Oct. 13 (Bloomberg) -- India’s ruling Congress Party faces its first electoral test today since victory at national polls in May, with voters in three states delivering their verdict on rising food prices and job security for indigenous groups.

Congress is bidding for a third five-year term in the western state of Maharashtra, home to the financial capital of Mumbai and the headquarters of Tata Group and Reliance Industries. Voters will also cast ballots in the northern state of Haryana and Arunachal Pradesh, a mountainous region neighboring Tibet that is partly claimed by China.

In Maharashtra, “rising prices, suicides by indebted farmers and internal security failures are strong factors against Congress but there is no opposition to grasp the opportunity,” said Yashwant Deshmukh, head of the New Delhi- based C-Voter polling agency. Congress should “win at least two, if not all three states.”

A resurgent Congress won 206 seats in the 543-member lower house of parliament in May’s elections, relegating its closest rival, the Bharatiya Janata Party, to 116 lawmakers.

The 124-year-old Congress and its local ally, the Nationalist Congress Party of Agriculture Minister Sharad Pawar, will battle the BJP and its partner, Shiv Sena, for control of the 288-seat Maharashtra assembly. Bond, currency and share markets in Mumbai are closed. Both political alliances promise to raise the city’s profile as a financial center.

Water, Power Shortages

Consumer prices at the highest in a decade, corruption, unemployment, and water and electricity shortages will influence the ballot as the state’s 76 million voters elect a new administration, according to a pre-poll survey by Star TV and ACNielsen. The Congress-led alliance may emerge as the biggest grouping in the new Maharashtra assembly, the survey said. Votes from the three states will be counted on Oct. 22, according to the Election Commission.

India’s economy is showing signs of recovery, Finance Minister Pranab Mukherjee said yesterday after data for industrial production rose the most in 22 months, boosting Congress on the eve of the vote. The economy may expand as much as 6.5 percent this fiscal year, Prime Minister Manmohan Singh said last week.

Mumbai is home to many of India’s biggest companies, its two main stock exchanges, the diamond bourse and principal commodities trading center. It also boasts the world’s most prolific movie industry.

Sons of the Soil

In campaigning, Congress trumpeted the opening of a 5.6 kilometer (3.5 miles) sea bridge, and the construction of metro rail and monorail systems for the city of 19 million. Still, the bridge opened half a century after it was planned, and traffic jams still disrupt daily commutes.

Complicating the poll predictions is a split in the support for parties that champion people born in the state, known as the Marathis. Formed in 1966 by a cartoonist, Balasaheb Thackeray, the Shiv Sena campaigned to protect jobs for local people as Mumbai’s emergence as a business hub attracted migrants.

The party is now headed by his son, Uddhav, who follows a more tolerant approach that seeks to regulate the inflow of job hunters. His nephew, Raj Thackeray, runs the rival Maharashtra NavNirman Sena. The MNS pledges to protect jobs and education for locals and make the Marathi language compulsory in all schools as well as on sign boards of shops and offices, the party said on its Web site.

“The most important issue for me is the security of my job and family,” said Ramesh Chandra, 35, a Hindi-speaking taxi driver on his way to vote at a polling booth in central Mumbai. Parties that discriminate in favor of Marathis threaten both, he said.

“Mumbai is much more cosmopolitan today than it was 20 years ago,” Deshmukh said. “The demographics have changed and Marathis don’t form a majority in the city anymore. The non- Marathi votes are getting concentrated in favor of Congress, while the Marathi votes are getting divided.”

To contact the reporters on this story: Sumit Sharma in Mumbai at sumitsharma@bloomberg.net.

Last Updated: October 13, 2009 02:57 EDT