NDA now controls 18 of 29 Indian states

With Narendra Modi’s Bharatiya Janata Party back in power in the key eastern state of Bihar, the federal ruling coalition now controls 18 of 29 states, which represents 60 percent of the country’s gross domestic product. It’s also expanding its base in Karnataka and luring lawmakers from the rival Congress party in Gujarat, where state assembly elections are set to be held in December. The BJP’s National Democratic Alliance is expected to increase its strength in the upcoming polls.

Since he came to power in May 2014, Modi has led the BJP to state election victories and expanded the party’s base. Among the big states he failed to capture were Bihar and West Bengal. But in a surprise political maneuver last week, Modi renewed his ties with regional party leader Nitish Kumar, who was regarded as a potential rival to him in national elections due in 2019. Nitish Kumar’s Janata Dal (United) party severed its alliance with the BJP-led coalition in June 2013, only to join hands again with the BJP to reclaim government in Bihar.

The renewed alliance and the BJP’s expected gain in the August 8 upper house elections will increase the ruling coalition’s strength, although it will still be short of a majority there.

To give a momentum to the labor reform process, Modi’s government is likely to introduce a bill in the current parliament session that ends on August 11. The bill, which will seek to consolidate a clutch of wage-related labor laws and ensure a minimum wage across all sectors, was approved by cabinet last week.

The increasing political strength of BJP and allies should bode well over the coming years for reforms at both the central and state level.

India’s states have operated almost as separate countries. They set their own taxes, provide most basic amenities critical for development, including electricity, water, sanitation, law and order, and health care. Getting states to reform and attract business is critical for India’s overall development. The July 1 implementation of the national sales tax, which rolled more than a dozen levies into a goods and sales tax is an illustration of Modi securing the cooperation of states to push the decade-long pending indirect tax reform.

Provinces ruled by the BJP and its allies are leading the way with reforms.