India's economic reform programme and privatisation plans are likely to be boosted by its ruling party's decisive electoral victory in the Western state of Gujarat.

The Bharatiya Janata Party (BJP), which leads the ruling federal coalition, won 126 of the 182 seats in Gujarat's state parliament in elections over the weekend.

As well as being a hardline Hindu nationalist heartland - and the location for vicious communal riots between Hindus and Muslims in recent years - Gujarat is also one of India's leading industrial regions.

Victory might therefore calm nerves within the ruling coalition about controversial privatisations, not to mention the politically sensitive question of cutting subsidies.

Back on track

Arguments about the pace of reform have raged within the coalition for some time, with several senior ministers attempting to block plans for selling off stakes in the country's two leading oil firms, Bharat Petroleum and Hindustan Petroleum.

Those arguments have now largely been settled, but there remain factions within the Hindu nationalist movement - particularly the most extreme end - who oppose the reforms.

But the victory should strengthen the hand of Prime Minister Atal Behari Vajpayee, analysts said.

First on the list after the oil selloff - part of a $2.5bn programme - will probably be plans to reduce food and fertiliser subsidies, as the government tries to find ways of cutting back the budget deficit from last year's 5.9%.

"The BJP will now be confident politically that if its policies are not popular it still has a political plank which outweighs the negative impact of any harsh economic decision," one analyst told Reuters.