Indian Cabinet’s Anti-Graft Bill Brings Vow of Further Protests

India’s cabinet approved powers for a graft-fighting agency that fell short of demands made by activists, who pledged to next week renew protests against the government that had earlier won nationwide support.

The bill agreed by ministers in a meeting late yesterday and due to be presented to lawmakers tomorrow excludes direct oversight of the country’s leading criminal investigation force and the lower rungs of India’s bureaucracy from the scope of the proposed anti-corruption body. The legislation grants the agency the right to probe a serving prime minister apart from when issues of national security are involved.

The government is “creating an anti-corruption body without any investigating power,” Arvind Kejriwal, a leader of demonstrations that roiled Prime Minister Manmohan Singh’s administration in August and a freedom of information campaigner, told the Times Now television channel. The new body will be so weak it will resemble a “post office” where complaints are delivered yet never probed, he said.

Singh is seeking to pass one of the most divisive bills of his premiership in this parliamentary session, which has been extended by three days so the law can be debated. Opposition parties also criticized yesterday’s cabinet draft for lacking teeth. The ruling Congress party wants to counter charges it has failed to crack down on graft as it prepares to contest five regional elections early next year and bids to revive a policy process derailed by corruption allegations.

Anna Hazare, a 73-year-old campaigner against corruption who became a household name in India with a 13-day fast in August styled on protests held by independence hero Mahatma Gandhi, vowed to hold a three-day hunger strike from Dec. 27 in Mumbai if the government fails to accept his group’s demands. He also urged his supporters to seek arrest from Dec. 30 to Jan. 1, echoing a tactic used to confront British colonial rule.

Government Backtrack

Hazare and his supporters say the government backtracked on an August pledge that the anti-graft body, to be called the Lokpal, would be given control of key functions of the Central Bureau of Investigation, including appointing its chief. They also want the junior government officials that Indians blame for everyday acts of petty bribery to be brought within the ambit of the agency.

“The intentions of the government are not honest,” Hazare, whose protests have tapped middle-class anger over graft and according to opinion polls by Nielsen Holdings NV dented support for Singh’s Congress, told reporters yesterday from his home village in the western state of Maharashtra.

Cabinet Corruption

The government agreed to the inclusion the office of the prime minister provided certain conditions are met. The graft- fighting body will be able to probe a serving premier if six of the Lokpal’s nine members agree, according to the bill.

Singh is under pressure to crack down on corruption after a series of scandals, including one linked to a 2008 sale of mobile-phone licenses. Former Telecommunications Minister Andimuthu Raja, government officials and company executives are on trial in New Delhi over the issue. Their actions might have cost the country $31 billion in revenue, according to a report last year by India’s chief auditor. All deny wrongdoing.

India needs to improve investor sentiment and bolster growth, Finance Minister Pranab Mukherjee said in a Dec. 16 statement. India’s inflation of 9.1 percent in November is the highest among the so-called BRIC nations, which include Brazil, Russia and China, and the $1.7 trillion economy expanded at its slowest pace in two years in the last quarter.

Games Graft

“The whole affair has been very embarrassing for the government, they have been held to ransom by a small group of activists,” said Ramesh Dixit, a political analyst at Lucknow University in the capital of Uttar Pradesh, India’s biggest state and one of those going to the polls next year. “The government has again and again been forced to concede ground.”

Other bureaucrats have been jailed on charges they illegally benefited from contracts stemming from last year’s staging of the Commonwealth Games in New Delhi.

India fell four places in this year’s annual ranking of corruption to a position below Liberia and Colombia. The world’s second-most populous nation came 95th out of 183 countries in the 2011 Corruption Perceptions Index compiled by Berlin-based Transparency International.

To contact the reporters on this story: Andrew Macaskill in New Delhi at amacaskill@bloomberg.net; Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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