India's Opposition to Protest as Singh Weighs Steps on Prices

India’s main opposition party plans nationwide protests as rising prices of food including onions and milk roils Prime Minister Manmohan Singh’s coalition, already weakened by corruption charges.

The Bharatiya Janata Party, or BJP, will hold demonstrations and stage sit-ins in India’s major towns for a month starting Jan. 20, party spokesman Ravi Shankar Prasad said in New Delhi yesterday. Montek Singh Ahluwalia, deputy chairman of India’s Planning Commission, said Singh yesterday discussed steps to curb prices with cabinet colleagues. He didn’t elaborate. More deliberations may be held today, the Press Trust of India reported, without saying where it got the information.

India, where elections have been lost on the price of onions, a key ingredient in the nation’s cuisine, is holding polls in nine states in the next 18 months. Singh’s government has reached out to Pakistan to import the vegetable and plans to distribute 5 million tons of rice and wheat at subsidized prices to regain its popularity.

“The surge in food prices is threatening to further weaken the government’s credibility,” said N.R. Bhanumurthy, an economist at the New Delhi-based National Institute of Public Finance and Policy. “The government needs to do something urgently to slow inflation.”

The benchmark nine-year government bond yield has gained 30 basis points this month on speculation Reserve Bank of India Governor Duvvuri Subbarao may raise interest rates this month for the seventh time in a year, the most by any central bank in Asia. The yield fell more than one basis point to 8.21 percent at the close of trading in Mumbai yesterday. The RBI’s benchmark repurchase rate is 6.25 percent.

Stocks Fall

The Bombay Stock Exchange’s Sensitive Index lost 0.1 percent, completing its longest stretch of losses in almost a year. The rupee appreciated 0.6 percent to 45.165 per dollar.

In the past 15 years, Indians have voted out at least two national governments after inflation eroded the spending power of the poor. The World Bank estimates 828 million Indians live on less than $2 a day.

Inflation of more than 6 percent between 1994 and 1996 helped oust Prime Minister P.V. Narasimha Rao. His Congress party-led government lost to the BJP, which was voted out in May 2004 after prices rose in eight of the 12 months that preceded the poll.

The BJP plans to hold rallies to highlight “rampant corruption” in the government and Singh’s “failure” to control prices, party spokesman Prasad said.

Onion Prices

Food inflation accelerated to 18.32 percent in the week ended Dec. 25, the highest rate since July, the commerce ministry said on Jan. 6. Prices of onions soared 80 percent during the week and milk by about 20 percent.

Finance Minister Pranab Mukherjee on Dec. 30 raised his inflation forecast for the year through March. The inflation rate may be “around” 6.5 percent by March 31, Mukherjee said, more than the 6 percent prediction he made on Dec. 14. The rate was 7.5 percent in November.

Price gains are curbing purchasing power among consumers.

Krshna Vasudevan, a 68-year-old retired economics professor in the southern Indian city of Chennai, said his monthly vegetable bill has doubled to 9,000 rupees ($200) in the past two years.

“The government is not at all bothered about the rise in prices,” Vasudevan said in an interview yesterday. “I will definitely not vote for them.”

Neelam Kapur, a government spokeswoman, said yesterday that the prime minister is “concerned” about inflation and is discussing with cabinet ministers ways to gain control over it.

Political Pressure

Food prices have emerged as a top political issue even as Singh’s government tries to fend off opposition calls for a cross-party probe into an auditor’s report on the award of mobile-phone licenses at below-market prices that may have cost the state $31 billion.

The Indian mobile-phone service providers in which Telenor ASA and Emirates Telecommunications Corp. bought a stake, said Dec. 14 they will prove the validity of their licenses within 60 days after the telecommunications ministry ordered the carriers to respond to the audit.

The row stalled parliament during a monthlong session in November and December.

The BJP on Jan. 4 also accused the government of shielding an Italian businessman charged with taking bribes for brokering a 1986 defense deal.

If a parliamentary election were to be held now, Singh’s coalition may win 42 seats fewer than the 259 it got in the last general elections in May 2009, according to an opinion poll conducted by the India Today magazine and AC Nielsen this month.