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The festival of victory has started
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Prime Minister Atal Behari Vajpayee
Indian Prime Minister Atal Behari Vajpayee congratulated Gujarat's chief minister Narendra Modi and said he believed the vote would be the beginning of a resurgence for their Bharatiya Janata Party (BJP).
Mr Modi's campaign was criticised by some for capitalising on right-wing fervour following terrible communal violence in the western Indian state earlier this year.
Post-election clashes broke out between Hindu and Muslim supporters in two cities which had witnessed much of the blood-letting and an indefinite curfew was imposed.
The BJP increased its majority in the 182-seat state assembly by winning 125 seats.
The main opposition Congress party took 52 seats, four seats were won by a small party and independents and there was no election in one constituency after the death of a candidate.
The BBC's Sanjiv Srivastava says the results have shown that, at least in riot-affected Gujarat, the politics of right-wing Hindu nationalism has paid off for the BJP.
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The people of Gujarat have given a verdict in our favour - I thank them for this
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Narendra Modi
The local Congress Party leaders, Shankersinh Vaghela, said the BJP had won using "communal" tactics to divide majority Hindus and minority Muslims in the state.
BJP officials denied they had "cashed in" on the riots which left more than 1,000 people, mostly Muslim, dead.
Mr Modi - accused of ignoring anti-Muslim violence - struck a conciliatory note, saying he would work for all the people of Gujarat, whether they had voted for him or not.
But he said he had a clear mandate: "The people of Gujarat have given a verdict in our favour - I thank them for this."
The scale of his victory surprised some observers as the BJP's popularity has been in decline.
Prime Minister Vajpayee told reporters: "We want to take inspiration from this and prepare for upcoming elections in other states."
"The festival of victory has started."
Violence
But as celebrating crowds gathered at BJP offices, cheering, setting off fire-crackers and dancing in the streets, clashes broke out in the city of Baroda during a victory procession.
Gujarat votes:
Police say one man was injured in fighting between Hindu and Muslim supporters and a curfew was imposed.
Police also say they dispersed crowds in Ahmedabad, when they began pelting stones at each other.
The situation in both the cities - which were at the heart of the bloody rioting earlier this year - is said to be under control now.
Voting took place on Thursday, but counting only began on Sunday to allow officials to hear complaints about the voting process.
Fresh votes were held in 15 polling stations on Saturday because of irregularities and faulty voting machines.
On Saturday, the Election Commission revised an initial turnout figure of 63%, a near record, to 61.7% after assessing data from all parts of the state.