NEW DELHI, Feb 27: India's ruling Congress Party was defeated on Tuesday in important state elections in the Punjab and Uttarakhand by a resurgent opposition led by Bharatiya Janata Party (BJP), a verdict that could push the course of India-Pakistan dialogue either way.

The Congress however retained its hold on the remote northeastern Manipur state.

Punjab Chief Minister Amarinder Singh resigned as the head of the Congress party ministry after an alliance of the BJP and Sikh religious Akali Dal captured 67 seats in the 117-member state assembly. The outgoing chief minister was closely associated with the dialogue with Pakistan, chiefly with his counterparts in Pakistan's Punjab province. However, the new incumbent, Parkash Singh Badal is not seen as a critic of the peace process either.

But BJP leaders told visiting Foreign Minister Khurshid Mehmood Kasuri recently that any discussion without the rightwing Hindu party at the helms in India would be futile. The choice now is for the Congress to tamely accept the BJP's over reaching claim or to break out from its shackled approach to the dialogue process.

The Congress came to power with a rag-tag alliance following close elections in May 2004, promising to make the benefits of the BJP's controversial economic reforms available to the common man. On Tuesday, as he conceded his party's defeat, Prime Minister Manmohan Singh admitted that galloping prices of ordinary commodities, chiefly food, had led to the adverse verdict.

With elections in the most populous state of Uttar Pradesh due in April, where the Congress once again locks horns with the BJP, an aggressive opposition camp against the country's ruling coalition is on the cards. This could translate into the BJP going for a shrill anti-Muslim campaign. That usually translates into an anti-Pakistan campaign.

An old defence-cum-financial scandal relating to a howitzer deal during the Rajiv Gandhi administration has again come handy too.