Setback For India PM's Party As Financial Capital Placed Under Direct Rule

India's financial capital was plunged into political uncertainty Tuesday after the president imposed direct rule on wealthy Maharashtra state after weeks of deadlock over who would form its government following fiercely fought elections.

India has been battling an economic slowdown and the political stalemate is a setback for Mumbai, which is home to business tycoons, the stockmarket and the glitzy Bollywood film industry.

The move is also a blow for Prime Minister Narendra Modi's Hindu-nationalist Bharatiya Janata Party (BJP), which was expected to remain in control of India's richest state after winning the most seats at last month's polls.

"President Ram Nath Kovind signs proclamation imposing President's rule in Maharashtra," the Press Trust of India reported, citing officials.

The state was ruled by the BJP and its right-wing regional ally Shiv Sena ahead of the elections.

But the two parties failed to agree on a power-sharing deal after the election results showed the coalition had won a comfortable majority for a second consecutive term.

Shiv Sena quit the coalition Monday, hoping to convince ideological rivals the centre-left Indian National Congress and the Nationalist Congress Party to form a government instead.

Under India's constitution, New Delhi can take direct control of a state in the absence of a local government and after obtaining consent from the president.

The president's direct rule can last up to six months, but experts said fresh elections are likely to be called within a few weeks to solve the political quagmire, unless one of the parties is able to cobble together a coalition.

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