State election routs cripple India's ruling party

AP News
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Posted: Mar 07, 2012 11:00 AM
State election routs cripple India's ruling party

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 Wednesday.

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 dollars.

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 initiative."

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 government.

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 elections.

"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 said.

"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 Chakraborty.

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.

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