Saturday, April 01, 2006

surprisingly sober analysis from the econ intelligence unit

apr 1

amazing. they are not falling all over themselves to canonize the 'woman who cried wolf (once too often)'. what happened, the good old white guy/atlanticist types are dumping the italian woman?

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India politics: Mrs Gandhi steps down, again

COUNTRY BRIEFING

FROM THE ECONOMIST INTELLIGENCE UNIT

India's unwieldy ruling coalition, the United Progressive Alliance (UPA), is facing another setback after Sonia Gandhi, the leader of Congress (the largest party in the coalition), resigned from the Indian parliament and quit her post as chairman of the National Advisory council (NAC) on March 23rd. Though the move has enabled the government to regain the moral high ground over the opposition—which was accusing the UPA of attempting to subvert the constitution to help her retain the posts—it demonstrates the coalition's weakness ahead of important local elections due in the next couple of months.

According to Indian law, members of parliament (MPs) cannot hold "office of profit" in other government offices. As chairman of the NAC, Mrs Gandhi had been accused of violating that principle (although the issue is not clear cut). The opposition has also been demanding the resignation of several other MPs for the same reason. Embarrassingly, the UPA has also recently used the same issue to force the resignation of an opposition politician.

Mrs Gandhi's "second renunciation" (the first was her decision not to take up the post of prime minister after the UPA's electoral victory in 2004) was an attempt to silence her detractors in opposition. This has not been entirely successful. Leaders of the Bharatiya Janata Party (BJP, the largest opposition party) have played down her actions as an exercise in damage control, claiming that the government was caught red-handed while trying to subvert the constitution. This followed the government's decision earlier in the week to adjourn parliament in order to make way for an ordinance that would identify some existing government positions as non-profit—including that of the chairman of the NAC.

The NAC's conception in 2004 was already highly controversial, as it empowered Mrs Gandhi with the right to comment on government policy without actually giving her a position in the UPA cabinet. This allowed her the flexibility to focus on party matters while still exercising control over crucial policy issues. Despite having resigned from both offices, Mrs Gandhi will continue to be an important behind-the-scenes influence over various aspects of UPA policy, and she is expected to seek re-election to the family's seat of Rae Bareli in Uttar Pradesh. Meanwhile the prime minister, Manmohan Singh, had said that all options remain open over the issue of redefining what constitutes an "office of profit".

Political weakness

While Mrs Gandhi's resignation may have taken the sting out of the opposition's attack, the crisis is the latest in a growing list of political woes for the UPA. The current coalition has faced several embarrassing scandals, some involving senior ministers, since coming to power in 2004. The most high-profile of these resulted in the resignation last year of the then foreign minister, Natwar Singh, after evidence emerged of his involvement in an oil scandal in Iraq. Congress has also faced a string of electoral defeats in recent state-level elections in Bihar, Haryana and Jharkhand.

By contrast, the BJP has enjoyed some recent successes. In mid-February it took control in the southern state of Karnataka after the collapse at the end of January of the Congress-led government there. This development is highly significant: it is the first time that the BJP, whose support base is mainly in India's Hindi-speaking northern states, has formed a state government in the country's Dravidian south. A presence in the south has been a long-standing BJP aspiration. Moreover, Karnataka is a state of great economic significance. The state's capital, Bangalore, accounts for about two-thirds of the US$17bn in annual revenue generated by India's information technology and outsourcing industries.

Mrs Gandhi's resignation has underlined the UPA's fragility. Mrs Gandhi, who was credited with reversing Congress's fortunes and was instrumental in cobbling together the UPA, seems to be losing her grip on the unruly coalition. The Left Front, a group of mainly communist parties which nominally supports the UPA in parliament, has consistently undermined efforts by the prime minister and the cabinet to introduce economic reforms. (Unsurprisingly, it said it would not support the government's ordinance on offices of profit.) Mrs Gandhi has often intervened to defuse uncomfortable stand-offs. Yet she has been unable to convince the Left Front to accept the UPA's position on foreign or economic policy matters in the last year. As a consequence, the UPA's progress on economic reforms has been less satisfactory than Mr Singh, or his finance minister, Palaniappan Chidambaram, would have hoped when they took office in 2004.

The timing of the latest crisis is particularly inopportune, with more crucial elections in Left Front-dominated states such as Kerala and West Bengal due in April-June this year. The coalition's continued political troubles are likely to result in the government putting controversial, but necessary, reforms such as the privatisation of public-sector companies and the liberalisation of the retail, banking and social-security sectors on the back burner and instead turning to populist tactics. These will become more apparent in the lead up to the elections, especially if Mrs Gandhi's resignations do not enable the government to shrug off further opposition attacks on its probity.

SOURCE: ViewsWire Asia (full publication)


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