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India Celebrates Independence Day, but Corruption, Economic Challenges Take Center Stage

August 10, 2011

When Indian Prime Minister Manmohan Singh ascends the ramparts of Old Delhi’s Red Fort on Monday to address the nation on the 64th anniversary of its independence, it will be as a political leader whose government, party, and personal reputation are seriously bruised. This will be Singh’s seventh Independence Day address since becoming prime minister in 2004.

PM Singh

Although Prime Minister Singh continues to be regarded as a man of personal integrity, the scandals on his watch have raised serious questions about his leadership. Photo: Flickr user World Economic Forum.

The speech is an opportunity to review his government’s achievements during the past year, highlight national challenges, and outline a vision for the future. At no point in Singh’s tenure, the longest of any Indian prime minister except Jawaharlal Nehru, has he or his party seemed so embattled.

The immediate problem is a string of high-level corruption scandals that has wracked the Congress-led United Progressive Alliance (UPA) government. A year ago, Singh devoted one line of his Independence Day address to the issue of corruption, stating that government programs should be managed “more effectively, minimizing the chances of corruption and misuse of public money.” His reference to systemic corruption gave no hint of the grand corruption that would surface in subsequent months. First came charges of favoritism and kickbacks during preparations for the October 2010 Commonwealth Games in Delhi, which led to the arrest of organizing committee chairman Suresh Kalmadi, a Congress Party stalwart. Next was the Adarsh Housing Society scam where the government was accused of irregularities in allocating expensive apartments in downtown Mumbai. The most debilitating blow was the 2G spectrum scam in which the now jailed telecommunications minister, A. Raja, was charged with under pricing licenses at an estimated cost to the government of a staggering $40 billion in lost revenues.

Corruption scandals are hardly new in India, but the scale of the alleged transgressions is unprecedented and public reaction strong. In April, veteran Gandhian activist Anna Hazare went on a hunger strike demanding that the government establish a lokpal, or ombudsman, office with broad powers to investigate corruption. Although Hazare’s India Against Corruption (IAC) movement has been criticized for its tactics, middle-class following, and alleged partisan bias, it raises widespread public concerns that cannot be ignored. The corruption debate has paralyzed parliament for months, with the political fallout spreading both within and outside of the UPA. In late July, in a move to protect its own credibility, the opposition Bharatiya Janata Party (BJP) removed its powerful chief minister in Karnataka, B.S. Yeddyurappa, on charges he misused his influence to allot valuable mining land to his sons.

Although Prime Minister Singh continues to be regarded as a man of personal integrity, the scandals on his watch have raised serious questions about his leadership. A technocrat not known for his skills as a political street fighter, he is often at the mercy of competing interests, including those within his own Congress Party led by Sonia Gandhi. Since the UPA government holds only 262 seats in the 552-seat Lok Sabha, it must piece together support from an on-again-off-again collection of allies to retain a majority. The government’s actions in response to the corruption scandal have reinforced the perception of weakness. A cabinet reshuffle in July was viewed as little more than window dressing. That the draft Lokpal Bill placed before parliament last week exempts the judiciary and elected officials from oversight, including the prime minister’s office, has compounded the problem. Whether or not the legal and constitutional arguments for the bill’s construction are valid, it is a public relations debacle. Anna Hazare has threatened to publicly burn copies of the draft and begin a new fast on August 16 if the government does not withdraw the current bill.

The corruption scandals and parliamentary gridlock have also raised economic concerns. Capital expenditure dropped during the first quarter of 2011, a possible sign of reduced investor confidence. In his Independence Day speech last year, Prime Minister Singh cited India’s relative success in avoiding the global economic slowdown. He noted high inflation as a challenge, especially for the poor, but said he was confident that the government would tackle it. Economic growth has dropped slightly during the year, with the prime minister’s Economic Advisory Council recently reducing its 2011-12 projection from 9 percent to 8.2 percent. While the government has been successful in bringing food inflation from a 22 percent high in February 2010 to 8.3 percent today, overall inflation hovers around 10 percent. This is above the government’s target of 5 percent, which is considered a safe threshold level if the economy is to avoid overheating.

In response to financial jitters following Standard and Poor’s downgrade of the U.S. government’s credit rating last week, Finance Minister Pranab Mukherjee asserted that India would not be affected because its “fundamentals are strong.” But how strong are they? Despite a robust growth rate, industrial production slowed during the past year, and the government has not made progress on reforms in the energy, land, and education sectors that are needed for India to maximize its advantages, such as the “demographic dividend” from a growing workforce. As finance minister in 1991, Manmohan Singh played a historic role in unleashing the economic transformation that India has undergone during the past two decades. As leader of a weak coalition today, he seems unable to push through the second generation of economic and governance reforms that would help to secure his own legacy as a transformational leader.

While Prime Minister Singh’s speech on Monday is unlikely to outline bold new initiatives, it provides an important opportunity for him to candidly address the nation’s challenges and outline his personal vision. To some extent, India’s economic growth and continuing rise as a global power are inexorable given the current momentum, but riding the wave is not enough. Long-term growth that is stable and inclusive requires effective leadership and good governance. Corruption scandals during the past year and parliamentary dysfunction have hindered the ability of Prime Minister Singh and the UPA government to drive needed reforms, especially as coalition members begin to eye elections in 2014.

Nick Langton is The Asia Foundation’s country representative in India and can be reached at nlangton@asiafound.org. The views and opinions expressed here are those of the individual author and not those of The Asia Foundation. 

View all posts by Nick Langton

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