A Man in Shadow

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Asleep at the Wheel?
The trouble started in earnest in 2010 when Andimuthu Raja, then Telecommunications Minister, was accused of selling 2G spectrum to private players at throwaway prices. By some estimates, the deals, made in 2008, cost the country as much as $35 billion in lost revenue. Raja denies the charges, but in February, the Supreme Court quashed all 122 government-granted licenses awarded under him, ruling them unconstitutional. Singh was accused of not acting quickly enough when the matter was first brought to his attention, and though the Supreme Court cleared Singh of any wrongdoing, damage to his reputation was done. "For the first time in his life, he was being accused of looking the other way," says Baru.

"Wherever there has been a perception of any malpractice, the Prime Minister [and the government] have acted with alacrity," says Manish Tewari, spokesman for Congress's steering committee. But the cloud that the 2G scandal cast over Singh's administration has since been darkened by other events, including the awarding of allegedly inflated commercial contracts at the 2010 Commonwealth Games and the resignation — most embarrassingly — of the head of India's antigraft agency over corruption charges.

The battered economy is another menacing concern. In a bid to cushion the pain of inflation and keep constituents happy ahead of ever looming elections, the UPA has been burning through its boom-time chests, spending on subsidies and social benefits. But business-friendly laws that could spur growth to offset that spending are languishing, and industry is struggling. Growth in the industrial-production index was only 0.1% in April, compared with 5.3% last year, and investors are running scared. "All new investment in the private sector has dried up," Rajiv Kumar, FICCI's secretary general, said in May. "I've never seen people as downbeat as they are now."

There was some relief when Coca-Cola and furniture giant Ikea recently announced plans to invest billions over the next few years. A June 27 missive from Singh's Twitter account called on officials to "revive the animal spirit in the country's economy," and he has also asked officials to re-examine a controversial retrograde-tax law. "He wants to be cautious because he knows the economy in India ... is facing hardships," says Pankaj Pachauri, Singh's communications adviser. "He tells me, 'Don't raise expectations too much.'"

The problem is that expectations, and frustrations, have been high for years. India's growth has occurred primarily in white collar sectors like IT (a very different model from other Asian economies that have focused on labor-intensive manufacturing). Many Indians believe this has simply put money in the pockets of urban elites, leaving the vast legions of poor no better off. In 1994, India was 135th on the U.N.'s Human Development Index. Last year, it ranked No. 134. Despite significant increases in expenditure on social programs, only 51% of Indians say they are satisfied with their standard of living, according to a recent Gallup poll, and 31% of adults — roughly 240 million people — are described by the agency as "suffering."

Poverty has been steadily declining (poverty rates are expected to drop to 22% by 2015, down from 51% in 1990, according to last year's U.N. Millennium Development Goals Report), but the urgent question is how these improvements can continue. The vast majority of Indians still live in rural areas, even though agriculture now accounts for less than 20% of GDP. "What is the engine of growth in India, and what will be the engine of growth in India over the next 20 or 30 years?" asks Hun Kim, the Asian Development Bank's country director for India. "The engine has to be big enough to move these people."

Industry leaders are demanding a host of bold reforms, such as an end to expensive subsidies, deregulation of diesel prices and resumption of a law to allow multi-brand retailers like Walmart into India (the government originally backed down from such legislation in order to keep coalition members happy). In theory, Singh agrees. "We owe it to our country to take all the necessary decisions which would return the country to a high-growth path," he told reporters during an airborne press briefing on his way back from the recent G-20 meeting in Mexico. But probusiness reforms are politically unpopular. "This is happening in a democratic society," cautions C. Rangarajan, chairman of the Economic Advisory Council to the Prime Minister. "We need to convince everyone."

Singh has joined the public soul-searching belatedly, and the electorate will let him know what it thinks of his performance in general elections scheduled for 2014. (They could be held earlier if relations within the ruling coalition, particularly between Singh's party and the Trinamool Congress, led by mercurial Mamata Banerjee, continue to deteriorate.) Meantime, other players in Congress, most notably Rahul Gandhi, Sonia's son, are positioning themselves to take Singh's place. The opposition BJP is also working out its internal power struggles and choosing a front man who can take the government back. "The middle class is exasperated," says commentator Dasgupta. "We have developed expectations far beyond our capacity to deliver." Narrowing that gap should be a job for the man who launched those expectations 21 years ago with such oratorical flourish. India can only wait to see if Singh can rouse himself, let alone prevail or overcome.

—with reporting by Ershad Mahmud / Gah and Kalpana Pradhan / Kolkata