NEW DELHI Prime Minister Manmohan Singh brushed aside on Wednesday widespread accusations that he was a "lame duck" leader presiding over a government mired in graft and policy paralysis, but offered little concrete in way of policy steps he would take up.
The prime minister met five domestic media editors in an attempt to overhaul his reputation as out of touch with the country, with corruption scandals and stubbornly high inflation eroding confidence in his coalition government.
As the government fights the backlash from the scandals, investors are increasingly worried it will not push through reforms to support long-term growth in Asia's third largest economy, including an overhaul of its land acquisition policy, taxation system and foreign direct investment rules.
Responding to a question if his had become a lame duck government, Singh said: "This is the result of the clever propaganda of the opposition," according to a transcript of the meeting, issued by the government.
"I think the first thing is to sustain the momentum of growth that we have built. Second, we must ensure that infrastructure does well, is well-managed, its reform is a priority concern," he said in response to a question on near-term reforms.
He said that amongst issues uppermost in his mind were long-pending proposals to hike foreign investment caps in insurance and to open up the retail sector to greater foreign investment.
Analysts were unimpressed with the message from Wednesday's meeting, comparing it with Singh's last meeting with the media in February when the prime minister voiced similar sentiments but ended up doing little to back them up.
"I think the market will be looking for actions rather than comments," said Samiran Chakraborty, regional head of research at Standard Chartered Bank in Mumbai. "Confidence can come back only when there is perceptible movement in the policy stance. Before that, a cabinet reshuffle can bring in some hope."
The prime minister said plans to reshuffle his cabinet were a "work in progress" but declined to say whether there would be significant changes in top positions.
SUCCESSION, NOT IF BUT WHEN
Singh said he had the full support of the Congress party and denied speculation he would be replaced by Rahul Gandhi, the 41-year-old son of Sonia who has long been seen as a prime-minister in waiting, saying that was not on the party's agenda.
A senior Congress party member and the interior minister have this month publicly praised Rahul Gandhi as having the skills to be prime minister, hinting that Congress members were increasingly anxious to change leadership.
"I sincerely hope that whenever the Congress Party makes up its mind, I have no objection to step down. But so long as I am there, I have a job to do," he said.
Singh's premiership has been beset by graft scandals, including a $39 billion telecoms scam that saw former telecom minister A. Raja arrested and parliament suspended by opposition protests.
Those scandals have been the focus of widely popular fasts by activists and the government's handling of the protests has added to the view it is out of touch with public sentiment.
"I'll be very blunt. The government has committed one blunder after the other," said N Bhaskara Rao, chairman of New Delhi-based think-tank Centre for Media Studies.
Congress was expected to push through a series of long-delayed economic reforms after winning a second term in office in 2009, but little progress has been made.
The government's inability to combat high inflation, exacerbated by fuel price rises this month, has led to widespread public anger, and damaged voter confidence in the ruling party with elections looming in 2014.
Economic growth is expected to slow down on high inflation and interest rates, with few expecting the government to be able to tame inflation, and fiscal deficit targets looking like an ambitious goal.
Three-quarters of India's leading companies have lost faith in the government, and believe that a governance crisis and policy limbo will hit economic growth and their investment plans, a survey said this month.
Still foreign and domestic investors point out that the opportunities in India often outweigh the challenges, with its relatively untapped market with huge growth opportunities compared with those in struggling industrialised economies.
(Additional reporting by C.J. Kuncheria in New Delhi and Swati Bhat in Mumbai; Writing by Paul de Bendern)
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