NEW DELHI (Reuters) - An anti-corruption movement sweeping India has dealt a serious but not yet deadly blow to the ruling Congress party's chances of sweeping back to power in elections in 2014.
Almost two weeks of massive protests led by 74-year-old self-styled Gandhian activist Anna Hazare have exposed a party riven by a lack of leadership, indecision, poor judgment and out of touch with the concerns of a country of 1.2 billion people.
"In the hour of its greatest need, the Congress's top leaders have failed the party. Anna Hazare's movement threatens the survival of an UPA (coalition government) on the brink of breakdown," news magazine India Today said.
The Congress party of the Nehru-Gandhi dynasty, in power for most of the time since independence in 1947, must find a way to rebound for key state elections next year and national elections in 2014.
Recent opinion polls show the Hindu nationalist opposition Bharatiya Janata Party (BJP) edging ahead of the Congress party after the Hazare movement threw an unknown element into national politics -- the middle-class vote.
Hazare rallied millions of predominantly urban middle class, angry at the government's inability to crack down on rampant corruption, made evident by the arrest of a minister and the poor state of infrastructure and services in a country that has grown at around eight percent per annum over the last few years.
The crisis has also taken a toll on governance. A series of key bills, including one on land acquisition reform and plans to open up the retail sector to foreign companies, has stalled.
Economic growth is set to slow over the next few years, with the central bank, cutting its forecast to below eight percent for this year -- a minimum requirement to lift millions out of poverty and repair or rebuild crumbling roads and facilities.
"Since 2004, Congress strategy was to own the successes and disown the failures... It has worked until now," said Sanjaya Baru, editor of newspaper Business Standard and Prime Minister Manmohan Singh's media adviser from 2004 to 2008.
Since 2004, India has been run through an unusual setup whereby Congress party leader Sonia Gandhi, the Italian-born wife of assassinated former prime minister Rajiv Gandhi, sets the political agenda and the prime minister runs day-to-day affairs.
Sonia is India's most powerful politician, but unlike previous leaders of her star-crossed family she decided not to become prime minister. This has come back to haunt the party, especially since she took leave to undergo surgery for an undisclosed illness in the United States three weeks ago.
Rumours swirling in the corridors of parliament say she may not return to run the party and instead hand control to her relatively inexperienced son, Rahul. Congress denies this.
Singh, frail after two heart operations, is seen as a symbolic and avuncular figure, blamed for not cracking down on graft.
"The seemingly perfect division of power between Sonia Gandhi, the politician, and Manmohan Singh, the policy wonk, has imploded, exposing a party riven by indecision and miscommunication," India Today said.
The verdict since Rahul, 41, has been running some of his mother's affairs is that he has fared poorly. A speech in parliament at the 11th hour on Hazare was too little, too late.
When asked why he had remained silent when tens of thousands of people took to the streets over corruption, Rahul told reporters: "I tell you why. Because I like to think about things and then decide about things."
Crucial to Congress and the Nehru-Gandhi family dynasty will be how well Rahul takes on the leadership of the party. He is also expected to be the party's next prime minister.
The danger is that Rahul, who heads the youth movement of the Congress party, has alienated the very voter base he has worked to win over and seen as crucial in coming years.
The party has traditionally won support from rural India, particularly farmers, many of whom live on state support.
The youth and the urban middle class, while not the core of the Congress party voter base, will increasingly play a crucial role in elections.
"What is really worrying them is that they banked so much on the generation shift and the youth vote," said analyst Swapan Dasgupta. "The Hazare movement has really shaken that faith."
But Baru says Congress should not be underestimated.
"What we will see over the next three years is the older generation moving out and the younger one taking over and you've recently seen lots of younger Congress members of parliament more active on the Anna Hazare issue," Baru said.
A series of state elections over the next 12 months, particularly in the country's most populous state, Uttar Pradesh, will be key for Congress. In Uttar Pradesh, it is all about whether Mayawati, the leader of the formerly untouchable Dalit castes, will return to power or not.
"There could be some damage in the coming state elections. Anna's movement has certainly dented the image of government and particularly some ministers' dealing with the issue," said a senior Congress leader, who asked not to be named.
Rahul's future is very much at stake as he has invested political capital to win the state from Mayawati, or at least enough seats for Congress to join a coalition in the state.
His image was dented after Congress was drubbed in state assembly polls in Bihar, despite his high profile campaigning.
Worrying for Congress is that a series of home goals has weakened its base in several key states. In India, winning federal elections is hugely influenced by how a party does in state elections and what alliances a party forges.
Congress's stronghold, Maharashtra, the state Hazare is from and where Mumbai, the financial capital is located, is in trouble, riven by infighting among its top leadership.
In Andhra Pradesh, which was key for Congress to return to power in 2004 and 2009, the party is fighting a mutiny over its decision to split the state, a move which was later shelved.
"The way politics is played out in India is at state level. You have to see what the impact of all this will be for not just Congress, but importantly for its allies," Baru said.
"In politics, all that counts is victory in elections."
(Additional reporting by Manoj Kumar in New Delhi; Editing by Alistair Scrutton and Nick Macfie)
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