Protest Not Policy in India Parliament as Coal Fuels Logjam

India’s parliament session ended today with deadlock between the government and opposition over coal contracts unresolved and Prime Minister Manmohan Singh’s legislative agenda in tatters.

The monthlong sitting passed just four of 30 bills lined up for approval by the Congress party-led administration, making it the least productive in 17 months. Protests over the mining awards wiped out the last 13 days of the session, heightening political polarization that has taken its toll on an economy growing at near its slowest pace in three years.

“The government has completely stopped working,” said Laveesh Bhandari, director of Indicus Analytics Pvt. Ltd., an economics research firm in New Delhi. “The two most powerful people in Congress -- Sonia and Rahul Gandhi -- have refused to take things head on,” exacerbating the sense of drift, he said.

The main opposition Bharatiya Janata Party is demanding Singh resign and the cancellation of coal block permits after the nation’s chief auditor said a decision not to auction the assets may have lost the government $33 billion. Federal investigators have charged five companies with providing false information to obtain licenses in an echo of an allegedly corrupt 2008 mobile-phone scandal that still plagues Singh, 79.

The government described the auditor’s coal findings as “flawed,” saying it adopted a transparent process that aimed to attract investment and keep the prices of electricity low.

Graft probes, revolts by coalition allies unwilling to back plans to lift curbs on foreign investment in retail, insurance and pensions and opposition protests in parliament have plunged the government into almost two years of firefighting.

Plunging Popularity

An opinion poll last month by Nielsen and the India Today magazine said Singh’s alliance may lose nearly one third of its parliamentary seats if an election were held now and would most likely be ousted from power.

While Congress has 18 months to go before it must face the electorate in a nationwide ballot, state polls in Gujarat and Himachal Pradesh are due by December. Eight provincial elections will be held next year.

Singh and Finance Minister Palaniappan Chidambaram are under pressure to boost the economy as elevated inflation saps growth and political gridlock deters investment, with a weak monsoon and a slump in the rupee further dimming the outlook.

Inflation, stoked by food costs, has exceeded 7 percent for most of 2012. The Reserve Bank of India in July raised its inflation forecast for the year ending March 31 to 7 percent from 6.5 percent, and reduced its GDP growth estimate to 6.5 percent from 7.3 percent.

‘Hyenas Gather’

Standard & Poor’s and Fitch Ratings have cited risks such as the fiscal deficit in warning they may strip Asia’s third- largest economy of its investment-grade credit rating.

Failure to resolve the impasse in parliament has sidelined proposals to change rules on how companies, including steelmakers such as South Korea’s Posco and ArcelorMittal (MT), acquire land for projects. Investment plans have been stalled by farmers’ protests demanding greater compensation.

“When the buffalo is wounded the hyenas gather and that is exactly what is happening,” said Prem Shankar Jha, an independent political analyst in New Delhi. “The BJP is trying to force this government, thinking if it has an early election they will capitalize on it.”

Only 30 percent of the parliament session that started Aug. 8 was spent on debates or legislation, according to the New Delhi-based PRS Legislative Research think-tank.

Mockery

Singh said the BJP’s disruption was making a mockery of India’s parliamentary democracy. “Those who prevent parliament from functioning disable the voice of the people,” Singh said in a statement in New Delhi today. “I urge all right minded Indians to stand up and unite against the forces of anarchy and disruption.”

Mukhtar Abbas Naqvi, a leader of the BJP, said the party would take its protests against what he called an arrogant and corrupt administration to the streets.

Congress President Sonia Gandhi has accused its principal rival of “blackmail” and holding parliament to ransom. “Let us stand up and fight, fight with a sense of purpose and fight aggressively,” she told party lawmakers Aug. 28.

Renewed speculation that Gandhi’s son, Rahul, may finally accept Singh’s repeated invitations to join the government have prompted expectations of a cabinet reshuffle.

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

To contact the editors responsible for this story: Hari Govind at hgovind@bloomberg.net; Peter Hirschberg at phirschberg@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.