Country Report India April 2011

The political scene: Corruption scandals are hampering parliament's work

The political scene continues to be dominated by a slew of corruption scandals that have shaken the Indian National Congress-led United Progressive Alliance (UPA) coalition government. Persistently high rates of inflation, as well as preparations for important elections in four Indian states and one union territory scheduled for April-May, are also turning up the political heat.

The prime minister, Manmohan Singh, has admitted to an "error of judgement" in appointing Polayil Joseph Thomas as the head of India's anti-corruption watchdog, the Central Vigilance Commission, in 2010. Mr Thomas was forced to resign in early March after the Supreme Court overturned his appointment on the grounds that he himself faced charges of corruption. The government stands accused of acting too timidly on corruption, and has been struggling for months to restore its damaged reputation. Allegations of corruption-against politicians, among others-are so pervasive that the government must fear that attempting to end India's long-standing culture of impunity could threaten the stability of an already weakened government.

Another damaging blow to Congress's apparent attempt to sit out the scandals came in mid-March, when a daily newspaper, The Hindu, published contents of a US diplomatic cable obtained by a whistle-blowing website, WikiLeaks. According to the cable, a political aide to a senior Congress party politician, Satish Sharma, told a US embassy official that Congress officials had paid a number of members of parliament US$2.2m each to back the government in a parliamentary confidence vote in July 2008. Mr Sharma is a close associate of a former prime minister, Rajiv Gandhi; the current Congress party president, Sonia Gandhi, is Mr Gandhi's widow. The publication prompted Mr Singh to deny publicly that any member of the party or the government "had indulged in any unlawful act during the trust vote". The revelations are potentially grave, as the reported improprieties appear to implicate the Congress leadership generally. This stands in contrast to the biggest corruption scandal currently being investigated, which concerns the sale of telecommunications licences in 2008. This affair involved just one former member of the coalition government, A Raja, who was telecommunications minister at the time.

Meanwhile, amid the raging controversy and recriminations centring on corruption, parliament has found itself hamstrung. The government is likely to be concerned that the confrontation surrounding various graft scandals has made bipartisan support for a number of reform-oriented bills even more difficult to secure than it otherwise would have been. These measures include the Banking Laws (Amendment) Bill; the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Amendment) Bill; the Constitution (Amendment) Bill-Goods and Services Tax; the Mines (Amendment) Bill; the Land Acquisition (Amendment) Bill; and the Rehabilitation and Resettlement Bill. Parliament is expected to pass the budget for fiscal year 2011/12 (April-March) during the current legislative session (the government tabled the budget on February 28th). But the passage of the other bills will almost certainly prove impossible, not only because legislators are currently being distracted by the corruption controversies, but also because the current session of parliament has been shortened on account of the forthcoming state and union territory elections.

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
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