The defeat of India's ruling Bharatiya Janata Party (BJP) in the Bihar state election will energise opposition parties and make it tougher for Prime Minister Narendra Modi to push reforms through Parliament, starting with the goods and services tax.
Opposition parties all over the country celebrated the defeat of the Hindu nationalist party, which started the year with an election defeat in Delhi, the country's capital city, and, now, ends the year with another major defeat at the polls.
Bihar, as the nation's third-most populous state, is a key prize as state elections decide who controls the Upper House of India's Parliament - where the BJP does not hold a majority.
The Upper House is crucial for passing legislation, and the Bihar vote will further embolden opposition parties to block Mr Modi's reform agenda.
Two regional leaders - Mr Akhilesh Yadav, from the Samajwadi Party, and Ms Mamata Banerjee, from the Trinamool Congress - were among the opposition leaders who congratulated the winning alliance led by Bihar Chief Minister Nitish Kumar, calling the win "historic".
ROUGH ROAD AHEAD FOR MODI
Mr Modi will have a tough time when Parliament assembles. The opposition will not allow Parliament to function. Already, there is discontentment that Mr Modi is not doing enough. He will have to find some way to reach out to the opposition.
DR BHASKARA RAO, from the Delhi-based Centre for Media Studies
Dr Sandeep Shastri, pro vice-chancellor at the Jain University in Bangalore, said: "The opposition is going to unite. The two results in Bihar and Delhi clearly point to strong state-based parties with credible leaders being at the forefront of the opposition to the BJP. The lead will be taken by these regional parties.
"The opposition will go hammer and tongs against the Prime Minister - that's a price the BJP has to pay for pitching the PM at the centre of the whole campaign."
The BJP had hoped for a win in Bihar to push up its numbers in the Upper House, where it has been facing difficulties in pushing through key reforms, such as easing land acquisition rules, and the goods and services tax, which is set to miss next year's deadline for implementation.
The Congress had disrupted the previous monsoon session of Parliament.
"Mr Modi will have a tough time when Parliament assembles. The opposition will not allow Parliament to function. Already, there is discontentment that Mr Modi is not doing enough. He will have to find some way to reach out to the opposition," said Delhi-based Centre for Media Studies analyst Bhaskara Rao.
While the defeat does not directly threaten the government or the Prime Minister, analysts said the ruling party will have to go back to the drawing board to stem any further slide in its political fortunes, and also rethink its Hindu agenda.
Throughout the Bihar campaign, critics accused the BJP leadership of trying to polarise votes along religious lines by not quickly condemning or reacting to a series of incidents, such as the recent lynching of a Muslim blacksmith by a Hindu mob that thought he had beef in his house, or against the activities of hardline Hindu fringe groups that have become more active under BJP rule.
Anti-Muslim statements by a small section of BJP leaders are also believed to have pushed Muslims to vote for the winning alliance in Bihar. Said Dr Shastri: "The Hindu agenda... helped unite the minorities in favour of the grand alliance (led by Mr Kumar). This (Hindu agenda) would need a rethink, especially when the party has to manage power at the federal level for three more years."
The issue of religious tolerance has, in recent weeks, also taken the discourse away from Mr Modi's governance and development agenda.
Moody's Analytics, in a recent report, noted that while Mr Modi had "largely distanced himself from the nationalist gibes, the belligerent provocation of various Indian minorities has raised ethnic tensions".
The report warned of "a possible increase in violence" that could endanger reforms. The Indian government dismissed the report.
Still, others believe that the defeat could bring internal dissent out into the open.
"The results in Bihar are staggering... The clamour against Narendra Modi within the BJP will increase," said Dr Shaibal Gupta, from Bihar's Asian Development Research Institute.