India's Congress party punished in state elections

BJP Prime Ministerial candidate Narendra Modi, December 8, 2013 in New Delhi.
Mohd Zakir | Hindustan Times | Getty Images

India's Congress party was headed for a bruising defeat in key state elections, including in the capital, early results showed on Sunday, underlining the struggle it will face to cling to power in a national election due by May.

Congress, led by the Nehru-Gandhi dynasty that has ruled India for most of the 66 years since independence, is facing widespread anger at corruption and high inflation after two successive terms at the head of a national coalition.

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The center-left party's main opponent, the Hindu nationalist Bharatiya Janata Party (BJP), was the clear winner in three big states that went to the polls, though with the count still on it was a neck-and-neck race in a fourth.

Markets are closely tracking the outcome of the polls, seen as a test of support the BJP's business-friendly candidate for prime minister, Narendra Modi. Bond, rupee and share prices rose last week after exit polls predicted a strong BJP performance.

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"BJP's victory across the states is spectacular," Modi said on Twitter shortly after arriving at his party's headquarters in New Delhi, where he congratulated party workers and leaders.

However, it was unclear how far Modi's campaigning at more than a hundred energetic rallies in recent months had contributed to the BJP's strong showing, an important factor in whether the results can be replicated nationally.

"You can argue about the extent of a Modi wave, but you can't deny that this verdict is an anti-Congress tsunami," Headlines Today TV news anchor Rahul Kanwal said in a Tweet.

The Congress party's poor performance in the state assembly elections may bring fresh pressure for an overhaul of its national campaign, which is headed by Rahul Gandhi.

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Gandhi is the next in line in a political dynasty that began with his great-grandfather, Jawaharlal Nehru, India's first prime minister. His campaign, focused on the Congress government's welfare programs, has failed to capture the imagination of many of India's aspirational young voters.

However, Congress played down the possible ramifications of its state elections setback.

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"It's not a manifestation of what is to come," said Jyotiraditya Scindia, campaign chief in the state of Madhya Pradesh for the defeated Congress. "Having said that, I believe we really need to tighten our belts and get down to some hard work before the (general) election in the next six months."

Sonia Gandhi, the leader of the party, told reporters that Congress would "introspect seriously" following its defeats, and - standing beside his mother - Rahul promised a transformation of the party to reverse its fortunes.

While the results are expected to add to the momentum Modi has built in recent months, India's fragmented political landscape makes national elections harder to predict.

In three of the four state elections counted on Sunday, the election was a two-way race between the BJP and Congress, which is unusual in a country whose states are increasingly governed by powerful regional parties. In the past, strong state results have not always translated into success in national elections.

(Read more: India to stick with austerity despite looming election)

Some in the BJP are concerned that Modi, seen by many as a Hindu hardliner, will find it hard to form a national coalition with parties dependent on votes from India's minority Muslim population in the likely event that next year's vote does not hand an overall majority to the party.

In Delhi, the one state which saw a three-way contest, the BJP's likely victory after 15 years of Congress rule was tempered by an unexpectedly strong showing by the new anti-corruption Aam Aadmi (Common Man) Party, which could deny it the majority required to rule.

Supporters of the new party celebrated outside its headquarters, waving brooms to symbolize sweeping out rotten politicians after years of spectacular corruption scandals.

Final results were expected by early evening for the elections in Delhi, Chhattisgarh, Madhya Pradesh and Rajasthan.

Early results showed a resounding third-term victory for the BJP in Madhya Pradesh. That stoked speculation that Chief Minister Shivraj Chouhan, seen as more moderate than Modi, could emerge as an alternative candidate for prime minister if the BJP struggles to lure enough allies to form a ruling coalition.

(Read more: Will India break out of its downward growth spiral?)

BJP-ruled Chhattisgarh was the tightest race and the one possible bright spot for Congress, which stood a whisker behind its rival by late afternoon. Congress has benefited from voter sympathy after much of its state leadership was wiped out in an attack by Maoist militants there earlier this year.

A small north-eastern state, Mizoram, is due to report results from its election on Monday. Exit polls forecast Congress lost ground there, as well, to local ethnic parties.