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Singh’s Congress Sweeps to Power in Key Southern India State

May 8 (Bloomberg) -- India’s ruling Congress party swept to power in the southern state of Karnataka in a rare piece of good news for the party as the government battles corruption allegations that have paralyzed parliament.

Congress won 111 seats and was ahead in 11 seats in the 224-member assembly, according to the website of India’s Election Commission. The Bharatiya Janata Party, the main opposition party, which has governed Karnataka for the last five years, won 33 seats and was leading in seven constituencies, it said.

Prime Minister Manmohan Singh and his Congress party are trying to build momentum ahead of national elections scheduled for May 2014 in the face of persistent graft charges that have hobbled the government’s legislative agenda. The BJP and other political parties are demanding the resignation of Singh and his law minister over alleged interference in a probe into the allocation of coal blocks.

“This is a good result for Congress, it will lift their morale, and it is a sign that they are not withering away,” said Satish Misra, an analyst at the Observer Research Foundation, a policy group based in New Delhi. “But Congress won this election by default because of the BJP’s problems in the state.”

For the BJP, losing power in Karnataka, home to the Indian offices of Intel Corp. and General Electric Co., would frustrate the party’s bid to expand its base beyond its stronghold in the north. Karnataka is the first state in southern India the party has ruled without a coalition partner.

Illegal Mining

Rather than acting as a catalyst for gaining broader electoral support, the provincial government in 2011 became embroiled in a $3.6 billion illegal mining scam where companies were accused by the state’s anti-corruption ombudsman of operating without permits and evading taxes. Chief Minister B.S. Yeddyurappa was named in the probe and forced to step down.

Those revelations blunted the BJP’s campaign to target Congress over corruption.

Celebrations in the Congress party were tempered after the Supreme Court today slammed the federal investigative agency and government officials for altering a probe report on the award of coal mining permits. The Central Bureau of Investigation has “become a caged parrot and it has many masters,” the top court observed, while directing the government to make the agency independent.

Parliament Stalled

Singh was in charge of the coal ministry for part of the period under the probe and has been personally blamed by opposition parties for irregularities.

Parliament today ended its session abruptly two days before scheduled as twin houses continuously paralyzed when an aggressive opposition demanded the resignation of Singh, Law Minister Ashwani Kumar and Railways Minister Pawan Kumar Bansal, who since last week has been embroiled in another corruption allegation.

The casualty in the parliament logjam is the legislation to extend a subsidized food program and change laws on land purchases for industry. The Congress party wants to pass both as it chases the votes of poor Indians ahead of next year’s national elections.

Railways Bribe

Kumar is under fire as the CBI told the top court on May 6 that the minister made “certain changes” in the probe. Bansal is facing flak after one of his relatives was arrested by the investigators for allegedly accepting money in exchange for a top post in the Indian Railways.

Kumar has said he wasn’t involved in drafting the changes, while Bansal denied any wrongdoing, saying he has no business relationship with the relative.

“They have lost all the rights -- moral, legal, electoral, etc. to continue in office,” Yashwant Sinha, a leader of the BJP and former finance minister, said in a Bloomberg TV India interview. “The sooner they go, the better it will be for this country and its people because nothing is happening.”

Singh’s government has been assailed by graft charges since the nation’s auditor in 2010 reported that an “arbitrary” sale of mobile-phone licenses may have cost the government $31 billion in revenue.

Congress Vice President Rahul Gandhi and Narendra Modi, the BJP chief minister of western Gujarat state, have addressed rallies in Karnataka, trading barbs about corruption. The two men are being promoted within their parties as candidates for prime minister.

“ This government has been accused of paralysis for some years now. Now, it is in deep coma,” Sinha said. “We can’t afford a totally non-functional government in coma.”

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: Sam Nagarajan at samnagarajan@bloomberg.net

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