Soul searching for India's Modi after humiliating Bihar defeat

NEW DELHI: Indian financial markets took fright on Monday at the humiliating defeat suffered in a pivotal state election by Prime Minister Narendra Modi and his party, whose leaders are expected to meet amid calls for a rethink of policies and priorities.

Modi was due to huddle later with a dozen senior colleagues of his Hindu nationalist party, including its president Amit Shah, Finance Minister Arun Jaitley and Home Minister Rajnath Singh, party and government officials said.



The loss in Bihar, India's third most-populous and poorest state, is the most significant setback for Modi since he won a crushing victory in a general election last year.

"We have to identify what went wrong," said Ram Madhav, a Bharatiya Janata Party (BJP) general secretary.

The BJP office in New Delhi was deserted on Monday with workers compiling newspaper clippings on the election defeat in Bihar. Security guards turned away offerings of sweets and gifts for Diwali, a Hindu festival being celebrated this week.



Indian shares, bonds and the rupee fell to six-week lows as investors who had backed Modi fretted that he would struggle to push economic reforms through the parliament against an emboldened opposition.

The Bihar loss may hamper Modi's reform agenda because he needs to win most state elections in the next three years to gain full control of parliament. India's states are represented in the upper house, where the BJP lacks a majority.

The election came against a background of concerns in India at incidents in which Muslims have been targeted by Hindu zealots. There have been protests by prominent intellectuals at what they call a climate of rising intolerance.



Some BJP lawmakers called for the party to refocus on a more unifying agenda focusing on economic development after a campaign that used rhetoric in Bihar and sought to polarise voters along caste and religious lines.

"We have to be single mindedly focused on development, development, development," said Chandan Mitra, a BJP member of parliament. "We can't afford to be distracted by anything else."

During the election rally, Modi accused rival parties of snatching economic benefits from lower-caste Hindus and handing them over to a religious minority, a comment interpreted as veiled reference to Muslims.



The election commission banned several party posters they said could incite hatred. One banned poster showed a young Hindu woman embracing a garlanded cow, an animal sacred to Hindus.

The BJP president was also criticised for comments suggesting that if his party lost, the result would be celebrated in archrival Muslim-majority Pakistan.

Arun Shourie, a minister in the last BJP government, called for a change in course.

"We should be grateful to the people of Bihar because the direction has been halted," he told NDTV. Asked what went wrong with the party's Bihar campaign, he said "everything"