By Sarita Chaganti Singh, Rishika Sadam and Rupam Jain
NEW DELHI/HYDERABAD (Reuters) -Regional parties in Indian Prime Minister Narendra Modi's alliance demanded on Thursday more funds for their states and federal cabinet positions as negotiations began on forming a new coalition government, alliance leaders and sources said.
Modi was named leader of the National Democratic Alliance (NDA) on Wednesday, after his Bharatiya Janata Party (BJP) lost its outright majority in India's parliamentary election and found itself reliant on support from regional parties - mainly the Telugu Desam Party (TDP) and Janata Dal (United).
The NDA won 293 seats in the 543-member lower house of parliament, where 272 constitutes a simple majority.
But Modi's BJP won only 240, making TDP leader Chandrababu Naidu and JD (NASDAQ:JD)(U) head Nitish Kumar, also the chief minister of the eastern state of Bihar, kingmakers in the alliance with their 16 and 12 seats respectively.
TDP also won a regional election in the southern state of Andhra Pradesh and Naidu is set to become chief minister there.
"We’re still in discussions and one thing we’re clear on is Naidu wants to maintain a very good relationship with the centre (federal government) because our priority is state development and interest," senior TDP leader Kutumba Rao told Reuters.
Both parties are pushing longstanding demands to grant special status to their states, according to one TDP spokesperson and five NDA sources.
Special status allows states to receive more federal development funds, and on simpler terms. While Bihar is India's poorest state, Andhra Pradesh lost some of its resources in 2014 when the new state of Telangana was carved out of it.
Besides special status and cabinet positions, TDP is also seeking more funds for irrigation projects in Andhra Pradesh and to complete the building of its new capital, Amaravati, two sources familiar with the matter told Reuters.
"This is not the first time we are in NDA, so we are confident that we will get what is due to us," TDP spokesperson Jyothsna Tirunagari said.
"In our earlier terms with NDA, we had ministerial berths and also the Lok Sabha [lower house] speaker from our party. This time we are a strong partner and share a clear vision for the country," she said.
JD(U)'s Kumar also wants support for new industrial projects in Bihar along with federal cabinet positions, one NDA source said.
COALITION NEGOTIATIONS
Top BJP leaders held talks about ministerial portfolios with the allies on Thursday, a day before Modi is expected to meet President Droupadi Murmu to present his claim to form the next government, one BJP source said.
Modi is expected to be sworn in over the weekend and local media reported that leaders of Sri Lanka, Bangladesh, Maldives, Nepal, Mauritius and the king of Bhutan have been invited to attend the inauguration.
The coalition negotiations are a throwback to an era before 2014 - when Modi swept to power with an outright BJP majority - in which alliance partners haggled for positions and benefits in exchange for their support.
The BJP's loss of its majority unnerved markets and raised the prospect of a government less stable and sure-footed than the outgoing one.
But Shivraj Singh Chouhan, a top BJP leader and newly elected lawmaker, told the CNN-News18 TV channel that Modi's new government would last its full five-year term and "come back with a better performance".
A survey published on Thursday suggested that a lack of jobs, high inflation and falling income had cost Modi votes, even though he personally still commanded wide support.
Some 30% of voters said they were worried about inflation, compared to 20% prior to the election, according to the Lokniti-CSDS post-election survey published by the Hindu newspaper.
In a survey for the Hindu conducted before the election, unemployment had been the main concern of 32% of respondents.
Decreasing income and the government's handling of corruption and fraud were other issues of concern, according to the survey.