How Singh Blew India's Moment

By Kahn, Jeremy | Newsweek International, September 22, 2008 | Go to article overview

How Singh Blew India's Moment

Kahn, Jeremy, Newsweek International

Byline: Jeremy Kahn

The ruling Congress Party failed to capitalize on an unprecedented boom and a sweet nuclear deal.

It must have been an unusually tense night for India's prime minister. While Manmohan Singh waited in New Delhi, his fate hung in the balance more than 4,800 km away in Vienna. There diplomats from the 45-nation Nuclear Suppliers Group were deciding whether India should be granted a waiver allowing it to purchase uranium and civilian nuclear technology abroad--even though India has never signed the nuclear Non-Proliferation Treaty. The dispensation, part of the nuclear deal hammered out between New Delhi and Washington in 2005, would provide India with much-needed energy, cement its new strategic partnership with Washington and enhance its international stature. Singh had staked his legacy on the deal and risked the collapse of his fragile coalition government if it was scotched.

As the clock ticked past midnight in Vienna, things looked grim, with six nations reportedly opposing the deal. Yet just a few hours later, after a flurry of last-minute U.S. diplomacy, the holdouts came around, and the news was announced Sept. 5: India had secured its exemption. Headlines hailed the agreement as a triumph for Singh and a remarkable rebound from lame-duck status.

Just three months earlier, Singh's government had been on the ropes, as its communist partners threatened to abandon the coalition if it moved forward on the deal. But after months of equivocating, Singh ditched the communists and put together a new coalition that survived a confidence vote by an unexpectedly wide margin. Now one might assume Singh's Congress Party is well positioned for the next election, which must be called before May. The nuclear deal is almost in hand, and with annual growth rates topping 9 percent, India's international star has never been brighter. Yet Singh's government remains stubbornly unpopular.

The disaffection stems from Singh's inability to deliver on promises and bridge India's rich and poor gap. His countrymen long for a leader who can marry the country's vast potential with a bold vision, and make that vision a reality. What they got instead was a caretaker. Thrust into power almost by chance, lacking a clear mandate and constrained by his own party and his allies, Singh has often seemed meek and indecisive. And he's been unable to seize a series of once-in-lifetime opportunities.

Behind India's headline-grabbing economic growth, dissatisfaction and malaise abound. The reforms that ignited India's boom in the early 1990s--and that Singh helped implement as Finance minister--have stalled. The wealth gap between rural and urban dwellers has grown. Spiraling inflation, well into the double digits, has begun to pinch the wallets of even middle-class Indians. The white-hot economy has begun to cool, with growth projected to slip below 8 percent this year. That still sounds brisk, but it's not enough to lift millions of Indians out of abject poverty. Meanwhile, government spending has outpaced surging tax revenues, leading to a fiscal deficit estimated at more than 8 percent of GDP and that's gotten India's debt downgraded to near junk-bond status. The sense of insecurity is also compounded by faltering peace talks with Pakistan, a recent series of terrorists attacks inside India and new unrest in Kashmir. And in the past month the government has been criticized for its sluggish response to catastrophic flooding along the Kosi River and anti-Christian violence in Orissa.

Congress may manage to cling to power--its archrival, the Hindu nationalist Bharatiya Janata Party (BJP), suffers from internal division and geriatric leadership. The last BJP government (1999 to 2004) presided over huge economic growth but the gains were mostly concentrated in a few sectors, such as information technology, and a few urban centers. Hundreds of millions of Indians believed they'd been passed by and responded eagerly to Congress's promise of "growth with equity. …

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