PM Singh to reshuffle cabinet amid graft, inflation

Prime Minister Manmohan Singh will reshuffle his cabinet on Wednesday in a mid-term effort to refresh a coalition government snared by corruption scandals and year-high food inflation as it faces key state elections.

The reshuffle, which could show the direction the government will take either to back reformist ministers or bow to political expediency and pressure from industry, is due to be announced at 1700 IST (1130 GMT), according to government sources.

Singh may make cosmetic changes to smaller ministries, bringing in younger politicians to invigorate the government's image. Or he could make major changes with some controversial reformists, such as Environment Minister Jairam Ramesh.

A tide of anger over corruption and prices of basic foods like vegetables threatens to strain the coalition's ties with its increasingly worried party allies in the run-up to important state elections this year and a general election due by 2014.

The legacy of the 78-year-old Singh, founder of India's economic reforms and widely seen as an honest technocrat, is also under threat from his inability to deal with graft scams and the highest food inflation of any major Asian economy.

Reelected in 2009, his government managed to shield India from the worst of a global downturn, and its economy is heading for growth of nearly 9 percent in the fiscal year ending this March. But reforms seen as key to making that growth sustainable to compete with China have been in limbo, while inflation and graft have overshadowed the economic boom.

A group of 14 public figures from industrialists to former Reserve Bank governors warned this week in an open letter that corruption and bad governance threatened India's growth story, a sign scandals were reaching a tipping point for civil society.

We are alarmed at the widespread governance deficit almost in every sphere of national activity covering government, business and institutions, said the letter, quoted in the Hindustan Times.

A recent poll showed voter discontent with Congress party would result in a loss of 40 seats in a general election which would threaten its majority and damage its ability to form a working coalition government.

ENVIRONMENT MINISTER

The fate of outspoken Ramesh may show how much Singh will back a minister seen as a reformist who has been criticised in business and political circles for blocking major industrial projects over green concerns.

Ministerial vacancies have been created by the resignations of Shashi Tharoor as junior foreign minister and Andimuthu Raja as telecommunications minister. Raja, from the Congress's regional DMK ally, quit over his link to a $39 billion telecoms scam.

Several elderly and powerful ministers have been criticised for scuttling new thinking in government, frustrating efforts toward faster reform, such as opening up the retail sector.