Congress party wins state polls - TV

A cut out of Indian Prime Minister Manmohan Singh is seen through the flag of India's ruling Congress party at the state head office of Congress party in Mumbai October 22, 2009.

NEW DELHI (Reuters) - India's ruling Congress party-led alliance won two state polls on Thursday and were set to form the government in a third, local television said, a result that gives more room for the alliance to push economic reforms.

Elections were held last week in Maharashtra, northern Haryana and Arunachal Pradesh in polls seen as a major test for the Congress coalition after a strong victory in central polls in May.

The party retained power in Maharashtra and Arunachal Pradesh, and were expected to hold on to power in Haryana, party officials said.

"It is a mixed result for the Congress party, as they won largely because of a fractured opposition, but they now have the opportunity to consolidate and rework their strategies," said Amulya Ganguli, an independent political analyst.

Experts said the Congress will now be able to dictate the pace and scope of reform measures such as politically tough stake sales in state-run firms.

"This paves the way for economic reforms because there will be less number of dissenting voices and the Congress can now focus on economic reforms as their first priority," said D.H. Pai Panandikar of the RPG Foundation, an economic think tank.

"The vote shows the Congress is coming on its own and is reinstating itself as the single largest party in India," Panandikar added.

A weak and divided Bharatiya Janata Party, the main opposition Hindu nationalist party, was hoping that a severe drought and security issues could help them, but party officials were quick to concede defeat after early count showed they were trailing.

"The BJP is in complete disarray, they don't have a leader to show the way and are in serious trouble," Ganguli added.

(Editing by Nick Macfie)