furore), the voting percentage increased 5.5 per cent - bridging quite a lot of gap.
This time, the ballot paper impact is reportedly larger than what used to be in the past years, so the impact is likely to be less than what an immediate comparison may show, it said.
Net-net, Bernstein said unless one witnesses both the voter turnout witnessing a steep decline and a significant anti-incumbency contributing, it does not see much impact on the overall election results, with the incumbent party expected to sail through - with some possibility of repeating 2019 or even going slightly above.
The seven-stage election commenced on April 19 and is slated to conclude on June 1. The election outcome is scheduled for June 4.
Bernstein said there can be many theories designed to suit many narratives, and by now, the theory of BJP voters being overconfident and opposition voters being demoralised has been beaten around enough.
Bernstein divided voters them into three categories: the first is a seasoned NDA supporter, the second is a seasoned non-supporter of NDA, and the third is the swing voters - the ones who flip quickly and may decide at the last moment whom to vote for.
Bernstein said swing voters were instrumental in the decisive BJP victories of 2014 and 2019. Bernstein assumed that the core voter base of both BJP and Indian National Congress (INC) would be around 18-20 pr cent, as this is the minimum vote share both parties have had, even at their worst - INC in 2019 and BJP in 2009.
Bernstein said the election outcome was mainly decided by the swing voters, who overwhelmingly voted for BJP in 2014 and 2019. It said it is these swing voters, whose abstinence would result in voting percentage going up or down, as the core vote bank is likely to turn up on the voting day.
"A lack of any connection with an issue on the ground or lack of connection with opposition, for instance, may discourage these swing voters from coming out and voting. This also gets one interesting result: there weren’t enough swing votes in favor of INC in 2019 (barely 0.5 per cent). So, assuming the core voters will mostly turn up, the loss due to swing voters will likely be for NDA," Bernstein said.
Bernstein said the second point to remember is that the BJP may lose vote share due to voters abstaining or anti-incumbency factor, among which the INC will only gain due to the anti-incumbency loss (voters abstaining will not benefit it directly).
It took two cases - one where we see a voting decline but not too much anti-incumbency and second where major decline is seen.
"Assuming a minor decline of 2.5 per cent for overall voting and generously assuming INC
captures 75 per cent of the anti-incumbency, we still have the BJP’s vote share at 32.7% compared to that of INC at 22.2 per cent. The vote percentage difference is only marginally behind the 2014 difference, still translating to a comfortable victory. Thus, even with anti-incumbency, a minor vote share decline does not translate to any election surprises. The opposition seats will go up given that we’re seeing a combined INDIA alliance, but a major loss to BJP seats is unlikely," Bernstein said.
In the second case, assuming a 5 per cent or more significant decline in total votes, this is when things start getting interesting, Bernstein said.
Assuming the same 75 per cent flow to INC, the BJP’s vote share now declines to 27.8 per cent, and INC at 25.1 per cent starts giving it a good fight. The vote share difference drops to just 2.6 per cent.
"This is the case where we see the ruling government start losing a fair share of seats, resulting in the scenario of a hung assembly or, given the fact that the BJP is facing a combined opposition this time, even more, extreme cases are a real possibility. This is where we see a rapid decline in the seats of the BJP at the expense of an even greater risk for the opposing INDIA alliance," it said.
Meanwhile, in the case of demoralised, but not shifting voters that Bernstein said will most likely be seen, "even with those demoralized swing voters who may not have enough motivation to vote for NDA this time, they won’t be voting for INC in droves either. Thus, taking the anti-incumbency factor to just 20 per cent of total abstention, we come up with case C. Here, even a significant drop in voter turnout becomes insufficient to move the voting percentage much."