India's Congress party goes into election warm-up on the backfoot

NEW DELHI Sun Nov 10, 2013 4:51am EST

Rahul Gandhi, a lawmaker, speaks to Sonia Gandhi (R), who is his mother and India's ruling Congress party chief, during the Indian National Congress meeting in Jaipur, capital of India's desert state of Rajasthan January 20, 2013. REUTERS/Stringer

Rahul Gandhi, a lawmaker, speaks to Sonia Gandhi (R), who is his mother and India's ruling Congress party chief, during the Indian National Congress meeting in Jaipur, capital of India's desert state of Rajasthan January 20, 2013.

Credit: Reuters/Stringer

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NEW DELHI (Reuters) - Trailing in opinion polls and stunned by the rise of opposition leader Narendra Modi, India's ruling Congress party is limping into a clutch of state elections, underlining the struggle it may face to retain power when the nation votes next year.

Surveys last week showed that Modi's Hindu nationalist Bharatiya Janata Party (BJP) could win as many as four of the five states going to the polls over the coming month.

Opinion polls are notoriously unreliable in India, however.

The Nehru-Gandhi dynasty's Congress party could still cling to power in the capital, Delhi, and it may wrest control of the eastern state of Chhattisgarh from its rival.

The results of the state polls, due to be declared on December 8, will largely hinge on local leaders and issues, but analysts say a strong showing for the BJP will boost the momentum for Modi in the run-up to the national election due by April.

"Congress is certainly very nervous because it has seen how the popular mood continues to be against it," said Amulya Ganguli, a political commentator.

Although a deeply polarizing figure, Modi's star has brightened dramatically, in large part because many voters - particularly the growing ranks of young urban citizens - believe he could set India on a new path after nine years of corruption scandals and policy drift under Congress.

Modi is widely seen as a business-friendly reformer who has attracted investment and bolstered economic growth in Gujarat, the western state he runs. The prospect that he may become the country's next prime minister, almost inconceivable a year ago, has helped drive a surge in the Indian stock market.

The benchmark BSE index hit a record high this month, notching up a gain of 20 percent since its 2013 low in late August, compared with a 12 percent gain in the MSCI Asia-Pacific index excluding Japan.

Goldman Sachs last week upgraded its stance on Indian equities, noting in a report titled "Modi-fying our view" that optimism over the BJP leader's chances had trumped concerns about economic problems such as high inflation and a fiscal gap.

Furious over the report, the Congress party accused the investment bank of interfering in India's politics.

"Goldman is parading its ignorance about the basic facts of the Indian economy, and it also exposes its eagerness to mess around with India's domestic politics," Commerce Minister Anand Sharma told the Economic Times.

ROW OVER OPINION POLLS

Congress has also been stung by polls showing it may be hammered in the national election, with one survey showing it may win just 102 of the 543 parliamentary seats at stake, its worst performance ever. The party has urged a ban on opinion polls, arguing that they can be "doctored by vested interests".

It has also launched a series of attacks on Modi: in an interview with Reuters, a senior cabinet minister compared his rise to the emergence of Nazi Germany's Third Reich.

Critics have long sought to brand the Hindu nationalist leader a fascist and blame him for anti-Muslim riots in 2002 that killed at least 1,000 people in Gujarat. Modi denies wrongdoing and a Supreme Court probe found no evidence to prosecute him.

Surveys have shown that Rahul Gandhi, the young scion of the Nehru-Gandhi family that has dominated Indian politics since independence in 1947, has so far failed to electrify voters.

"They have given up the battle. They know they have no future," BJP spokeswoman Meenakshi Lekhi said of Congress.

For all its confidence, the BJP is expected to emerge from next year's election far short of the parliamentary majority required to rule. Modi could find it tough to win around allies to form a working coalition, Ganguli said.

The local polls kick off on Monday in Chhattisgarh, where the battle is expected to be closely fought. Surveys suggest the BJP will retain power in the central state of Madhya Pradesh, and wrest control of the desert state of Rajasthan from Congress. A small north-eastern state, Mizoram, is also going to the polls.

Security will be tight during the staggered elections, especially after several small bombs killed six people at a Modi rally last month. In Chhattisgarh, long plagued by a Maoist insurgency, police said several improvised explosive devices were recovered in the run-up to voting.

(Additional reporting by Nigam Prusty in New Delhi and Jatindra Dash in Bhubaneshwar; Editing by John Chalmers and Clarence Fernandez)

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