The election defeat for Modi comes days after the successful visit of US President Barack Obama to India and following the biggest national election victory by his party in three decades, the New York Times editorial board said.
"Fresh from the diplomatic high of a successful summit meeting with President Obama, Prime Minister Narendra Modi has been brought down to earth by domestic politics," it said in an editorial titled 'A Defeat for Prime Minister Modi'.
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It said that Modi and his BJP were "crushed" in the election for New Delhi's 70-member state assembly.
BJP won three seats while the upstart Aam Aadmi Party (AAP), lead by Arvind Kejriwal, won a massive 67 seats.
"The election won't affect Modi's hold on the prime minister's office and the federal government. But it will increase the enormous pressure to deliver on his economic and governance promises even while making that harder," it said.
The board said "ordinarily" elections in New Delhi would not draw international attention but ever since Modi and his party recorded a massive victory in national elections last year, the political leader and the BJP "have generated an aura of invincibility, winning a succession of other state elections.