VZCZCXRO7817
OO RUEHAST RUEHCI RUEHDBU RUEHLH RUEHNEH RUEHPW
DE RUEHBI #0198/01 1391127
ZNR UUUUU ZZH
O R 191127Z MAY 09
FM AMCONSUL MUMBAI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7204
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0164
RUEHRL/AMEMBASSY BERLIN 0053
RUEHLO/AMEMBASSY LONDON 8778
RUEHMO/AMEMBASSY MOSCOW 0114
RUEHFR/AMEMBASSY PARIS 0137
RUEAIIA/CIA WASHDC
RHMFISS/JOINT STAFF WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC
RUEKJCS/SECDEF WASHDC
RUEHUNV/USMISSION UNVIE VIENNA 0039
RUCNDT/USMISSION USUN NEW YORK 0153
RUEHBI/AMCONSUL MUMBAI 2403

UNCLAS SECTION 01 OF 03 MUMBAI 000198 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: KDEM PGOV PINR IN ECON EFIN
SUBJECT: BHARAT BALLOT 09:  CONGRESS COMEBACK IN WESTERN INDIA 
 
REF: BHARAT BALLOT SERIES 
 
MUMBAI 00000198  001.2 OF 003 
 
 
¶1.  (U) Summary:  In the 2009 national election in western 
India, the Congress Party gained seats in Madhya Pradesh and 
Maharashtra, along the lines of national trends.  The Congress 
lost only one seat in Gujarat, much less than was expected.  The 
Congress hopes that the momentum in Maharashtra will carry the 
party through the upcoming state Assembly elections, and make 
them less reliant on the ally - but sometimes rival - 
Nationalist Congress Party in the state.  Observers believe that 
Gujarat Chief Minister Narendra Modi's campaigns in western 
India did little to help the Bharatiya Janata Party's fortunes, 
confining his impact to his state.  Buoyed by the Congress 
victory, equity markets in Mumbai surged at the prospect of 
continued economic reforms and policy continuity.  End Summary 
 
 
 
Maharashtra: Congress Gains, but Thackeray Surprises 
 
--------------------------------------------- -------- 
 
 
 
¶2.  (U) The Congress Party gained four seats across Maharashtra, 
sweeping all six Mumbai seats, and won back seats in both rural 
and urban districts.  The BJP lost four seats, and its regional 
party, the Shiv Sena, lost one.  The three independents who won 
seats are likely to ally with the Congress-led coalition in New 
Delhi.  The Congress gains in rural Vidarbha were seen as 
recovering seats in rural or tribal areas traditionally held by 
the Congress, in large part due to farmer debt-relief programs 
and other aid offered by the United Progress Alliance (UPA) 
administration. 
 
 
 
¶3. (U) The strongholds of Sharad Pawar and his Nationalist 
Congress Party (NCP) in the sugar growing regions of western 
Maharashtra appear to be fading.  The NCP won only five out of 
ten districts in this region, including seats for himself and 
his daughter.  Overall, the NCP lost one seat, down from nine to 
eight, leaving Pawar and his party in a weak bargaining position 
for central ministries.  He had estimated that the Congress 
tally nation-wide would be smaller than 2004, and that he and 
other secular leaders could wring out more concessions from the 
Congress, including more important portfolios, which is now 
unlikely to happen. 
 
 
 
¶4. (U) Several of the Congress gains were credited to the strong 
showing of Raj Thackeray's three-year-old Maharashtra Navnirman 
Sena (MNS) party that attracted Marathi-speaking voters and 
pulled votes from Shiv Sena and BJP candidates.  The impressive 
MNS tally surprised many observers; analysts and Shiv Sena 
politicians estimated that the MNS would not make an impact in 
this election because it was riding on the media-hype around Raj 
Thackeray's controversial anti-North Indian utterances and had 
no grassroots organization.  However, MNS candidates - many of 
whom were political newcomers -- garnered more than 100,000 
votes in each of the 12 districts where it fielded candidates, 
coming in second in two seats (including the prestigious South 
Mumbai constituency).  The strong showing by the MNS signals 
trouble for the Shiv Sena in the state Assembly elections in 
September.  The Samajwadi Party contested two seats in 
Muslim-dominated urban constituencies, but its candidates lost 
their deposits in both seats, which means that the Muslims 
decided strategically not to waste their votes on non-Congress 
parties. 
 
 
 
Congress Gains in Madhya Pradesh 
 
-------------------------------- 
 
 
 
¶5.  (U)  In Madhya Pradesh, the Congress gained seven seats to 
hold 12, despite the far better organization of the BJP's 
political machine in the state.  While the BJP still dominates 
 
MUMBAI 00000198  002.2 OF 003 
 
 
in the state with 16 of the 29 seats, its vote share has 
significantly diminished, as it did in the state Assembly 
elections in November 2008.  Mayawati's BSP picked up one seat 
along the border with Uttar Pradesh.  BJP officials expected 
losses heading into the elections, but the results were more 
startling than they had projected.  Political observers credited 
individual candidates for each gain, but rural economic relief 
programs of the UPA administration no-doubt paid dividends as 
well.  One BJP star in the state, Sushma Swaraj, who ran 
virtually unopposed when her Congress opponent failed to get on 
the ballot, was rumored as a potential future leader for the 
national party.  While favored by some because she is not 
tainted with the history of sectarian violence that hurt L.K. 
Advani and Modi, she declined to vie for the position, deferring 
to Advani. 
 
 
 
-Gujarat: Modi-Magic on the Wane? 
 
-------------------------------- 
 
 
 
¶6.  (U)  Despite Congress's sweep nationwide, the BJP still 
managed to add one seat to their tally in Gujarat from 2004, 
several less than expected.  Both the BJP and the Congress 
slightly lost vote share.  The results disproved the claim of 
Gujarat Chief Minister Narendra Modi's supporters that he could 
get any candidate elected - half of the new faces Modi had 
nominated lost their bids.  Pundits report that Congress 
benefitted in Gujarat from the nationwide positive feelings 
towards PM Manmohan Singh, staving off a worse defeat there. 
Widespread support for Manmohan Singh to continue as PM was 
noted by Mumbai's Congenoffs even among the pro-BJP business 
communities in Gujarat. 
 
 
 
¶7. (U) Modi's widely touted rallies and a semi-national campaign 
appears to have made little dent in the BJP's fortunes.  Despite 
holding public rallies in 20 constituencies in Maharashtra, NDA 
candidates won in only three of those districts.  Observers in 
Madhya Pradesh also expressed concern that Modi was too 
autocratic and too Modi-centered, leaving no room for others in 
the party. 
 
 
 
Financial Markets Celebrate 
 
--------------------------- 
 
 
 
¶8.  (U)  Mumbai's newspapers roared "Singh is King," proclaiming 
the victory of Prime Minister Manmohan Singh.  Investors also 
cheered at the prospect of a stable government, and drove 
equities markets sharply upwards at the opening bell on Monday, 
May 18, tripping regulatory "circuit breakers" designed to 
hamper rapid fluctuations in the market.  The Bombay Stock 
Exchange saw the sharpest one-day rise ever in its history, 
sky-rocketing 2111 points, 17.3 percent, and the National Stock 
Exchange rose 17.7 percent, also a record-breaker.  The 
Hindustan Times predicted the soar before markets opened, 
arguing that the Congress would now be able to provide stable 
government and push through economic reforms that were 
previously held hostage by the Left and other UPA allies.  Salim 
Gangadharan from the foreign exchange department at the Reserve 
Bank of India noted that given the overwhelming victory, the 
market reaction was no surprise.  He expected that markets would 
continue to rise - as would the rupee, appreciating due to 
foreign capital inflows. 
 
 
 
¶9.  (U)  Comment.  Despite reports from Madhya Pradesh and 
Maharashtra that the Congress Party was not well organized, 
their candidates pulled off significant victories in 
district-by-district campaigns.  The popularity of UPA programs 
to help farmers and other poor appear to have been key weapons 
 
MUMBAI 00000198  003.2 OF 003 
 
 
for the Congress, judging by the districts where they regained 
turf. 
 
Investors also cheered the return of PM Singh and the Congress 
Party, and hopes for policy continuity and more economic reforms 
are high. For regional leaders like Modi and Pawar, this 
election has come as a setback, signaling that their popularity 
has, for the time being, plateaued.  We will be watching to see 
whether the gains made by the MNS can be duplicated or improved 
upon in the Maharashtra Assembly elections this fall. End 
Comment. 
KAUFFMANEC