(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
By Jeff Glekin
LONDON, Sept 22 (Reuters Breakingviews) - India's government has lost its mojo. Its mishandling of corruption scandals comes as the culmination of almost two years of policy inertia. Anna Hazare, the campaigner who last month forced the government into a humiliating u-turn on a law to combat corruption, filled a vacuum which the ruling Congress party created by ignoring the needs of its core vote.
Odd as it may sound, the government wrongly attributed its electoral success in 2009 to a populist, pro-poor set of policies that included farm-loan waivers and rural employment guarantee schemes. But Congress actually lost seats in most of the poorest states. Their success was as a result of a large middle class vote for Singh in the richer metros. Congress and its allies won every major city, with the exception of Bangalore.
India is a poor country by international standards, but only 25 percent of families now earn below ${esc.dollar}1,300 per year. Over half of households take home ${esc.dollar}1,300 to ${esc.dollar}4,300 per year which, in India, makes them middle class.
The government needs an agenda to win these voters back. They put up with corruption and lack of progress on economic reform while the economy was growing rapidly. But the growth story now looks to be stalling. The government looks too weak to force through big-ticket reforms like liberalisation in financial services and retailing. If Singh wants an alternative, he could start by scaling back the bureaucracy.
This year the World Bank ranked India 134 in its ease of doing business report, below even Pakistan at 83. Cutting back the tentacles of the state would have the twin benefits of improving the business environment and limiting the possibility for low level corruption. As a start Singh could target a reduction in the time it takes to set up a business (currently 29 days). He could also reduce the number of overlapping ministries in Delhi.
To do so would put the prime minister on the side of the average Indian in their daily struggle against bureaucracy and graft. It could also build him, or his successor, a platform to tackle the next set of reforms.
CONTEXT NEWS
-- India's ruling Congress party has suffered a slump in the opinion polls following a high-profile anti-corruption campaign by Anna Hazare. A poll by market researcher Nielsen for Star News gave the opposition Bharatiya Janata Party (BJP) a 12-point lead over Congress party, with 32 percent of the vote versus 20 percent. A similar poll in May had Congress on 30 percent and the BJP on 23 percent.
-- India's central bank, the Reserve Bank of India (RBI), recently forecast 8 percent growth for 2011-12. The economy grew by 8.5 percent in previous year. Wholesale price inflation (WPI) for August came in at 9.8 percent, above market expectations of 9.6 percent and July inflation of 9.2 percent.
-- Reuters story: INSIGHT-Anti-corruption campaign awakens India's middle class
-- Reuters story: ANALYSIS-India graft protests expose ruling Congress failures
(Editing by Hugo Dixon and David Evans)
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