A BMW kills six, no questions asked

India has become ungovernable. But who cares? Good government might threaten the elite. John Elliott

For many Indian people, the vicious killings, rapes and burning of property in Gujarat in February and March have confirmed their worst fears: that there is no political party in India capable of governing the country effectively. The riots, in which more than 700 people died, also fuelled worries about whether India is indeed governable in its current state of social and political development. Is this ancient civilisation, and potentially great nuclear power of around one billion people - one-sixth of the world's population - embarking on a period of increasingly intolerant social and economic instability?

In Gujarat, the state government, controlled by the Hindu-nationalist Bharatiya Janata Party (BJP), did more to encourage the riots and killings than to quell them, while India's BJP-led national coalition government failed to exert effective authority. A violent youth wing of the Sangh Parivar (a loose grouping of Hindu organisations), to which the BJP belongs, also led riots in other parts of India and even stormed the assembly building in the eastern state of Orissa. And the organisation of national volunteers warned that members of India's minority Muslim community should realise that "their real safety lies in the goodwill of the majority".

The BJP's inability to keep its extremists in line means that it should logically be written off at the next general election, due in 2004. There is, however, no other party capable of forming a strong central government. The obvious alternative should be the once-dominant Congress Party, but it has ill-defined policies and weak national leadership - even though it rules in more than half of the country's states. So India looks doomed to between 15 and 20 years of multi-party coalitions.

The only thread linking the 24 parties in the current coalition is a refusal to serve under the current Congress leader, Italian-born Sonia Gandhi, the Roman Catholic widow of the former prime minister Rajiv Gandhi, assassinated in 1991. The regional parties have shown no interest in broad economic and other national domestic issues. Instead, they have used their presence in government to win concessions for their own vote banks and to secure "lucrative" ministerial posts that provide bribe money for their parties' coffers and their own pockets.

"India has always been ungovernable - the only difference now is that we want it to be so," says a leading newspaper editor, only half-jokingly. The first part of that remark reflects how India has always been too large to be run efficiently from the national capital. Since independence in 1947, it has partly relied on state governments, which gained more powers in the 1990s but are now drifting into bankruptcy because their political leaders will not take tough economic decisions. In many areas in north-east and central India, rebel groups are in charge, while politically powerful criminal gangs rule parts of Uttar Pradesh and Bihar.

But the second part of the remark highlights a more serious development - that powerful vested interests do not want India's problems tackled and therefore seek to impede effective government. Since 1947, the elite has quietly shuddered at the prospect of the 50 per cent of the population that is poorly fed and poorly educated rapidly entering mainstream society - and thus little has been done. There is also widespread resistance to economic reforms from, for example, farmers who want to continue to receive the free electricity that they have had for years, and politicians who do not want to upset their vote banks by reforming employment laws and cutting wasteful subsidies.

Politicians also block reforms that would interfere with their powers of patronage and thus stop them using (loss-making) public sector businesses for freebies and largesse for cronies. Politically powerful business groups also give financial support to politicians and bureaucrats who will help shield them from new competition.

As a result, most economic reforms proposed by central governments since 1996 (when coalitions took over following five decades of mostly Congress rule) have been scuppered by coalition partners and vested interests. The BJP has failed to break that mould. The only current exception is a privatisation programme that is being driven by a rare "clean" combination of a single-minded campaigning editor-turned-government minister, Arun Shourie, and a determined top civil servant, Pradip Baijal. Shourie has said that the government's problems stem from "a fractured electorate that leads to a fractured legislature" in which "everyone has enough power to block everything and no one has enough power to see anything through".

Most state-level electricity boards are bankrupt and more than half the state governments cannot afford to pay staff salaries on time. The central government's annual revenue receipts of roughly Rs2,317bn (£34bn) are more than wiped out by debt and interest payments, and the combined fiscal deficit of central and state governments has risen to an unwise level of more than 11 per cent of GDP. Government-owned financial corporations are sliding deeper into debt, because of the pyramids of bad loans with politically influential companies that no one dares disturb.

Logically, all this should lead to an economic crisis, but it does not do so because India's internal economy is substantially protected from external financial forces. Instead, annual economic growth has fallen to about 5 per cent, which may look high by current world standards, but is inadequate because it is partly eaten away by a population growth of nearly 2 per cent, and is far short of the 8 per cent or more needed to tackle India's poverty.

The lack of effective government is not limited to the economy and the handling of riots. India's long-admired legal system is becoming increasingly corrupt, and there is a backlog of more than 30 million court cases, which would take centuries to clear at current rates of progress. Corruption is becoming almost universal among the police, who are subject to political influence. For example, they allow witnesses to crimes to be coerced into withdrawing incriminating evidence before trials start. Three witnesses who saw a BMW saloon - driven by the son of an influential admiral-turned-arms dealer - run down and kill six people, including three policemen, in Delhi three years ago, have changed their testimonies, first saying it was a truck and then an Indian-made car. Such events, widely reported in the media, cause scarcely a stir.

Standards of recruitment into the civil service are declining, and there are more job applications for the "lucrative" Inland Revenue than for the main Indian Administrative Service. Many civil servants ally themselves with self-seeking politicians, and there are growing links between politicians and criminals. A large number of people with criminal convictions and court cases outstanding are allowed to stand for election to state assemblies. Recently, Laloo Prasad Yadav, who had to resign from the chief ministership of Bihar after he was charged in a large-scale corruption case, was elected to the Rajya Sabha, India's upper house. He is currently out on bail, and his uneducated and non-political wife is Bihar's puppet chief minister.

"So what!" people say. India has always ridden out its crises, absorbing troubles such as riots between Hindus and Muslims. And, say members of the establishment, if the BJP continues to fail to deliver on Hindu extremism and economic reforms, it will be swept away in the next election and a different coalition will emerge. Sooner or later, they add, the electorate will tire of non-performing governments. Then a new grouping will emerge, led by "younger" (ie, aged under 60) politicians and probably involving Congress, but without Sonia Gandhi in the lead. India will then move forward again - "as it always does". A national crisis, some suggest, will suddenly trigger change and help to set the country on a new course, as happened in 1975 when Indira Gandhi introduced a state of emergency, and again in 1991 when an international payments crisis prompted long-overdue economic reforms.

This may be true, eventually. There will be economic successes, mainly based on the software and other hi-tech industries, where government influence is minimal. But the dominant picture will be of a dichotomous country that is becoming internationally important in geopolitical and hi-tech terms, but whose democracy is becoming anarchic, as vested interests and religious extremists use the power vacuum to push their own agendas.

That is not the India one saw 20 years ago, nor is it the India that its people need today.