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Indian Prime Minister Narendra Modi suffered one of his biggest setbacks since taking office with a defeat in a crucial state election, dealing a blow to his push for economic reforms.
His opponents led by incumbent Bihar Chief Minister Nitish Kumar won 73 percent of seats in the state’s 243-member assembly, with the Modi-led National Democratic Alliance taking 24 percent.
Modi said on Twitter that he called Kumar and congratulated him on his victory.
The outcome will embolden opponents who have sought to block key economic reforms like a national sales tax while portraying Modi’s government as intolerant of religious minorities. That’s bad news for India’s stocks and currency, which are expected by some analysts to fall when markets open on Monday. One-month rupee forwards slid 0.7 percent, headed for the biggest drop since Aug. 24.
It also hurts Modi’s longer term goal of taking power in the opposition-controlled upper house of parliament, where members are chosen by state legislatures. His Bharatiya Janata Party-led alliance needs to perform well in about 10 state elections through 2017 to have a shot at controlling the upper house and ending gridlock that has stifled reforms.
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