India PM Modi's on-off ally holds key to his weakened third term

N Chandrababu Naidu, chief minister of the southern state of Andhra Pradesh

By Rishika Sadam

HYDERABAD, India (Reuters) - A former member of the opposition Congress and an on-and-off ally of Indian Prime Minister Narendra Modi could decide the shape and stability of the next government after a vote count on Tuesday returned a fractured verdict.

Chandrababu Naidu, whose party has the second highest number of parliamentary seats in Modi's National Democratic Alliance (NDA), has endorsed him for prime minister. In the last election in 2019, Naidu took the lead in bringing together all opposition parties against Modi.

Having done better than expected this time, leaders of the Congress-led opposition have said they have not given up hope of winning back former allies like Naidu.

"Our victory is the result of the hard work of the alliance," Naidu, who takes credit for transforming the southern city of Hyderabad into a technology hub, told a press conference on Wednesday. "I have seen so many political changes in the country ... (but now) we're in the NDA."

Modi's Hindu nationalist Bharatiya Janata Party (BJP) emerged the single-largest party with 240 of the 543 directly elected seats in parliament, well short of the majority mark of 272. Naidu's Telugu Desam Party (TDP), based in the state of Andhra Pradesh, is the second biggest in the NDA with 16 seats.

Naidu, 74, is on bail after being jailed last year on corruption charges he has denied. The investigation is ongoing but it could be put on the back burner now that Naidu has won a separate local election to run the state government.

While he focuses on his state, Naidu is demanding senior ministerial positions in the next Modi government for his party, said sources with knowledge of the matter.

"Naidu is a very shrewd politician and I believe he would proceed cautiously," said economist and political analyst Pentapati Pullarao.

Touted as a tech-savvy politician, Naidu often talks about his meeting with Microsoft founder Bill Gates more than two decades ago while he was chief minister Andhra Pradesh. The state's former capital is now home to the Indian offices of many software giants, including Microsoft.

His focus has also been on the infrastructure development of Andhra Pradesh's new capital region of Amaravati after the state was split into two in 2014.

Naidu, who first became a state lawmaker in 1978 on a Congress ticket, took over the reins of TDP in the 1990s, effectively ousting his father-in-law who founded the party.

In an interview with Reuters around the last election, Naidu said that allowing private companies to build and operate ports, while the government plays the role of "catalyst and facilitator", would not only help to generate revenue for the state but also create jobs.

Modi's inability to create employment opportunities for millions of youth entering the workforce has been one of the biggest criticisms of his time in office.

Naidu is also known to have moderate views of India's minority Muslims, in contrast to the BJP's image.

Kaushik Basu, an economics professor at Cornell University and a former chief economic adviser to the Indian government, recalled his meeting with Naidu long ago.

"I was impressed by 2 qualities: his efficiency & his secularism," Basu wrote on X. "I hope he retains these qualities & pulls out of NDA now."

(Reporting by Rishika Sadam and Sarita Chaganti Singh; Editing by Krishna N. Das and Ros Russell)