India election: The promise and challenges facing new leader Narendra Modi

After years of fractured coalitions, India is set to see its first majority government in some time, this one under the opposition Bharatiya Janata Party and its "strongman" pro-business leader Narendra Modi.

A “shock and awe” campaign spearheaded by promises of economic growth, and the heavy use of huge, old-fashion rallies combined with high-tech holograms and social media bombardment looks to have brought what could be the strongest mandate for any government here since the 1980s.

The stock market, which has been climbing to new records almost daily in anticipation of Modi's open-for-business promises, broke it again on election day as the BJP were confirmed as the winners.

But for all the cheering and gloating, there are some important lessons from the immediate past that this new government might want to take stock of.

For one, there’s a Starbucks in my New Delhi neighbourhood.

That may sound as a vapid statement, but the U.S. chain is a symbol of the economic growth and diversity that India has grown accustomed to now. When I moved here in 2009, foreign retail brands had only just started to trickle in, as the country's growing middle class market opened up to international investment.

Now they are much more apparent, and serves as a warning to BJP that growth in India has to keep growing to satisfy an increasingly educated cadre of voters.

At the same time Modi might also want to look back, to see what NOT to do.

Out with the old

Ten years ago, pollsters, media and the markets were shocked when the Congress party took power with a broad coalition.

Famous for being the party of Mahatma Gandhi who helped free India of colonial rule, it’s also the party that, in the 1990s, kickstarted India into the open and growing economy it is today.

The man who began that revolution, former finance minister Manmohan Singh, became prime minister in 2004, to the delight of many in the middle-classes and business sector who cheered the soft-spoken economist as a welcomed technocrat, regarded as an honest man even by his opponents.

The party’s focus on social programs for the poor were balanced with economic reforms and development, in a grand ideological partnership of socialism and capitalism. And the fruits of that duel allegiance sparked an economic miracle everywhere, even in parts of rural India.

But if the first five years were a fairytale, the next five was when reality bit back.

Singh's coalition became bogged down by corruption allegations and failed to keep growth near the double-digit mark that Indians had come to expect. Balancing the current account deficit took a back seat to increasing subsidies to appease voters. Open fights broke out with political allies over foreign investment, and eroded the alliance from a majority to a weakened minority government.

Even before the election was called, the writing was on the wall.

Modi and his allies, as the votes now say, are clearly seen as the best choice to revive a stalled economy, though they are not exactly a "breath of fresh air." In fact, many of the same problems faced by Congress were the same the BJP and its allies tried to deal with prior to 2004 when they were in government.

There are, though, some stark differences this time around. The main one, economic growth is slowest it has been since the 1980s.

BJP has projected themselves as the pro-development party. Narendra Modi, chief minister of the western state of Gujarat, is touted as a strong man who "gets things done," the proof said to be in Gujarat’s growth, which has been above the national average.

Though critics have questioned those economic achievements, the broad example seems to have swayed most voters. Especially business types and other politicians who have visited Gujarat, and then compared it to their own states.

Hindu nationalism

Another potential problem facing Modi is that his BJP is broadly seen as the party of Hindu nationalism.

Religion will always play a key role here. But in this case, the 2002 riots between Hindus and Muslims continue to cast a long shadow over Modi and his party.
Despite being cleared by investigators of having any direct role in those riots, Modi still faces court challenges along with criticism that his government stood by and allowed Hindu mobs to kill nearly 1,000 Muslims in his home state.

The BJP as a whole has been accused several times in this election of stoking religious tensions for political gain. The party has shot back that other parties, particularly the Congress, have been using the allegations to lure minorities.

Many voters, especially younger ones, have said their vote for Modi is not to be seen as a clean slate for him on this issue, but rather for the belief that, as for right now, economic concerns are more pressing.

And the timeframe for dealing with those concerns is probably much tighter than it was in the past.

Modi will get his honeymoon, but given the implicit promise of the Gujarat model, anything less than, say, eight percent growth by this time next year will be considered a political failure for many.

Modi is famous for cutting through red tape, which India is notorious for. But even that will require considerable dexterity.

Back at Starbucks, the one big difference that distinguishes this version from anywhere else in the world is the signage: "a TATA Alliance."

Starbucks is in India only because it partnered with the Indian conglomerate Tata.

Diversifying the economy to allow foreign companies to enter the market solo, or with a majority stake, will be hugely controversial here. It may also be the only step India's new government can take to keep the economic engine humming.