Main coalition partner of the United Progressive Alliance (UPA) governing the federal government, the Congress Party, lost several key states including economically rich Punjab and militarily rich Uttarakhand. Political analysts and parties disagreed on what the vote meant. Congress party has blamed the loss on inflation, their supposed allies, the Communists, have blamed them on economic reforms. The winners Bharatiya Janata Party (BJP) claim that they won because of bad economic, security, and political management of the nation. Manipur is still in limbo and analysts expect a hung assembly.
The fallout of the elections may be seen at the federal level ranging from Congress Working Committee changes to increased curbs on Prime Minister Manmohan Singh's policy latitude over economic reforms. Inflation is at two year high mainly propelled by shortage of food supplies-despite strong monsoons, demand has exceeded supply chiefly due to poor management of food stocks and lack of early monitoring and warning systems. The government has also been castigated for the disastrous Special Economic Zones (SEZs) policy where haphazard allocation of farm land at sub-market rates to benefit politicians has antagonized dispossessed farmers. Yet another reform to allow retail operations in India has drawn flak from communist allies and traders who fear that large super-markets will upset their niche and livelihood.
While the government has to take the flak for poor supply management and ill-thought through SEZ policy, most economists will agree that SEZ and further reforms (including retail access) are essential for the continued growth of the economy. The new mantra that communist allies have started beating the government with is economic growth. India's gross domestic product (GDP) is projected to grow at an impressive 9.2 per cent but left-wingers, wanting instant gratification, say that the growth has not touched the poor. Already, the communists have stopped all disinvestment to fund social programs and therefore indirectly exacerbating the deficit condition to dangerous levels. While the deficit has been successfully masked and hidden, the effect of continuous deficit financing and subsidies are showing on government's inability to procure more and rectify the supply deficit. Singh faces critics from the left on the aforementioned issues both from opportunists within the Congress Party and from right wing parties.
These challenges coupled with another crisis involving an obviously nepotism-driven effort to avoid extradition of arms dealer Ottavio Quattrocchi from Argentina has the government under siege. Analysts expect the dancing room available to Singh to shrink rapidly. The question is whether UPA Chairperson Sonia Gandhi, a close friend of Quattrocchi, will sacrifice Singh to divert attention from her and make him the offering to appease the scalpers within and outside the coalition.