Indian coalition partner loses power in key state

PATNA, India, Wednesday (Reuters) A major partner in India's ruling coalition lost power in a key state , a defeat analysts say may weaken the federal government and slow reforms.

The election for a new assembly in the crime-ridden eastern state of Bihar was crucial for the Rashtriya Janata Dal (RJD) - the second largest party in the Congress-led national government - that had ruled the state for 15 years.

In counting after voting spread over a month, it lost to a coalition led by the Hindu nationalist Bharatiya Janata Party (BJP), which won at least 145 of the 243 seats.

The RJD, which won about 65 seats with counting continuing in one electorate, conceded defeat. "I accept the mandate, but the poor people have been fooled," party leader and national railways minister Lalu Prasad Yadav, a member of the lowly Yadav cowherd caste, told reporters. "We will give full cooperation to the new government."

Analysts said the result - the first major bounce-back since the BJP lost power in New Delhi last year - could have significant ramifications on the national government, which is also propped up by left-wing parties.

"A large bastion in north India for the federal coalition has fallen," political analyst Mahesh Rangarajan told Reuters.

"This is important in terms of political geography and it will make the government vulnerable." Rangarajan said defeat for the RJD could also see New Delhi's communist allies step up pressure to slow free market reforms.

"A defeat would allow the leftists to reignite the debate over reforms, as they would cite the loss as the people's rejection of the coalition's free market policies," he said.

One of India's poorest and most populous states, Bihar has been under special federal rule after polls in February led to a hung assembly that was subsequently dissolved.