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Just when the Congress-led United Progressive Alliance (UPA) was beginning to believe that the political situation could not turn worse, they were struck by another scandal on Friday—the Central Bureau of Investigation (CBI) alleged that railway minister Pawan Kumar Bansal’s nephew was at the centre of a bribe pay off.

It could not have come at a worse time. The UPA is already under pressure after it was discovered that the CBI had, despite a Supreme Court caution to the contrary, shared a draft status report on the investigation into the illegalities in the allotment of coal mines with law minister Ashwani Kumar. The apex court is set to resume hearing the arguments of the government and the CBI in the matter from Monday.

The episode involving Bansal, together with the Congress party’s decision to brazen it out, will only lend more grist to the mills with Parliament in session.

The UPA may well survive—as the spin doctors of the Congress party would have us believe—the latest episode, but it will come at a stiff cost. Also, the Bharatiya Janata Party (BJP), the principal opposition that is dealing with its own internal genies, may not be willing or adequately prepared to force a general election earlier than scheduled and may prefer instead to see the UPA shoulder the political price of survival.

First off, as The Hindu newspaper rightly put it, the latest turn of events puts the focus on the integrity quotient of the government. Throughout its second tenure, it has had to answer questions (with some even leading to arrests) on the conduct of some members of the cabinet, whether on the Commonwealth Games or the alleged infractions in the allotment of second-generation (2G) telecom spectrum.

I am aware that the counter argument proffered from within the Congress is that corruption is not an electoral issue, especially in rural areas (Even if it was the case, it certainly can’t be anybody’s case that it is cause for justification.) The argument is that it is too remote, unlike say inflation, to connect with the voters. The recent win of the Congress in Himachal Pradesh is also thrown in as evidence, while others would argue that it was an implosion within the state unit of the BJP that turned a victory into defeat, like the state unit of the Congress did in Punjab.

None of us have a crystal ball or the ability to grasp how people across the country are digesting the information playing out in public domain on corruption in high office. No doubt the voluble urban middle class is easy to fathom. But there is a demographic factor that could potentially upset the sanguine conclusion the Congress seems to be making about the larger Indian electorate.

Census 2011 revealed that officially the urban population aggregated about 32%. But it also identified a segment called census towns—overgrown villages that are still governed by panchayats and not a municipality or corporation as in the case of urban areas—or as rural development minister Jairam Ramesh puts it: Rurban.

Taking these census towns into account, the urban population is nearly 50%. In other words, one in two Indians live in urban or semi-urban areas. Further, the census also estimates that 65% of the population of India is less than 35 years of age; implicit is that they were born around or after 1980. This generation differs from the previous one in terms of the aspirations, consistent with how India has gained in economic prowess over the last decade and its gross domestic product is now estimated at nearly $2 trillion.

Unfortunately, their aspirations are not being realized, at least for the majority. Part of the reason is that the education system, mired in a different era, has not equipped them with the requisite skills. The other is that the economy, despite its spectacular surge in the last decade, has not generated sufficient jobs; the phenomenon of jobless growth has been the biggest dampener to the growing aspirations of India’s next generation. Visible corruption in public office will only worsen their frustration levels.

The second fallout of the imbroglio is the squeeze on the ability of the UPA to carry out further policy reform. Already, the political mismanagement has nixed the informal deal with the BJP to ensure passage to the insurance and pension reform legislation (a litmus test for some foreign investors). Not to speak of the deadlock in Parliament that has precluded discussion on several thorny issues plaguing the country.

This is ironic. Because due to a combination of good circumstances and efficient nursing by finance minister P. Chidambaram over the last eight months, the economy is actually bottoming out. So this is the time for a fresh thrust of policy initiatives, not less. But for a government so preoccupied with survival, policy change would be more difficult to come by, especially anything that needs legislative approval.

In the final analysis, therefore, it is evident that either way the Congress party is at a point of inflection. It has to choose between the cost of survival over the short term or shoring up its political future in the medium term. A tough call to make normally, but given the current set of circumstances, the UPA is better off cutting its losses.

Anil Padmanabhan is deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at capitalcalculus@livemint.com

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