INDIA: A major regional ally of India's ruling Hindu nationalist Bharatiya Janata Party-led coalition suffered a major electoral setback in a southern state yesterday, reinforcing projections of an unclear verdict when votes from the parliamentary polls are counted tomorrow.
The surprise verdict also impacted negatively on India's financial markets.
Share prices, which rose to record levels earlier in the year following a "feel good factor" that the BJP unsuccessfully tried exploiting, plummeted to the lowest levels in over three years following fears that India's ongoing economic reforms could be derailed if a weak or ineffective coalition assumed power.
"We accept the people's verdict," Andhra Pradesh state chief minister Chandrababu Naidu declared after his Telugu Desum Party won just 48 seats in the 294-member provincial assembly.
He was routed by the Congress party that is also the main opposition at the national level, which, along with its allies, bagged a record 227 seats or a 75 per cent majority.
Andhra state assembly election results were announced two days ahead of the parliamentary poll results as the constitution requires a new government to assume office by Thursday.
In the outgoing parliament, the BJP-led National Democratic Alliance was supported by 29 Telugu Desam MPs. But Mr Naidu's defeat could mean a fall in support for the federal coalition from the state at parliamentary level.
The defeat of the reformist Naidu, who was a favourite of western corporations for his efforts to transform his backward state into an information technology hub, resulted from his administration ignoring farmers and the under developed countryside.
Following successive years of drought, usurious or non-existent government loan schemes and a lack of state help, around 3,000 desperate farmers in Andhra had committed suicide. Analysts said Naidu was busy pursuing his dream of turning the state capital Hyderabad into 'Cyberabad', an ultra-modern city.
"It was reasonably clear that there would be some losses in Andhra though I really can't say that this magnitude of loss was ever anticipated," BJP leader Arun Jaitley said.
Exit polls indicated that Prime Minister Mr Atal Behari Vajpayee might not return to power, a dramatic turnaround for him.