Buoyed by a resounding victory in the Indian parliamentary elections, the Congress party began talks on forming a new government yesterday amid hopes that it will be able to push through badly needed economic reforms.

The final results showed that a coalition led by Congress had defied predictions of a hung Parliament by winning 262 seats in the month-long poll — up from 180 in the last election and just ten short of an outright majority in the Lok Sabha, the Lower House.

Sonia Gandhi, the Italian-born Congress leader, met party elders yesterday including Manmohan Singh, the Prime Minister, and Pranab Mukherjee, the Foreign Minister, to decide whom to invite to make up the numbers. They were also expected to discuss a first position in the Cabinet for Mrs Gandhi’s 38-year-old son and heir, Rahul, who has been credited with spearheading the Congress victory and is tipped to take over from Dr Singh, possibly within two years.

“I think he should be Prime Minister now,” said Jyotiraditya Scindia, 38, a Congress MP who is considered close to Mr Gandhi and is among several young Congress figures also in the running to join the Cabinet. “He has all the qualities, capabilities and he has shown that.”

Mr Gandhi, whose father, grandmother and great-grandfather were all prime ministers, celebrated victory and the inmproved mandate yesterday by hosting a tea party for young Congress workers in Delhi to discuss the results and future strategy.

Right up until Saturday, when results began to emerge, analysts had predicted that the Congress-led coalition would win by a much narrower margin, forcing it to rely on several smaller parties to form a fragile government that might not have lasted its full term.

Now, Congress can take its pick of potential new allies rather than trading support for Cabinet positions or policy concessions — as it had to with India’s Communist parties after the last election in 2004. That means the ruling coalition should face fewer internal divisions over reforms that are desperately needed to stimulate growth and spread its benefits to the 880 million Indians who live on less than $2 (£1.32) a day.

It also faces a severely weakened opposition after a rival coalition, led by the Bharatiya Janata Party, won just 159 seats, down from 177 in the last Parliament, as voters appeared to reject the BJP’s divisive brand of Hindu nationalism.

The Communist parties, which withdrew their support from the Government last year after a dispute over a nuclear deal with the United States, also lost ground in the election.

“Finally, a free hand,” was the headline of the Economic Times, which hailed the result a as a landmark in India’s political and economic development. “The people have spoken and spoken decisively: voting out confusion, voting in clarity, voting out schism, voting in development,” the newspaper said.

“2009 may just be the beginning of India’s century — a year when India dumps its old baggage and looks to the future with humility, unity and hope.” Most analysts sounded a more cautious note, saying that the new Government would face far worse economic conditions than the last one, which oversaw annual growth of almost 9 per cent since 2004.

Some expressed concerns that Congress was discussing joining forces again with the Samajwadi Party, based in the northern state of Uttar Pradesh, several of whose MPs have criminal backgrounds.

However, they all welcomed the reversal of what had seemed like an inexorable trend towards weak coalition governments made up of small parties based on regional, religious or caste lines.

They also voiced hopes that the new Government would be able to improve relations with the United States and work with it on security issues in a region overshadowed by fighting in Pakistan, Afghanistan and Sri Lanka.

Congress leaders are expected to hold talks with several other parties over the next few days before announcing the formation of a new government before the constitutional deadline of June 2.

Hits and misses

Rahul Gandhi Billed as Congress’s star campaigner, but went into the election with much to prove. The party’s unexpected success has buffed his credentials as a prime-minister-in-waiting. On the campaign trail he promised to better the lot of India’s vast poor population, went to pains to present himself as in touch with the common man and promised to democratise the way in which Congress functions. Prospects Never been brighter.

Manmohan Singh Detractors tried to brand him an uncharismatic puppet of Sonia Gandhi. The electorate, by contrast, appears to have warmed to the Prime Minister’s reputation as a steady hand that has never been tainted by corruption. Last year he demonstrated a new steeliness by pushing through a deal with the US that gave India access to nuclear technology. Prospects A new legitimacy without having to rely on the Left.

L. K. Advani Portrayed by the BJP as the “iron man” of Indian politics. Ran a negative campaign with attacks on rivals and vowed to repatriate billions of dollars he claimed were looted by corrupt officials. Prospects None.

Also-rans Mayawati, the controversial politician who has courted the Dalit (“Untouchable”) community, was spoken of as a potential PM. Her party won 21 seats, only two more than in 2004. The Left got a kicking from voters with its worst performance in decades