Votes are only partly counted in India's latest round of state assembly elections, but already the signs are clear: the Congress party has lost in Gujarat and Maharashtra, the two richest and most influential western states.
The right-wing Hindu Bharatiya Janata Party (BJP) is winning Gujarat, while in Maharashtra, their coalition with the extremist Shiv Sena party is set to take power in Bombay, the state capital and India's largest city. These losses are offset by a Congress victory in the eastern state of Orissa, where Mr Rao's party dislodged the left-wing Janata Dal party.
The Maharashtra race is close enough for Congress still to assemble a majority, but only if it can lure back many rebels who quit in disgust with Mr Rao's leadership and ran as independents. Janata Dal, which in the past has sometimes allied with Congress against the wave of Hindu nationalism sweeping the country, is refusing an alliance with Mr Rao's party to keep it in power in Bombay.
Although these are only state polls, they could turn out to be as important for the beleaguered Mr Rao as any general election. They are likely to fuel the revolt against him that is brewing already within the Congress party.
The leading opposition party, the BJP, is demanding that general elections be brought forward. The BJP's president, Lal Krishna Advani, who flew to Bombay in anticipation of his party's success, said: "It's evident that infighting in the Congress had taken a heavy toll and the existence of the Congress party itself was under a cloud. Congress has forfeited the confidence of the people."
The probable Congress defeat could make it tougher for Mr Rao to forge ahead with plans to liberalise India's rusty Socialist economy. In both these state assembly polls, it became apparent that most of India's poor, that is to say most voters, were not reaping benefits from Mr Rao's economic reforms.
These losses may force the Congress Finance Minister, Manmohan Singh, to slow the pace of liberalisation, even though the World Bank is complaining that India is modernising too cautiously.
Mr Rao, who proved such a poor crowd-puller in previous state assembly elections that he was urged not to display his unsmiling face much in Bombay, may face the flak sooner than he would like. Party dissidents may challenge Mr Rao's leadership at a meeting of Congress MPs today in New Delhi.
Many Congress members are leaning on Mr Rao to bring back Arjun Singh, a former cabinet member, expelled from the party for openly criticising the Prime Minister's failure to stop government corruption and improve relations between the Hindu majority and hundreds of millions of Muslims who are feeling menaced by the rise of Hindu extremism.
Bombay has a large Muslim population and many Muslims last night expressed their disquiet over the apparent victory of the BJP and Shiv Sena, whose bullies were often seen hurling petrol bombs into Muslim neighbourhoods during the city's last riots.
Through a quirk in Indian election rules, although the polls in these states were held weeks ago, the counting was delayed, so that the results would not influence voters in Bihar and Arunachal Pradesh, two other states holding elections.
Some analysts said that the voting trend was not necessarily anti-Congress, but that the electorate, bitter about failed election promises, had punished whichever party happened to be running the state.