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As Power Flows to Regional Bosses, Questions Rise on India\'s Economy

NEW DELHI - It seems like eons ago, but Prime Minister and his coalition government once inspired very high expectations. They were going to stoke 's economy, improve education, help the poor, build modern transportation and energy systems and, perhaps most improbably, prove that India, the most populous and messiest of democracies, could be successfully governed.

That was in 2009, when the governing coalition, led by the Indian National Congress Party, won an unexpectedly broad re-election victory. India's economy was motoring out of the global recession, and the country seemed to be moving from an era of fragmented politics to a new stage in which power resided with a stronger central government in New Delhi. To those who saw India as a rising global power, this was good news.

If only.

Today, India's political calculus is again in flux. The economy is in a tailspin, Mr. Singh and his government are desperately trying to regain credibility, and power is now radiating to regional political chieftains, who are teasingly considering a new national political alignment, a so-called third front to compete with the two national powers, the Congress Party and the opposition Bharatiya Janata Party.

Regional bosses, once in decline, are becoming kingmakers again: the squat, sleepy-eyed Mulayam Singh Yadav, who oversees the powerful Samajwadi Party, is even publicly musing about himself as a future prime minister.

“The incentive for every single party from the opposition to the allies is to send a signal that the Congress can't govern,” said Pratap Bhanu Mehta, president of the Center for Policy Research in New Delhi. “That's the election plank.”

Had Mr. Singh's government met initial expectations, or even come close, the political landscape would undoubtedly be different. “They just blew it,” Mr. Mehta said. The rise of Mr. Yadav and several other regional bosses has many implications for Indian politics, but the trend also raises a broader question about the changing arc of the Indian economic story: If the old assumption was that India needed a strong central government to compete globally, and to avoid a competitive disadvantage with China, what will happen now that the opposite seems to be happening?

History does not provide much reassurance. In past decades, third-front governments have twice taken power and have twice collapsed because of internal bickering, a prospect of instability certain to be unappealing to those in New Delhi and Washington who are eager for India to become a stable and influential player in Asia. Most analysts are skeptical that a true third front will take power in the near future, but they agree that the clout of regional leaders is growing.

“Indian politics will have to live with bargains and negotiations with regional parties,” Ashutosh Varshney, a political expert, said in an e-mail interview. “A third front may or may not emerge, but both national parties will have to negotiate and bargain. That also means that India will find it harder to make firm assertions of power on the international stage, à la China. Its power will grow, but more gradually.”

Last week, Mr. Singh's coalition government nearly collapsed after he pushed through unpopular economic measures, including an increase in diesel fuel prices and a policy shift enabling global giants like Walmart to open retail stores here. Mamata Banerjee, the populist chief minister of the state of West Bengal, declared the moves “anti-poor” and withdrew her regional party from the governing coalition, potentially bringing down Mr. Singh's government. Until, that is, Mr. Yadav and another nonaligned regional leader, Mayawati, who uses only one name, stepped in to rescue the government, at least for now, by pledging “outside” support.

The machinations were hardly altruistic. For months, Mr. Yadav and other regional leaders have speculated - at times gleefully - about the possibility that the governing coalition might collapse, forcing early elections for Parliament, before the scheduled date in 2014. By allowing the government to survive, analysts say, the regional bosses made a cold calculation: keeping afloat a wounded central government was more advantageous, for now, than trying to pick up extra seats by forcing early elections.

The strategy is to pummel Mr. Singh's government like a piñata, if not yet knocking it completely to the ground, in hopes of inflicting even greater long-term damage to the Congress Party. Mr. Yadav, for example, is lending parliamentary support to the government, even as he plans to rally against Walmart and some economic measures.

India's economy has suffered in the lingering global downturn, but most analysts say India's current problems are disproportionately self-inflicted. The two-headed leadership structure of Mr. Singh and Sonia Gandhi, the Congress Party president, which worked earlier, is now seen as increasingly ineffective.