India Election Surprise, Market Plunge with Crypto Law Delays

Indian voters surprised Prime Minister Narendra Modi’s party and sent stock markets plunging with a lower share than predicted in the first results. This also likely delayed the implementation of crypto law.

Modi’s Bharatiya Janata Party (BJP) and its allies seem poised to retake power despite falling short of their projected supermajority of 370 seats in India’s 543-seat lower chamber of parliament.

The BJP alone did not gain the 272 seats necessary to pass the halfway point, which it had done so with ease in 2019. This result bestows kingmaking authority upon its supporters, and the opposition, spearheaded by the Indian National Congress, might attempt to entice them to defect.

Despite exit polls on June 1 predicting a clear victory for the BJP and its allies, India’s stock markets, initially at all-time highs, saw values drop by about $350 billion as results became available. The Nifty and the Sensex plunged as much as 8.5% before recovering some losses.

The vice president of the Indian cryptocurrency exchange WazirX, Rajagopal Menon, commented, “The election results were a true black swan event that no one saw coming. In the short term, markets will remain jittery as they despise instability. Once the new government takes office, things should return to normal.”

Voters considered cryptocurrency to be unimportant, and it was not a political talking point during the campaign. The election results were not expected to immediately affect crypto policy, and current restrictive rules, including a 1% tax deducted at source on every crypto transaction, were expected to remain.

The Modi administration also gave top priority to drafting crypto policy with international agreement during its year as the Group of 20 presidents, last year.

Plans for comprehensive crypto legislation will likely be postponed while the administration concentrates on fortifying its coalition and addressing the policy concerns of its allies. The present Finance Minister, Nirmala Sitharaman, may not continue in that role, which might affect crypto policy.

According to Menon, there have been no notable changes to crypto regulations. The G20 ministerial declaration, which provides a detailed regulatory plan by 2025, was signed by India. 

Also Read: Indian Markets Dive Down, Crypto Goes Wild as Counting Undergoes for Elections 2024