A defeat for Congress in the Maharashtra state assembly elections, held today and on 12 February, could bring down Mr Rao's increasingly infirm 30- month-old government.
Already, powerful dissidents within the party are challenging him. His expulsion on Tuesday of Arjun Singh, the former human resources minister, for "indiscipline", may have backfired. Rather than crush the revolt as Mr Rao hoped, the expulsion has turned a power struggle into open warfare. This might well split the Congress Party which has towered over Indian politics for decades.
The parliamentary opposition leader, Lal Krishnan Advani, of the right-wing Hindu Bharatiya Janata Party (BJP), said: "The disintegration of the Congress party has begun."
If Congress loses these upcoming polls as badly as in the recent Andhra Pradesh and Karanataka state contests, the BJP is expected to demand that the Prime Minister resign and mid-term general elections be held.
Mr Rao has made one attempt to pump up his party's sagging fortunes in Maharashtra, India's economic powerhouse state. He avoided the state capital, Bombay, where he is unpopular, and flew instead to Nagpur. But even in Nagpur, where the arrival of a prime ministerial helicopter is a rare event, his rally was sparsely attended. An opinion poll conducted in Maharashtra by the Asian Age newspaper predicted that Congress was heading for a huge loss in this state, long considered a party fortress.
Congress is also expected to fare poorly in other state elections, where voting will be staggered throughout this month and early March. The final tally for Maharashtra will not be known for several weeks, once the other states have voted for new assemblies. Mr Rao's party may also lose in Gujarat, Bihar, and Arunachal Pradesh but may squeak by with a win in Orissa.
In Maharashtra and across the country, Congress leaders have seen their usual voters - the religious minorities and the poor - abandon them.
Muslims deserted Congress after Mr Rao failed to protect the Ayodhya mosque from being torn down during rioting by Hindu extremists in December 1992. Maharashtra's Muslims hold a special grudge over the Ayodhya incident. When religious riots flared in Bombay because of the mosque's destruction, the police, who were mainly Hindus, refused to give proper protection to the city's Muslims. So far, Mr Rao's economic reforms have failed to aid most of the 450m Indians living in poverty. Instead, they face higher prices for their staple foods, rice and roti bread.
Congress can dodge defeat in Maharashtra only if its main adversary - a coalition between the BJP and the even more reactionary Shiv Sena party - falls apart. Deep fissures have appeared in the coalition, with the BJP trying to rein in Shiv Sena's anti-Muslim rhetoric. One Shiv Sena leader was found guilty of fanning communal hatred and banned from standing for election for several years.