India’s ruling Bharatiya Janata Party (BJP) has conceded defeat after failing to win the majority of seats in a crucial election in the populous state of Bihar.

On Sunday, India’s election commission said an alliance of parties, linked to main opposition Congress party, running against Prime Minister Narendra Modi’s ruling party had 176 of the 243 available seats compared to 53 won by the BJP.

Indians celebrate after a victory by an alliance of parties running against the ruling BJP, in New Delhi on November 8, 2015, in the Bihar state assembly elections. (AFP photo)

Modi said he had congratulated his main rival, Bihar Chief Minister Nitish Kumar, on the alliance’s victory in the vote.

The defeat comes months after the BJP lost elections held in February for the Delhi state assembly.

Analysts say the defeat will give the opposition more power and even divide the ruling party.

Sunday's vote results also represent a setback for Modi’s plans to push forward economic reforms through the national parliament, where the BJP lacks a majority.

Indian Prime Minister Narinder Modi addresses a public rally in Srinagar on November 7, 2015. (AFP Photo)

Bihar, which has a population of more than 100 million, is struggling against poverty. Two thirds of the state’s population does not have access to electricity.

Modi, who came to power in May 2014, had described the vote as a test of his popularity.