WITH Hindu nationalists winning power in India's “silicon valley” state, the ruling Congress party's chances of holding onto national office are dimming. India's main opposition Bharatiya Janata Party (BJP) won an election in the southern state of Karnataka on Sunday, performing better than many analysts expected by nearly clinching an outright majority in what for decades was a Congress stronghold. The win has given the BJP momentum for going into a general election expected within a year. It was the latest in a string of defeats that Congress has suffered, with signs that India's booming economy is not trickling down to enough voters. Unless the party bolsters its political leadership and squashes rising inflation, it could be in trouble. “With the clock ticking for the general election, the Congress needs to do some soul-searching,” wrote Mahesh Rangarajan in the Mail Today. “There is no doubt that this is a political earthquake from the south.” The man running the campaign in the state, S.M. Krishna, even admitted there was “no clarity in the Congress strategy.” Unless that changes, Hindu nationalists could soon return to power after their 2004 defeat, promising pro-market reforms, infrastructure development and an end to state corruption to keep Asia's third largest economy growing. After the vote, BJP leader Lal Krishna Advani said one of the main reasons for Congress's defeat was the “government's utter failure to control the prices of essential commodities.” With inflation at a three-year-high of around 8 percent, polls show one of voters' main concerns are price rises in basic foodstuffs eating into salaries. The question is, what can Congress do? There are signs inflation is out of the government's control, with international oil and commodity prices weighing more than supply bottlenecks. With the economy already slowing, the government is loathe to raise interest rates further. “The government's maneuvering ability is very limited when it comes to inflation,” said T.K Bhaumik, an economist at the Associated Chambers of Commerce and Industry. What may be left could be a slew of populist measures to shore up voter support, like spending more on potential vote winners like debt-waiver programs for farmers -- the centrepiece of an election-year budget in March. The government will also scrap controversial policies. The U.S. civilian nuclear deal had been basically shelved due to opposition from the ruling coalition's leftist allies. There will be almost no hope of reviving it after Karnataka. Another example is fuel prices. With oil prices at $133, state companies are losing around $128 million a day, forced to sell subsidized fuel to consumers. The government is mulling price rises, but Karnataka may have halted any meaningful hike. “The current scheme of not passing global prices to local consumers is not sustainable,” said A. Prasanna, an economist at ICICI Securities Primary Dealership. “However, there is no political will for such a review (of prices). Hence we may see some stop-gap solution.” If an economic solution is hard, Congress may focus on its leadership. The party does not even have a prime ministerial candidate and has often stopped local state leaders from getting too prominent -- in stark contrast to the BJP. The elderly, quiet-spoken Prime Minister Manmohan Singh has done little to enthuse voters. The Gandhi dynasty that has dominated Congress for decades also appears to have lost its shine. High-profile visits to Karnataka by Congress-head Sonia Gandhi and Rahul -- her son and political heir -- failed to galvanize enough voters. – Reuters __
