India said on Tuesday it would hold local elections in five states between April 4 and May 10, with the polls seen as the first test for the ruling Congress party since it became embroiled in corruption scandals.
The Congress and its allies are seen as early favourites in these opposition-ruled states, where a victory could embolden the federal government to push forward economic reforms such as freeing up diesel prices and opening up the retail sector to foreigners.
It would also help the Congress-led government build support for a single nationwide goods and services tax (GST), the country's most ambitious tax reform yet that is seen cutting business costs and boosting government revenue.
If Congress loses, however, it would severely impair Prime Minister Manmohan Singh's coalition for the rest of his term until 2014, analysts said.
"A loss would mean much more of policy paralysis. The (coalition's) character will change, it will be a very deflated one," D.H. Pai Panandikar, head of New Delhi-based think tank RPG Foundation, said.
"It will be seen as if the (coalition) leaders have been defeated by the people. Although technically there is no danger, morally the (coalition) will be weakened."
The five states going to the polls include West Bengal in the east and the southern state of Kerala. The Congress and its allies are expected wrest power in both states on an anti-incumbent wave. The Congress is also expected to return to power in northeastern Assam due to a fractured opposition.
In southern Tamil Nadu, the ruling Congress coalition is trying to retain power through populist measures such as cheap food grains and free television sets for the poor. The party is also seen retaining small southern Pondicherry.
The five states jointly send 116 lawmakers to the 545-strong lower house of parliament and the elections, the first of several state polls that will be staggered over the next few years, will be seen as an early test ahead of the federal polls in 2014.
But elections in India with millions of voters are notoriously difficult to predict. For instance, in Tamil Nadu, a multi-billion dollar corruption scandal linked to the DMK party, a Congress ally, could affect votes for both parties.