Narendra Modi was sworn in as India's prime minister on Sunday for a record-equalling third term at a grand ceremony held on the lawns of Rashtrapati Bhavan, the president's palace in New Delhi, attended by thousands of dignitaries, including the leaders of seven regional countries, Bollywood stars and industrialists.

 

The tallest leader of National Democratic Alliance (NDA), the bloc lead by the right-wing Bharatiya Janata Party (BJP), Modi was administered the oath of office by President Droupadi Murmu after key allies pledged their continued support to him after a shock election verdict which saw his party lose majority in parliament, reported Reuters.

 

A populist who has dominated Indian politics since coming to power in 2014, Modi will for the first time need the support of regional allies - the Telugu Desam Party, a key regional player in the southern state of Andhra Pradesh, and the Janata Dal (United) which rules the northern state of Bihar.

 

The NDA's tally in the 543-member lower house of parliament now stands at 303, more than the 272 needed to form a government, after the smaller parties joined the coalition. 

 

Modi's BJP won 240 seats on its own, a weakened verdict which could slow India's fiscal tightening, ratings agency Moody's said.

 

Both regional allies, the TDP and JD-(U), are considered pragmatists on economic policy, but Modi's new government is likely to need to find money to fund more spending on welfare projects in their states.

 

"Honoured to serve Bharat," Modi posted on X, minutes before he was sworn in, referring to India's name in Indian languages.

 

Supporters cheered, clapped and chanted "Modi, Modi" as the 73-year old leader, dressed in a white kurta tunic and blue half jacket, was called to take his oath. 

 

Modi was followed by senior ministers in the previous government: Rajnath Singh, Amit Shah, Nitin Gadkari, Nirmala Sitharaman, Subrahmanyam Jaishankar, and Piyush Goyal, among others. Their portfolios were expected to be announced after the swearing-in.

 

Modi, who started as a publicist of the Hindu nationalist Rashtriya Swayamsevak Sangh, the ideological parent of his BJP, is only the second person after independence leader Jawaharlal Nehru to serve a third straight term as prime minister.

 

Modi secured the third term in after multi-stage election that concluded on June 1 with the support of 14 regional parties in his BJP-led National Democratic Alliance. In the previous two terms his party had won an outright majority.

 

The outcome is seen as a big setback to the popular leader as surveys and exit polls had predicted BJP would secure even more seats than in 2019, reported Reuters.

 

Modi delivered world beating growth and lifted India's global standing, but appeared to have missed a step at home as a lack of enough jobs, high prices, low incomes and religious faultlines pushed voters to rein him in.

 

When Modi was the chief minister of the western state of Gujarat from 2001 to 2014 the BJP enjoyed strong majorities, allowing him to govern decisively.

 

Modi's new term as prime minister, therefore, is likely to be fraught with challenges in building consensus on contentious political and policy issues in the face of different interests of regional parties and a stronger opposition, analysts say.

 

Some analysts worry that the fiscal balance in the world's fastest growing economy could also come under pressure due to demands for higher development funds for states ruled by the NDA's regional partners and a possible push by the BJP to spend more on welfare to woo back lost voters.

 

While the broad focus on building infrastructure, manufacturing and technology could continue, "contentious reforms could be delayed", said Samiran Chakraborty, Chief Economist, India, at Citi Research.

 

"The BJP’s major coalition partners are politically unpredictable, sometimes working with the BJP and sometimes working against them," added Rick Rossow, the Chair in U.S.-India Policy Studies at the Center for Strategic and International Studies in Washington.