The United People's Freedom Alliance (UPFA) of Rajapaksa retained the Uva or the south-eastern provincial council by securing 19 out of 34 seats that went to the polls yesterday, but his party's popularity dropped by an unprecedented 22.98 percentage points.
The vote percentage of the main opposition United National Party's (UNP) almost doubled, with the party winning 13 seats.
UNP General Secretary Tissa Attanayake said his party is ready to face a national election in January next year or even earlier.
He said the UNP was ready to face any national election be it a Presidential or a Parliamentary elections.
The JVP or People's Liberation Front, which won 2 seats, said the ruling UPFA has suffered the worst electoral setback.
"This is an indication of the downfall of the government. People have shown their readiness to unseat the government," JVP leader Anura Kumara Dissanayake said.
For Rajapaksa, who took active part in campaigning in the election for his nephew and the incumbent chief minister, the results came as a setback.
He is widely expected to call for a snap presidential polls to seek a third successive term early next year.
A bitter pill for the Rajpaksa was the drop in vote at Moneragala, a predominantly rural majority Sinhala district. He saw vote drop to 58 per cent from 81 per cent atMoneragala.
During previous local polls, Rajapaksa took advantage of his popularity among the Sinhalese majority for crushing Tamil rebels and ending the 37-year-long separatist war in 2009.
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