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Inflation, not N-deal, may hold key to UPA’s fortunes

Inflation, not N-deal, may hold key to UPA’s fortunes
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First Published: Mon, Sep 08 2008. 01 34 AM IST
Updated: Mon, Sep 08 2008. 01 34 AM IST
New Delhi: The go-ahead by the Nuclear Suppliers Group (NSG) for India to resume nuclear commerce may have provided a morale booster for the Congress-led United Progressive Alliance (UPA), but the government is unlikely to reap political capital out of it in crucial state polls that will lead up to the general election.
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Inflation, running at a 16-year high of more than 12%, is still the dominant concern of Indian voters and it’s the ability to stem rising prices that would determine the UPA’s political fortunes, analysts say. Six state elections loom before the parliamentary polls.
Some Congress ministers agree with analysts that the UPA is likely to use the victory gained from the NSG meeting in Vienna to push policy that will have populist overtones rather than contentious reforms such as increasing the limit on foreign direct investment in insurance.
“The timing is not so good for the government. We cannot push an agenda that looks likely to help the rich and the corporates,” said a senior Congress minister, who didn’t want to be identified. “As there are few months left for the elections, we will have to introduce populist measures too.”
The 45-nation NSG adopted a one-off waiver proposed by the US allowing nuclear trade with India even though it has not signed the nuclear Non-Proliferation Treaty and possesses nuclear weapons.
The credit for this has accrued largely to Prime Minister Manmohan Singh, who had staked his political career and pushed for the deal against the odds, parting ways with Leftist opponents of the accord.
The goodwill that Singh enjoys as a politician and the impetus the Indo-US nuclear deal provides for better economic ties with Washington would appeal largely to the country’s middle class and the youth—a key demographic factor in the elections.
Minister of state for steel Jitin Prasada, a young Congress member of Parliament from Shahjahanpur in Uttar Pradesh, however, says winning votes was not a factor in the pursuit of the nuclear deal. The deal “is in the interest of the nation,” Prasada said.
“The nuclear energy will give the necessary fillip to the power situation,” Prasada added. “The poor farmers, who are now after different alternatives, will benefit out of it. It will also open new avenues of development and employment opportunities for the youth.”
The main opposition, Bharatiya Janata Party (BJP) and the Left, have decided to start a campaign accusing the government of sacrificing national interests to the US. They allege that India had forfeited its right to conduct future nuclear tests.
Still, the deal “is not going to have any impact either way,” BJP vice-president M. Venkaiah Naidu said. “People are more concerned about the price of dal and vegetables.”
Political analyst Mahesh Rangarajan said the nuclear deal will drive closer relations with the US in energy, economy and politics.
“The middle class will welcome it,” he said. “But it will not be a major election issue as they will not turn up to vote for the Congress unless the government tackles the issues of high interest rates for housing loans and price rise.”
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First Published: Mon, Sep 08 2008. 01 34 AM IST