ANALYSIS-Scandal blow puts Indian government in danger
* Singh has considered quitting, but not likely to go
* Two key events ahead: state election and parliament session
* Coalition partners could desert Congress if seen as a liability
By John Chalmers
NEW DELHI, Feb 6 (Reuters) - There is no clamour for an early general election in India, but the latest blow dealt to Prime Minister Manmohan Singh over a massive corruption scandal raises the risk that his wounded government could fall well before its mandate runs out in 2014.
Singh is unlikely to quit following last week's Supreme Court order for 122 telecoms licences to be revoked, a deeply embarrassing ruling that accused the government of "virtually gifting away an important national asset at throwaway prices".
According to Sanjaya Basu, a former media adviser to the 79-year-old prime minister, Singh has seriously considered stepping down at times during the turbulence of the past 12 months but has plodded on out of loyalty to the ruling Congress party.
Few really know the prime minister's mind. Indeed Singh's public silence on many matters is the butt of internet jokes, one of which has his frustrated dentist telling him: "You can open your mouth now, I'm your dentist."
Even if Singh did go, he has several ambitious colleagues who could step in to lead Congress into the next elections, hoping that they can shake off the unpopularity that has closed in on the party since it won a second five-year term in 2009.
There was some rare relief for the government on Saturday, when a court cleared Singh's interior minister of signing off on the sale of the mobile network licences, which may have cost the public exchequer up to $36 billion in lost revenues.
Buoyed by this ruling -- which kept the blame for short-changing the nation from spreading across Singh's cabinet -- the Congress party is most likely to try to limp on, just as it did through 2011.
Last year it survived the detention of a minister over the telecoms scandal, country-wide protests over corruption, flip-flopping by fickle regional parties in its coalition, and dismay over a policy paralysis as economic growth was skidding. It even blundered into an embarrassing legal face-off with the country's army chief over his date of birth and retirement.
The question now is whether it can ride out 2012 too.
"BETS ARE ON"
Two looming events could decide that: the first is a month-long election in the politically crucial state of Uttar Pradesh that gets under way this week, and the second is the budget session of parliament in March.
"Ever since the (telecoms) scandal blew sky high in October 2010 ... the regime in Delhi has acquired the traits of a rubber band that stretches and shows great elasticity but is yet to snap," the current affairs weekly Outlook said in a cover story.
"Everyone's waiting and bets are now on as to whether this government will survive the budget session," it said. "The Manmohan regime may be too much of a liability for regional parties (in the coalition) to carry the burden for much longer."
Congress is expected to fare better in the Uttar Pradesh poll than last time, when it won a mere 22 of the state assembly's 403 seats, in part thanks to the tireless campaigning of Rahul Gandhi, scion of the Nehru-Gandhi dynasty that has ruled India for most of its six decades of independence.
But if there is only a modest improvement in its seat tally, Congress will be further weakened.
This may encourage the main opposition Bharatiya Janata Party (BJP) to go on the offensive. Coalition partners that Congress relies on for a parliamentary majority could also be tempted to desert it during the budget session in March.
If the government fails to win enough support in parliament for its 2012/13 Finance Bill in mid-March, then, under the constitution, it must resign, which could trigger a mid-term election.
"How many members of parliament want an election now? There's no mood for it. The BJP doesn't want one because they are not sure that they can come to power," said one political insider, who asked not to be named. "But accidents can happen."
One coalition partner that could be tempted by an early election is Mamata Banerjee, a firebrand who leads the Trinamool Congress party. Congress relies on the 19 parliament seats that Banerjee's West Bengal-based party brings to the ruling coalition, the United Progressive Alliance (UPA), but at times Banerjee has seemed to be its fiercest opponent and there is a risk that she could pull her support from the government.
If that were to happen, Congress may turn to the Samajwadi Party, which is expected to emerge first or second in the Uttar Pradesh election, to join and rescue its coalition.
Many in Congress see 41-year-old Rahul Gandhi as the answer to the party's troubles. If he delivers a strong result in the Uttar Pradesh election, pressure could mount on him to take the reins of the party sooner than his current long-game plan.
"If Congress does remarkably well in Uttar Pradesh, if he can claim there's a Rahul wave, many would say that this is one way of liberating themselves from this (telecoms) controversy," the insider said. "The argument would be: here's a young man bringing votes back to the party and now it's time to give the younger generation a chance." (Editing by Nick Macfie)
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