Indian Prime Minister Manmohan Singh yesterday gave in to opposition demands for a parliamentary probe into a multibillion-dollar scandal over sales of telecommunications licenses for kickbacks, a setback for his embattled government and a victory for the opposition.
Singh, wary that a parliamentary probe could drag on for months and overshadow his Congress party-led coalition, only bowed to pressure after months of opposition protests stalled the last session of parliament and threatened to block passage of the budget on Monday next week.
“Our country can ill afford a situation when parliament is paralyzed,” Singh told parliament.
The Hindu newspaper yesterday called the scandal, in which the state auditor said up to US$39 billion was lost in revenues, “the biggest scam in the history of independent India.”
The government will likely stay in power, but is wary of a repeat of 1989 when Congress lost a general election due to the Bofors scandal over gun contracts involving associates of then Indian prime minister Rajiv Gandhi who were accused of taking bribes.
The latest controversy has halted the progress of reform bills and worried some investors in Asia’s third-biggest economy. Concerns about security of contract, combined with the global slowdown, have hit foreign direct investment and contributed to the Mumbai stock exchange’s recent performance, the worst of the world’s major share markets.
Parliament may now be open, but investors doubt their wish list of modernizing laws will be passed. Even before the latest scandal, the prime minister was on go-slow with reforms seen as helping India compete with the likes of China.
Singh, accused by the opposition of allowing corruption to go unheeded during his seven year rule, even within his Cabinet, now faces two battle fronts — the parliamentary probe and an ongoing police investigation.
The federal police have arrested his former telecoms minister and questioned some of India’s most powerful businessmen, including billionaire telecoms tycoon Anil Ambani, owner of No. 2 mobile carrier Reliance Communications.
Pushed on by a newly assertive Supreme Court, the police have until March 31 to issue charge sheets.
What is unclear is whether this probe will end in catharsis for a globalizing India that shows itself capable of rooting out corruption, or whether it will end in bitter acrimony and mudslinging with little progress in the probe.
While corruption has been endemic in India for years — one study said it shaved 1 percent to 2 percent off India’s growth rate — there are signs that an assertive judiciary, an aggressive media and a growing middle class are increasingly intolerant of graft.
The scandals have piled enormous pressure on the reformist 78-year-old prime minister, seen as a lame duck who plays second fiddle to the head of the Congress party, Sonia Gandhi. Some believe further revelations could force him from power early and lead to an interim leader before a 2014 general election.
The telecoms probe will be a boon for the opposition, headed by the Hindu nationalist Bharatiya Janata Party, which is regaining momentum after its 2009 general election loss to a coalition headed by the Congress party.
It is unclear how long the probe will last but it could dominate parties’ agendas ahead of state elections in Tamil Nadu and West Bengal states this year.