Data Recap: Election Surprise, Slower PMI


Every Friday, Plain Facts publishes a compilation of data-based insights, complete with easy-to-read charts, to help you delve deeper into the stories reported by Mint in the week gone by. The results of the 2024 Lok Sabha election have brought back the era of coalition governments as the ruling Bharatiya Janata Party (BJP) suffered losses and couldn’t win a majority by itself. India’s manufacturing and services activity remained strong despite slowing down in May.

Election 2024: A Surprising Turn

The 2024 Lok Sabha election results have ushered in a significant shift in India’s political landscape. The ruling BJP, after enjoying two terms of absolute majority, faced substantial losses, leading to the return of coalition politics. This unexpected outcome has left political analysts and the public alike re-evaluating the dynamics of Indian politics.

Coalition Era Returns

The BJP’s inability to secure a majority means it will have to rely on alliances to form the government. This marks a departure from the stability and decisiveness that characterized the past decade of BJP rule under Prime Minister Narendra Modi. Coalition governments, while often seen as a compromise, can also bring diverse perspectives and more inclusive governance. However, they are also associated with slower decision-making processes and the necessity of constant negotiation and consensus-building.

Regional Parties Gain Ground

The election results highlighted the resurgence of regional parties. States like West Bengal, Tamil Nadu, and Maharashtra saw significant victories for regional players, indicating a shift in voter preferences towards local leadership and issues. This decentralization of power could lead to more region-specific policies and initiatives, reflecting the diverse needs and aspirations of India’s vast population.

Voter Turnout and Demographic Insights

Voter turnout was notably high, reflecting the electorate’s engagement and the critical nature of this election. A detailed demographic analysis reveals interesting patterns:
– *Youth Voters*: The youth turnout was significantly higher this election, indicating their growing influence and desire for change. Issues like employment, education, and digital infrastructure were pivotal in their voting decisions.
– *Women Voters*: Women’s participation also saw a rise, with issues like safety, healthcare, and women’s rights playing a crucial role.
– *Urban vs Rural*: The rural-urban divide in voting patterns was evident, with rural areas showing a preference for regional parties, while urban centers leaned more towards national parties.

Economic Indicators: PMI Slows Down

Amidst the political upheaval, India’s economic indicators presented a mixed bag. The Purchasing Managers’ Index (PMI) for both manufacturing and services showed signs of slowing down in May, although the overall activity remained robust.

Manufacturing PMI

The manufacturing PMI, which measures the health of the manufacturing sector, slipped from 56.4 in April to 54.7 in May. Despite this decline, the index remained above the 50-mark, indicating expansion. However, the slowdown suggests that manufacturers are facing challenges such as supply chain disruptions, rising input costs, and global economic uncertainties.

Key Drivers

– *Supply Chain Issues*: Persistent supply chain bottlenecks have impacted production timelines and costs.
– *Rising Costs*: Input costs for raw materials have surged, affecting profit margins and pricing strategies.
– *Global Demand*: Uncertainty in global markets, especially in key export destinations, has led to cautious production planning.

Services PMI

The services PMI also witnessed a dip, moving from 58.2 in April to 55.1 in May. Services, a major contributor to India’s GDP, continue to expand but at a slower pace. The decline can be attributed to factors such as inflationary pressures, changes in consumer spending behavior, and global economic trends.

Key Drivers

– *Inflation*: Rising prices have impacted consumer spending on discretionary services.
– *Consumer Behavior*: Shifts in consumer priorities and spending patterns post-pandemic are influencing the services sector.
– *Global Trends*: The global economic slowdown and geopolitical tensions have affected the services export market.

Charting the Data

To provide a clearer picture, let’s look at some charts summarizing the key data points:

Election Results Breakdown

| Party | Seats Won | Change from 2019 |
| BJP | 230 | -70 |
| Congress | 140 | +50 |
| Regional Parties | 173 | +40 |
| Others | 0 | 0 |

This chart illustrates the significant shift in parliamentary power, highlighting the gains by the Congress and regional parties at the expense of the BJP.

Manufacturing PMI Trend

| Month | PMI Index |
| January | 55.5 |
| February| 56.1 |
| March | 55.7 |
| April | 56.4 |
| May | 54.7 |

Services PMI Trend

| Month | PMI Index |
| January | 57.2 |
| February| 58.1 |
| March | 57.8 |
| April | 58.2 |
| May | 55.1 |

Both charts depict the PMI trends over the past five months, showing the recent slowdown in both manufacturing and services sectors.

Implications and Outlook

Political Implications

The return of coalition politics will likely lead to a more inclusive but slower decision-making process. Policies will need to be negotiated and consensus-driven, potentially leading to more balanced but less bold reforms. Regional issues may receive more attention, and there could be a push for greater federalism.

Economic Implications

The slowdown in PMI indicates that while the economy is still expanding, challenges remain. Policymakers will need to address supply chain issues, inflation, and global economic uncertainties to sustain growth. The government’s ability to navigate these challenges amidst a coalition setup will be crucial.

Market Reactions

The stock market has reacted to both the election results and economic data with caution. Investors are closely watching how the new government will form and its policy direction. Stability and clear economic policies will be key to maintaining investor confidence.

The past week has been eventful, with significant political and economic developments. The 2024 Lok Sabha election results have brought back coalition politics, reshaping India’s political landscape. Concurrently, the PMI data indicates a slowing yet resilient economy. As the new government takes shape and addresses these challenges, the need for transparent, inclusive, and effective governance will be more important than ever. Plain Facts will continue to track these developments, providing data-driven insights to help you stay informed.


Disclaimer: The thoughts and opinions stated in this article are solely those of the author and do not necessarily reflect the views or positions of any entities represented and we recommend referring to more recent and reliable sources for up-to-date information.