Singh Loses Ground as India's Food, Fuel Costs Spur Opposition
By Cherian Thomas
May 29 (Bloomberg) -- Indian Prime Minister Manmohan Singh came to power pledging to improve the lives of common people. Soaring fuel and food prices are jeopardizing that goal, and his political future, as his term enters its final year.
Singh's Indian National Congress party lost elections this week in the southern state of Karnataka, its ninth failure to take or hold power in the 11 provincial polls held since January 2007. A third of India's 691 million voters live in the nine provinces where the party was defeated.
The sinking fortunes of the 123-year-old political party, headed by Italian-born Sonia Gandhi, have strengthened the prospects of Lal Krishna Advani, candidate of the opposition Bharatiya Janata Party, ahead of national elections due before May 2009. Another six state elections to be held by January in the world's largest democracy may further test support for Gandhi and Singh if the government fails to rein in prices.
``The general mood of the people is in favor of the opposition at the moment,'' said Chandra Prakash Bhambri, a professor of politics at the Jawaharlal Nehru University in New Delhi. ``The Congress party is definitely paying the price for not controlling inflation. Price rises hurt the poor the most.''
Soaring costs of staple foods such as rice, lentils and milk are eating into worker incomes in India, where the World Bank estimates about half the population of 1.1 billion people struggles to survive on less than $2 a day.
Inflation has climbed to more than 8 percent in the past three months, the fastest pace in four years. Singh on May 22 said the increase was ``wholly due'' to accelerating global commodity prices.
Oil and Fertilizer
India, which imports three-quarters of its oil, is hurt by the rise in crude, which has gone up about 250 percent to as much as $135 a barrel since Singh's government was elected in May 2004. Urea, a farm fertilizer India buys, has climbed to $370 per metric ton from $175.
``Laying the blame on rising prices globally is a lame excuse to give for inflation when you talk to an Indian electorate that's largely poor,'' said Arjuna Mahendran, Hong- Kong based chief investment strategist at HSBC Private Bank, which oversees client assets of about $494 billion.
Hundreds of people waved placards criticizing Singh and carried his effigy on April 22 when the prime minister visited the eastern town of Bokaro to lay the foundation for an expansion of state-run Steel Authority of India Ltd.
Falling Confidence
The Political Confidence Index, constructed by the New Delhi-based National Council of Applied Economic Research, dropped 17 percent to 106 in the current quarter, the lowest level in a year, because of the government's inability to arrest rising prices, the research group said on May 2.
The BJP and its allies, which led India's government for six years until 2004, have overturned Congress party control in Punjab, Himachal Pradesh and Uttarakhand provinces since January 2007. In its latest victory, the party won 110 seats of the 224- member Karnataka assembly on May 25, up from 79 seats previously as part of a coalition.
Congress was ousted by a regional party in Meghalaya and failed to take over assemblies in Uttar Pradesh, Gujarat, Nagaland and Tripura. It retained power in Goa and Manipur.
``The Congress came to power promising better lives for people,'' said Parimal Das, 45, who runs a restaurant at Polo Bazaar in Shillong, capital of India's northeastern state of Meghalaya. ``People got higher prices in return, and that's turning them against the party.''
Chutney
Das said profit from a rice platter that includes lentil curry, spicy chutney and stir-fried vegetables has fallen by a third to 2 rupees (5 cents) in a year because of higher costs for rice, vegetables and fuel. A 35-kilogram sack of rice has risen 12 percent to 600 rupees, he said.
Congress is losing popularity at a time when Singh, 75, has presided over the fastest period of economic growth in the country's history since independence in 1947. India's $912 billion economy has expanded at an average 8.8 percent each year since 2004.
Singh became prime minister after Gandhi, 61, the widow of former Prime Minister Rajiv Gandhi and the daughter-in-law of former Prime Minister Indira Gandhi, refused the post.
Reserve Bank of India Governor Yaga Venugopal Reddy said March 7 that large segments of the poor tend to only reap the benefits of economic growth with a time lag, while the rise in prices affects them instantly.
India's cabinet this month approved a plan to waive 716.8 billion rupees of agricultural loans to help farmers pare debt. Farmers make up more than half of India's 400 million workforce.
``The government's utter failure to control prices has angered common people,'' said the BJP's Advani, 80, in New Delhi on May 25. ``The geographical expansion of the Bharatiya Janata Party shows the shape of things to come in the run-up to the next parliamentary elections.'' |
