By Rupam Jain and Tommy Wilkes
NEW DELHI (Reuters) - Prime Minister Narendra Modi's party was on course for a landslide victory in India's most important battleground state, early returns showed on Saturday, in a personal triumph that will strengthen his claim to a second term as national leader.
Wresting control of Uttar Pradesh would be a ringing endorsement of Modi's stewardship of Asia's third-largest economy after his high-risk decision last November to scrap high-value banknotes worth 86 percent of the cash in circulation.
Though premature to call the final outcome, the Election Commission of India said Modi's Bharatiya Janata Party (BJP) was leading in 301 of the 403 seats in the northern state, which if confirmed by results would give it the biggest majority scored by any party in the state since 1980.
Almost four in ten voters backed the BJP based on early counting, the election commission said, close to the party's vote share in Uttar Pradesh in the 2014 national election when it won the biggest national majority in three decades.
"This will be a phenomenal endorsement for Narendra Modi and will put him on track for winning the 2019 election," Prannoy Roy, editor of TV channel NDTV said.
Investors hope victory will embolden Modi to embark on more reforms, including the launch of a national sales tax, to boost economic growth.
Modi threw himself into the Uttar Pradesh campaign after his party got off to a slow start, addressing dozens of rallies and turning the contest into a test of his personal popularity and his radical move to abolish big banknotes to rein in corruption.
Celebrations erupted outside BJP offices in state capital Lucknow and Delhi, with party workers dancing in the streets and splashing each other with colored paints.
"This is a victory for Prime Minister Narendra Modi's corruption-free administration and welfare measures for the poor," Modi's campaign manager, Amit Shah, said in a tweet.
Early results for four other state elections put the BJP ahead in the Himalayan state of Uttarakhand and behind in Manipur in the northeast. In the coastal state of Goa, the BJP was running neck and neck with the opposition Congress party.
Congress was ahead in Punjab state, trends showed, offering at least some consolation after Rahul Gandhi, heir apparent to the party leadership, failed again to make an impact.
In Uttar Pradesh, a largely poor and agricultural state of 220 million people, Modi pitched himself as a man on the side of the poor prepared to hit the corrupt rich hard with his demonetization drive.
Critics accuse his party of stirring communal tensions to shore up votes among its core Hindu base.
None of the BJP's opponents, including an alliance between Congress and the ruling Samajwadi Party, managed a vote share above 23 percent, partial official returns showed.
"The Samajwadi Party wholeheartedly accepts the verdict of the people of Uttar Pradesh," spokesman Ghanshyam Tiwari said, conceding defeat.
The election decimates the field of credible opponents who could halt Modi's march to a second term at the 2019 general election.
Victory in Uttar Pradesh will also make it easier to overcome resistance to the BJP's legislative agenda in the upper house of parliament, where the ruling party is in the minority.
(Additional reporting by Krishna N.Das, Malini Menon; Editing by Douglas Busvine and Simon Cameron-Moore)