NEW DELHI (Reuters) — The poor showing of India’s ruling Congress in polls in the country’s largest state could be the last nail in the coffin of economic reforms for this government as political compulsions tighten their grip on policy.While voters in Uttar Pradesh state — home to 170 million people — had not rejected India’s surging growth story, they had questioned its failure to deliver prosperity beyond the big cities, political analysts said.

Although this has been a recurring theme in smaller states, the unambiguous vote for change last week in a state with a population more than that of Russia and Australia put together, is expected to spur more caution two years ahead of national polls, they said.

“The message from Uttar Pradesh is that the people are impatient, they want things done,” said Prem Shankar Jha, an independent political-economy analyst.

“But the Congress has not done anything in the last three years that has captured the imagination of the people,” he said. “This government has lost its appetite for reforms. At this moment, there is no reform left in this government.”

Congress, which came to power at the centre in 2004 promising to end the inequities between India’s urban rich and millions of rural poor, was never in the running for power in Uttar Pradesh, having ceded ground to regional parties over the last two decades.

But as the party in power in New Delhi, it was still seen as responsible for price rises across the country and the failure to translate economic growth of eight to nine percent into rural prosperity.

As a result, despite a highly publicised campaign by Rahul Gandhi, heir apparent of India’s most famous political family, Congress lost ground in Uttar Pradesh, sinking to a record low of 22 seats in the 403-seat state assembly.

On the other hand, the state whose fractious politics hinged on caste and religious loyalties for nearly two decades made a break from the past and voted for a party that promised change and inclusiveness in one of India’s least developed states.

“This has immediately amplified the need for development,” said Saumitra Chaudhuri, economic adviser at domestic credit rating agency ICRA.

“It shows that regional parties have also understood that development is not a hoax and it is a possibility if they pursue it,” he said.

Over the last three years, Congress’ record on both development and economic reform has been patchy, with the ruling coalition swinging between populism and liberalisation to mollify belligerent communist allies and support a surging economy.

The outcome, analysts said, was that it was not able to do justice to either, and a range of liberalisation measures such as opening up of the retail sector, pension reforms and policies to allow more private investment in infrastructure got stuck.

With voters traditionally preferring price stability over growth, the Congress government was again in danger of offering electoral excuses to slow down on infrastructure enhancement and key reforms, the Indian Express said in an editorial on Monday.

Nearly three months back, India’s growth-obsessed Finance Minister Palaniappan Chidambaram promised higher investment in education, healthcare and the farm sector in what was seen as a course correction by the government ahead of the 2009 polls.

But analysts like Jha are not sure if the government can live up to those promises and ensure the bureaucracy implements plans.

“Will the Congress actually wake up and realise that to be able to recapture the imagination of the people it needs to do something that makes them feel much more secure in their life,” asked Jha.

“The answer to my mind is a resounding no.”