By Eduardo Garcia and Kevin Gray
LA PAZ (Reuters) - Bolivian President Evo Morales was heading for a landslide re-election on Sunday as voters backed his left-wing reforms asserting greater state control over the economy and increasing social spending on the poor.
Exit polls and a quick count tabulation by Uno television showed Morales took at least 61 percent of the vote and held a lead of more than 35 percentage points over his closest challenger, rightist former governor Manfred Reyes Villa.
Morales, Bolivia's first indigenous president, is hugely popular among the Indian majority that also supported a constitutional reform earlier this year to allow him to run for a second consecutive term.
Hundreds of Morales supporters, some waving rainbow coloured indigenous flags, crowded outside the presidential palace on Sunday night shouting "Evo Again! Evo Again!"
Veronica Canizaya, a 49-year-old housewife said she voted for Morales because of his aid programs in South America's poorest country.
"He's changing things," she said before casting her ballot at a public school on the shores of Lake Titicaca. "He's helping the poor and building highways and schools."
Morales is an ally of Venezuela's socialist President Hugo Chavez and ramped up social spending in his first term, tapping increased government revenue after he nationalized Bolivia's energy industry in 2006 and raised taxes on natural gas production. Bolivia, home to 10 million people, is South America's top exporter of the fuel.
But opponents say he has failed to increase output, stamp out corruption in the state-run energy company and develop the natural gas industry, signs of future challenges as Morales tightens the state's grip on the economy.
He pledges to launch state-run paper, cement, dairy and drug companies and develop iron and lithium industries to help Bolivia export value-added products instead of raw materials.
"Brothers and sisters, this is an electoral fight to change Bolivia," Morales, a former llama herder who never attended high school, said on the campaign trail.
The third-place contender in the presidential race, cement magnate Samuel Doria Medina, conceded defeat on Sunday evening as exit polls showed him taking 6 percent of votes.
SLOWED INVESTMENT
Morales' anti-capitalist rhetoric blaming foreign investors for ransacking the country's mineral and energy riches has slowed investment.
It also threatens to undermine what could potentially be its next source of mineral wealth: lithium. Bolivia is believed to be home to one of the world's largest lithium deposits.
Lithium carbonate is the main component of the rechargeable batteries that power laptop computers, cell phones and digital cameras. Demand for the metal could soar if car makers begin large-scale manufacturing of electric vehicles.
Morales has said Bolivia will look to mine and develop the metal on its own even though it has no expertise, shrugging off foreign investor interest in potential projects.
A fiery U.S. critic, Morales has had an antagonistic relationship with Washington, particularly over drug policy.
Bolivia is the No. 3 world cocaine producer and Morales, a former coca leaf farmer, says he wants to limit cocaine output while allowing coca-leaf growing for traditional chewing and tea use. Critics say his policies have, however, contributed to an expansion in coca production.
Morales threw out U.S. narcotics agents and expelled the U.S. ambassador in 2008, accusing him of plotting with his rightist rivals.
In Sunday's vote, exit polls projected Morales would also win control of Congress, making it easier for him to carry out economic reforms in his five-year second term.
Morales pushed through constitutional reforms earlier this year that allowed his re-election, joining other Latin American socialists like Chavez and Ecuadorean President Rafael Correa who changed the laws to extend their time in power.
Supporters of Colombia's rightist President Alvaro Uribe are also seeking to change the constitution there to allow three consecutive presidential terms.
Morales' critics warn he is amassing too much power and accused him of persecuting some of his political rivals in the conservative opposition in the months leading up to the vote.
"The president wants to control the three powers of the state," Reyes Villa said.
Morales has called for Reyes Villa to be jailed after the election on charges of corruption stemming from his time as governor of the central Cochabamba province.
His ample support shows the deeply divided opposition, which repeatedly challenged him in the early years of his presidency, has been weakened, even though it retains strong support in eastern regions home to many of Bolivia's natural resources and leading businesses.
(Additional reporting by Carlos Quiroga, Silene Ramirez and Diego Ore; Editing by Kieran Murray)
