After facing criticism from her own party and from the country, Congress President Sonia Gandhi asked the 22nd Finance Minister Manmohan Singh, an economist, to head the new government.

Singh had previously served in the Congress government of Prime Minister P. V. Narasimha Rao in the early 1990s, when he was seen as one of the architects of India's first economic liberalisation plan, which staved off an impending monetary crisis.

Prime Minister Atal Bihari Vajpayee had recommended premature dissolution of the 13th Lok Sabha (in accordance with a provision of the Constitution) to pave the way for early elections apparently in view of the recent good showing of the BJP in the Assembly elections in four states.

According to India Today, 115.62 billion rupees were expected to have been spent in campaigning for the elections by all political parties combined.

The BJP fought the elections as part of the National Democratic Alliance (NDA), although some of its seat-sharing agreements were made with strong regional parties outside of the NDA such as Telugu Desam Party (TDP) in Andhra Pradesh and All India Anna Dravida Munnetra Kazhagam (AIADMK) in Tamil Nadu.

The economy had shown steady growth in the last few months and the disinvestment of government owned production units (a continuation of India's liberalisation policies initiated in the early 1990s) had been on track.

The party was supposed to have been riding on a wave of the so-called "feel good factor", typified by its promotional campaign "India Shining".

These elections were marked by the campaign's emphasis on economic gains instead of communal issues involving religious polarisation like ban on cow-slaughter, implementation of a Uniform Civil Code, construction of Ram-mandir at the disputed site of Ayodhya, abolition of the provisions of secularism inorder to make Hinduism the country's state religion etc that characterised BJP's campaign in the 1996 election.

From the last few elections, BJP had realised that its voter base had reached a ceiling and had concentrated on pre-poll rather than post-poll alliances.

There is also the general perception that as soon as the BJP started realising that events might not proceed entirely in its favour, it changed the focus of its campaign from India Shining to issues of stability.

The Congress, who was regarded as "old-fashioned" by the ruling BJP, was largely backed by poor, rural, lower-caste and minority voters that did not participate in the economic boom of previous years that created a wealthy middle class and thus achieved its overwhelming victory on grounds of wealth inequality.

As soon as counting began, however, it became clear that the Congress coalition was headed for a sizeable lead over the NDA and the market surged, only to crash the following day when the left parties, whose support would be required for government formation, announced that it was their intention to do away with the disinvestment ministry.