By Sruthi Gottipati
HYDERABAD, India (Reuters) - When Jagan Mohan Reddy finally emerged from 16 months behind bars in southern India last month, the adoring crowd that greeted the young politician was so enormous that it took him six hours to drive the 11 km (7 miles) to his home.
The scene underscored Reddy's growing popularity - despite a thicket of corruption scandals around him - and it served as a rude reminder to national leaders up north in New Delhi that regional party bosses like Reddy will hold the key to power after elections next year.
Both the ruling Congress party and the main opposition Bharatiya Janata Party (BJP) are expected to fall short of a majority in the election, which means India may be heading for a
coalition government dependent on regional parties.
That may spook investors in Asia's third-largest economy because regional leaders often hold policy hostage to their local agendas. That has been one of the biggest brakes on economic reform under the current Congress-led coalition, and growth has tumbled to a decade low.
"They're clueless. They don't know what they're doing," Reddy, 40, told Reuters, voicing exasperation with the national parties in his first interview since being released on bail.
These regional chieftains often pull in different directions when it comes to national issues.
Reddy, a former Congress leader who broke away to form his own party, has rejected economic liberalization in the past. Members of his party went on a hunger strike to protest against a power tariff hike this year, and one lawmaker voted against the government's move to allow foreign supermarkets into India.
Nowhere is the rise of regions clearer than in Reddy's home state of Andhra Pradesh and its capital, Hyderabad.
In the 2009 election, Congress won 33 parliamentary seats there, but an opinion poll last week showed that it may secure just seven of the state's 42 seats this time.
The poll showed Reddy's "YSR Congress" party taking 13 seats.
That would propel him into the ranks of a clutch of regional leaders with enough muscle to make policy demands and insist on cabinet seats as the price for their support of a national party desperate for allies to stand a government up.
A member of parliament, Reddy was arrested last year on charges of possessing unexplained wealth. Nevertheless, his popularity has not been dented by the allegations against him in a country where corruption is endemic: his party won 15 of 18 state assembly seats at stake in a by-election last year as Congress lawmakers defected.
Reddy burst onto the political stage four years ago when his father, then the Congress party chief minister of Andhra Pradesh, died in a helicopter crash.
"Then the battle began," recalled Reddy, sitting in his 'Lotus Pond' office in Hyderabad's exclusive Banjara Hills neighborhood. A bail condition prohibits him from leaving the city, which is home to many IT firms and outsourcing businesses.
His father, Yeduguri Sandinti Rajasekhara Reddy - known by his initials "YSR" - had been a loyal Congress party man, following orders passed down from New Delhi. He was also hugely popular, and his statues dot villages across Andhra Pradesh.
His son built a rapturous following after YSR's death with a tour across the state, comforting grieving voters and promising to build on his father's social largesse.
Reddy believed he was the rightful heir to the chief minister's throne, political analysts say. So when Congress installed a party veteran in the job, he broke away.
Relatives and party workers paint a picture of Reddy as a serious and determined leader who chooses his words carefully and doesn't drink. Although Reddy is a Hindu name, Jagan Reddy converted to Christianity as his father did, and says he prays and reads the Bible daily.
Critics, however, say Reddy inherited a darker craft from his father: an elaborate system of political patronage, one that investigators scrutinized while he was in jail.
Investigators suspect that YSR offered political favors in return for investments in his son's companies, which include a cement plant and a media empire. Officially worth $72 million, Reddy is one of India's richest politicians and - for many - an emblem of the chronic nexus between politics and business.
Reddy declined to put a figure on his worth when asked about his business interests. But he dismissed the charges against him as politically motivated, arguing that he made his money before his father became chief minister.
A THORN IN THE SIDE
Reddy, whose office has a picture of Jesus Christ displayed in the corridor, says he leaves God to decide on his political fortunes. Asked if he had bitter feelings towards Sonia Gandhi, the Congress party president, he recited the Lord's Prayer. "Having bitterness toward somebody is itself a sin," he said.
Still, Reddy seems staunchly opposed to Congress, slamming a recent government decision to slice Andhra Pradesh in two to create a new state called Telangana. The move provoked mass protests and crippling strikes in the prosperous coastal rump of the state this month.
"The alarming fact is that they see what is happening and yet they choose to be ignorant," said Reddy, who went on a hunger strike to protest the bifurcation after he was freed from jail. Fearing a violent reaction from his supporters if his health failed, authorities whisked him off to hospital to be force-fed.
Reddy also lambasted the government for leaving open the possibility of making Hyderabad the capital of Telangana after serving as the joint capital of the two states for 10 years.
"Fifty percent of the Andhra Pradesh budget comes from Hyderabad. If this money doesn't come or if it is diverted to build another capital, where are we going to get money to pay for our salaries, to do our social welfare schemes?" he said.
His stand resonates with voters.
"He's the only one to raise his voice against the hypocrisy of Delhi," said Ramesh Kosuru, an engineer for a power company in the coastal city of Visakhapatnam. "He's reliable. When he says something, he will do it. People have realized that."
The ability to stand up to New Delhi is seen as a virtue in the southern state, where many voters say political power is concentrated in the north.
"We feel the pride of Andhra has gone down. We need someone to pick it up," said Kosuru, pointing to Reddy as the man for the job.
(Editing by John Chalmers and Raju Gopalakrishnan)