Thursday, March 8, 2012

[ZESTCaste] State election routs cripple India’s ruling party

State election routs cripple India's ruling party
March 07, 2012|Muneeza Naqvi, Associated Press

India's ruling party needed a series of state election victories to
reinvigorate its scandal-plagued government. The drubbing it received
instead has crippled its ability to enact urgent reforms or act
decisively, leaving the Congress party a virtual lame duck over the
final two years of its term.

The most damaging results came from India's most populous state of
Uttar Pradesh, where the Congress party's star campaigner and prime
minister-in-waiting Rahul Gandhi had canvassed for months. The party's
hopes of tripling their presence from a paltry 22 in a 403-strong
assembly were dashed as it won only 28 seats. The results from three
out four other states were dismal, too.

"This is bad news for the Congress. After being defensive for one and
half years on various scams, they had hoped the elections would turn
the mood around,'' Neerja Chowdhury, a political analyst said

The embattled government has a tough two years ahead of it with
poverty still widespread, its economy suddenly cooling and a spate of
crucial — and controversial — legislation on its agenda. That includes
bills guaranteeing food for its poorest citizens, creating an
ombudsman to tackle endemic corruption and regulating the purchase of
farmland for development.

The government was already floundering before the election debacle as
senior ministers and officials faced corruption charges stemming from
scandals in the hosting of the 2010 Commonwealth Games and the sale of
cellphone spectrum that auditors said lost the country billions of

Its own mercurial ally, Trinamool Congress that runs West Bengal
state, forced it to retreat from its plan to allow foreign companies
like Wal-Mart to own 51 percent of supermarket chains. That move had
been expected to spark infrastructure investment that would help fix
India's broken-down food distribution system.

The party tried to minimize the impact of the loss.

"I do not think the results will damage the UPA government,''
Congress' president, Italian-born Sonia Gandhi told reporters in New
Delhi on Wednesday. The Congress-led alliance is called the United
Progressive Alliance.

But Congress's poor showing in the state polls is expected to put
every difficult decision on hold.

"Congress has been weakened at the center and any government in that
position is buffeted around that much more by its allies,'' said
Chowdhury. "They will try and extract their pound of flesh on every

It had hoped that better numbers in Uttar Pradesh would make it
kingmaker in the state and give it more control over the state's
Samajwadi Party, a crucial but temperamental supporter of the national

Instead the Samajwadi Party won by a massive margin, proving it
doesn't need Congress' help and gaining the ability to dictate to the
national government.

On every count the government has a daunting to-do list and very
little help to tackle its agenda.

India's economy grew at its slowest pace in over two years in the last
quarter, even as inflation remained stubbornly high. The government
has scaled back growth expectations to around 7 percent for the year
ending March, down from an earlier projection of 9 percent.

New Delhi is also struggling to plug an unwieldy fiscal deficit, which
economists predict will exceed the target of 4.6 percent of GDP by a
percentage point or more.

Political gridlock has dampened business sentiment in India, which has
been trying to revive stalled investment to kickstart growth. Many had
been anticipating the March 16 budget announcement with high hopes
that the government would take clear steps to rein in spending and
reinvigorate its stalled economic reform agenda.

Now economists fear that the budget may end up being too soft as the
government scrambles to keep its hopes alive for the 2014 national

"Having taken a big beating the Congress-led government may try to
push through an overly populist budget,'' said Samiran Chakraborty, an
economist at Standard Chartered.

In July the country will elect a new president, a post currently
occupied by Pratibha Patil, a Congress party loyalist. The position of
the Indian president is largely ceremonial, but it's vested with
powers that can be significant in times of political crisis.

This time around the Congress controls only about a third of the
electoral college of federal and state lawmakers who elect the
president and will be forced to negotiate with its powerful allies.

The issue of increased foreign investment in retail is likely to stay
on the back burner as are other important decisions like the setting
up of a National Counter Terrorism Center, an idea already criticized
by several state leaders as encroaching on their turf, both analysts

"Every time a hard decision is to be taken they're likely to go into a
shell and stay there. The indecision is likely to continue,'' said

That indecision will also be at play in the 2014 elections where
regional parties, empowered by their victories at home, will likely
play an important role.

"It's too early to say how that will be reflected in national
politics, but it will definitely be a factor,'' Chowdhury said.


Associated Press Writer Erika Kinetz contributed to this report from Mumbai.


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