India Leader Singh to Step Down After Vote as Gandhi Rises

Photographer: Tomohiro Ohsumi/Bloomberg

India's Prime Minister Manmohan Singh. Close

India's Prime Minister Manmohan Singh.

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Photographer: Tomohiro Ohsumi/Bloomberg

India's Prime Minister Manmohan Singh.

Indian Prime Minister Manmohan Singh signaled younger party leader Rahul Gandhi should replace him while saying he’ll step aside after elections due by May, ending a decade in power with Asia’s third-biggest economy in a slump.

“I will hand the baton over to a new prime minister,” Singh, 81, told reporters in New Delhi today. Gandhi has “outstanding credentials,” Singh said, adding that top opposition candidate Narendra Modi “would be disastrous for the country” and presided over a “mass massacre” of citizens in his state of Gujarat.

Singh’s successor will inherit an economy with the fastest inflation in Asia that is growing at the slowest pace in about a decade. Opinion polls show his ruling Congress party losing the vote, adding pressure on the 43-year-old Gandhi to bolster a party controlled by his family and which has ruled India for all except a dozen years since independence from Britain in 1947.

Related: Gandhi Rises in India Ruling Party

Singh’s appointment a decade ago sparked optimism the former finance minister would build on moves he took in 1991 to open India’s economy. He ended up helming a government seen as one of the most corrupt in the nation’s history that is struggling to contain spending and a plunge in the rupee, which has stoked the cost of everything from onions to energy.

“The scams and economic struggles of the last three years will certainly cloud his legacy,” said Brahma Chellaney, a professor at the Centre for Policy Research in New Delhi who worked on an economic task force led by Singh. “He’s the captain of the ship and takes blame for these issues, and I think he knows that.”

Gandhi Dynasty

Rahul Gandhi’s family has dominated Congress and Indian politics for more than six decades. Jawaharlal Nehru, Rahul’s great-grandfather and independence movement hero, became the country’s first prime minister. He was followed by his daughter, Indira Gandhi, and her son, Rajiv Gandhi, Rahul’s father. Both were assassinated, drawing comparisons with the Kennedy family.

For most of his political career, Rahul Gandhi has avoided weighing in on issues of national importance. He rarely speaks in legislative debates and has missed more than half of the sittings since the present term convened in May 2009, according to records on the parliament’s website.

“I always felt that our government would have been strengthened if Rahul Gandhi was part of the government, but Rahul felt he had responsibility to the party, which did not permit him to join the government,” Singh said, adding that he respects his decision.

‘Outstanding Credentials’

“Rahul Gandhi has outstanding credentials to be nominated as the presidential candidate and I hope our party will take that decision at the appropriate time,” he said.

Singh defended his record today, saying he oversaw the economy’s fastest-ever expansion to lift 138 million people out of poverty. He urged Indians to look beyond the current economic slump and said most charges would be dismissed against officials accused of losing as much as $53 billion in revenue in the sale of mobile phone licenses and coal blocks.

“I have every reason to believe that when history is written of this period we will come out unscathed,” Singh said. “This is not to say that there were no irregularities, there were irregularities but the dimension of the problems have been overstated.”

Rural Spending

Singh more than doubled the guaranteed support prices for wheat and rice in the year ended June 30 from 2005-2006 to boost the wages of Indian farmers. He started a program to employ one adult in every poor rural household for a minimum of 100 days a year, and enacted a law that will provide cheaper food to about two-thirds of the country’s 1.2 billion people.

India’s consumer inflation exceeded 11 percent in November, the highest in the Group of 20 major economies, as bottlenecks of everything from food to energy stoke price increases. Singh said his government could’ve done better at controlling price rises.

“However, we should remember that our inclusive policies have put more money in the hands of weaker sections,” he said.

The rupee, which fell about 11 percent against the dollar last year, dropped 0.2 percent in Mumbai today. The S&P BSE Sensex index of shares dropped 0.2 percent.

Singh took aim at Modi, Gujarat’s chief minister who is the leading candidate of the main opposition Bharatiya Janata Party. In October, a Times Now and C-voter survey found that the BJP’s opposition alliance would top Singh’s ruling coalition in elections, with neither winning a majority in the 545-member lower house.

2002 Riots

Asked about criticism that he’s been a weak leader, Singh attacked Modi’s handling of the 2002 riots in Gujarat, which killed about 1,000 people, mostly Muslims.

“If by strong prime minister you mean that you preside over the mass massacre of innocent citizens in the streets of Ahmedabad -- if that is the measure of strength -- I do not believe that’s the type of strength this country needs, least of all from its prime minister,” Singh said, referring to Gujarat’s biggest city.

The carnage, which has left Modi barred from the U.S., followed the killing of Hindu activists in a train fire, a blaze for which Muslims were later found guilty. While human rights groups accuse Modi of failing to control subsequent riots, he denies wrongdoing and a Supreme Court-appointed panel investigating one documented incident found no evidence that he made decisions that prevented victims from receiving help.

‘Dirty Trick’

“It does not add to the dignity of the prime minister’s office,” Arun Jaitley, who leads the BJP in the upper house of parliament, told reporters today, adding that Singh’s comment was a “dirty trick” designed to disparage Modi.

Singh said his best accomplishment was passing a bill that allowed India to import nuclear technology from the U.S., which he described as ending “the nuclear apartheid that sought to stifle the processes of social and economic change.” His biggest failure was not doing enough to improve access to health care, particularly for women and children, he said.

“I feel I have done my best under the circumstances and that history will be kinder to me than the contemporary media or the main opposition,” Singh said, adding that he will make the most of his remaining time in office. “Five months is a long period of time to revive the growth and pulse of the economy.”

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 editor responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net

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