I think the reason was mainly political. India wanted to declare itself nuclear capable and take lead in the region.
Yes she had conducted a nuclear test back in 1974 but due to ever changing political environment in the region they wanted to remind the world of the power that they possessed by conducting 5 nuclear tests (also hinting that they have a huge arsenal of nukes in their stock).
This was sent as a warning to 2 hostile neighbors as well.
PS: Although personally I think it destabilized the region in the sense that it made it vulnerable to nuclear war as it forced Pakistan to retaliate and do their tests as well.