05/16/2014 09:37 pm ET Updated Jul 16, 2014

India's Voters Discard Incumbent Coalition, Modi to Become Prime Minister

Some 550 million Indian voters formed an anti-incumbency tsunami as results from India's historic parliamentary elections poured in overnight. The polling, which had stretched on for over a month, already indicated a record turnout of 66 percent.

India's next prime minister will be the pro-business Narendra Modi, who led the Bhartiya Janata Party (India People's Party, or BJP) to an unprecedented absolute majority, with over 280 seats projected in India's 543-member Lok Sabha (House of the People, the lower house of parliament).

The stock market went giddy over the Modi victory, with the benchmark Sensex index rising 6.1 percent and hitting a record high of over 25,340 on Friday before settling to 24,121 at the close of trading on the Bombay Stock Exchange. The Indian market had already anticipated a Modi victory over the last week and may be showing signs of irrational exuberance as investors and traders look forward to a future without the confusion and corruption that came to symbolize the last five years of the Congress-led UPA government of Dr. Manmohan Singh.

Losers from the incumbent Indian National Congress party included billionaire Nandan Nilekani, the former CEO of Infosys, who went on to lead the Unique Identification Authority under Prime Minister Singh. He lost to Ananth Kumar of the BJP in the South Bangalore constituency. Several current or former ministers were also voted out, including Kapil Sibal in Delhi, Farooq Abdullah in Kashmir and Sachin Pilot in Ajmer. The Congress party may be left with just 50 seats, not enough for it to nominate a formal Leader of the Opposition.

Modi's BJP was not completely unscathed; Arun Jaitley, who was widely expected to hold a major ministry in a Modi cabinet, was routed by almost 100,000 votes by Amarinder Singh of the Congress party in the border town of Amritsar.

Why This Is Good for America

A Modi government is likely to be more decisive and pro-business than the previous administration, which depended on gigantic transfer payment plans such as the National Rural Employment Guarantee Act for its popularity among the poor of India. Indian companies and entrepreneurs are less likely to be stymied by the ambiguity and vacillation that paralyzed investment decisions over the last five years. This means that India's trade with other countries will rise. Indians have a secular preference for America and American lifestyles, as confirmed repeatedly by Ipsos and Pew surveys over the last decade. Under a Modi government, India's consumers and businesspeople are more likely to be able to exercise their natural inclinations to engage more deeply with American interests.

A Thorn in the Side

In 2005 the United States denied Narendra Modi a diplomatic visa based on concerns that he may have been passively or actively involved in 2002 riots in Godhra, Gujarat. The U.S. also canceled his tourist visa at the time, and Modi has not visited the United States since, although he has appeared live on large video screens at national gatherings of Indian Americans. Modi has denied any culpability, and multiple investigations have largely cleared him of these charges. In February this year, U.S. Ambassador to India Nancy Powell, sensing a Modi wave in the air, made a trip to Gujarat, setting the stage for conciliation from the Obama administration. As is turned out, President Obama took less than a day to indicate that the visa denial was effectively retracted. In his congratulatory phone call to Mr. Modi, the president "invited [him] to visit Washington at a mutually agreeable time."

What's Next?

While specific news of wins, losses and lessons will pour in over the weekend, other signs of longer-term changes and actions will become clear after Mr. Modi announces his cabinet. In the meantime, stay tuned for congratulatory messages from President Obama, Prime Minister Harper of Canada and other world leaders.

CORRECTION: An earlier version of this post erroneously referred to India's Unique Identification Authority as the Universal Identification Authority. It also mistakenly implied that conciliation between Narendra Modi and the Obama administration had yet to begin at the time that this post was published, when in fact President Obama had already called Modi to invite him to Washington, D.C. The post has been updated accordingly.