Indian PM in the doldrums despite stellar economic results

June 3, 2007 - 0:0
NEW DELHI (AFP) -- India's prime minister, a staid 74-year-old hailed as model of probity amid a sea of corruption, should be happy that the country's economy has expanded more than nine percent in the past year.

But Oxford-educated economist Manmohan Singh has instead chosen to lament erratic electricity supply, the plight of debt-ridden farmers and the growing wealth of company executives.

He says it is a toxic mix that the country's teeming millions who live on less than a dollar a day are not willing to accept indefinitely.

Analysts say the tenor of his comments, made at the end of May on his government's third anniversary, highlights disappointment in the struggle to bridge a yawning divide between affluent urban and impoverished rural India.

"Singh is certainly concerned about the two faces of India that he sees. And this is manifested in statements about inclusive growth and new measures aimed at the poor," said political analyst Rasheed Kidwai.

The premier, who launched India's economic reforms as finance minister in 1991, made an unexpectedly strong appeal to Indian industry, asking it to shoulder some social responsibility.

"The time has come for the better-off sections of our society... to understand the need to make our growth process more inclusive, to eschew conspicuous consumption, to save more and waste less, to care for those who are less privileged and less well off," Singh said.

He followed that with a promise to spend nearly 11 billion dollars to improve rural roads and slammed corruption in the construction sector.

"Corruption in road construction projects has spread like cancer to every corner of our vast country," Singh told a New Delhi conference.

He issued a blistering warning of economic collapse unless the debt-ridden electricity generation and distribution system was fixed.

And Singh announced a six-billion-dollar package to help poor farmers who have been hit by high debt and low crop yields.

In cities such as the Indian capital, signs of affluence abound, from top-of-the-range imported limousines to swanky new restaurants where an average dish costs more than the monthly wages of hundreds of millions in the hinterlands.

The gap has already sparked violence, with a Maoist rebellion infecting 15 of India's 29 states and frequent street clashes along caste lines over access to elite education, government jobs and services such as hospitals.

Kidwai said that Singh knows the social divide could spell disaster at the next federal elections within two years. Singh's Congress party has suffered a drubbing in a series of provincial polls over the past year, including in the largest state of Uttar Pradesh last month, where a low-caste leader swept to the first majority government in 14 years.

"Clearly, there is pressure on the government to attempt a mid-course correction," Kidwai said.

Yashwant Deshmukh, another political analyst, noted that the "urban-rural divide that Singh's Congress party-led coalition government promised to bridge when it came to power three years ago still exists. If anything the gulf has only widened.

"The Congress-led government today is in the same situation as the (previous Hindu nationalist) Bharatiya Janata party (BJP) government in 2004," he said. "If it disregards the feelings of the people, it will suffer the same fate as the last government and be thrown out."

The BJP contested the 2004 polls on a slogan of "India Shining." But voters outside of the economic boom handed it a walloping defeat.

The ruling coalition has attempted to bridge the divide with hefty hikes in spending on health, education and rural development. But the efforts have failed to impress rural voters and Singh's key communist party allies have issued a steady drumbeat of warnings to do more or lose power.

"If there is any consensus (within the cabinet and government and its coalition partners) it is that the government has to pay attention to the social sector," said economist Paranjoy Guha Thakurta, head of New Delhi's School of Convergence.

A multi-billion dollar employment scheme that promises 100 days of work a year to every rural family in the country is a case in point.

Analysts say India's politicians and bureaucrats, annually ranked among the most corrupt by watchdog Transparency International, have used the program to line their pockets and reward supporters. "Its implementation has been impeded by political differences between parties administering state and federal governments, corruption and bureaucratic apathy," Kidwai said