Modi to push on with reforms despite crushing poll loss

India's finance minister vowed Monday to push ahead with much-needed reforms after his party's drubbing at a key weekend state poll hiked fears of a slowdown in the government's agenda.

The ruling Bharatiya Janata Party (BJP) suffered a shock defeat at assembly elections in one of India's biggest and poorest states after a campaign fronted by Prime Minister Narendra Modi.

Analysts said the loss was a blow to Modi's appeal as an invincible vote-winner after he stormed to power at last year's general election with the biggest mandate in 30 years.

Galvanised opposition parties are now expected to step up efforts to derail the Modi government's plans to push promised economic reforms through the national parliament.

India's stock exchange fell as much as 2.3 percent in Monday's morning session on the BJP's defeat before recovering some losses.

Finance Minister Arun Jaitley said the government would press on with initiatives including a long-awaited national sales tax despite lacking the numbers in parliament's upper house.

Jaitley also denied the election was a referendum on the Modi's government 17 months in power, while also saying "each one of us will take the blame".

"I don't see it as a setback to the economy... structural reforms will continue. They should continue at a rapid pace," Jaitley said in an interview with ET Now TV network.

"Every election is not a referendum. A state election is not a referendum. You are not contesting on any one issue," he said.

A coalition of rival, regional parties clinched 178 seats in the 243-seat Bihar assembly, more than triple the number of the BJP on 53.

Caption : The loss was a blow to Modi's appeal, say analysts