Modi's second straight regional election setback will galvanise opposition parties, embolden rivals in his own party and diminish his standing with foreign leaders amid concern he may not win a second term as prime minister.

"This is a clear indication that Modi's popularity may now have peaked," said Satish Misra, a political analyst at the Observer Research Foundation.

The loss in Bihar will also hamper Modi's push to pass economic reforms, because he needs to win most state elections in the next three years to gain full control of parliament.

It was the most expensive state election ever fought by the BJP, with more than 90 top party figures addressing 600 rallies over the last six weeks, party officials said.

"The Bihar election was a very important battle for us. We will have to analyse each and every aspect of the result," said Ram Madhav, a BJP general secretary.

Modi tweeted that he had called to congratulate Kumar, whose regional 'grand alliance' could now become a template for politicians seeking to prevent Modi's march towards untrammelled power under India's federal system.

The defeat could also dampen the mood as Modi heads to Britain for the first bilateral visit by an Indian leader since 2006. Modi is due to address a crowd next week at London's Wembley stadium.

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