India's ruling United Progressive Alliance government is now embroiled in a controversy that shows every sign of snowballing into a crisis over its mishandling of the 1984 Bhopal gas tragedy.

The resulting uproar has once again brought the 25-year-old tragedy back to sow widespread public anger that appears likely to have an effect far beyond Bhopal, imperiling the government's attempts to pass a bill limiting liability over nuclear plants, which require extensive foreign participation, particularly by US companies. And, given India's long-standing ambivalence about foreign investors, it may well create an atmosphere in which the government, under public pressure, seeks to limit foreign direct investment of all kinds.

As has been widely reported, the leak of a deadly cocktail of methyl isocyanate and other lethal gases which spewed out of Union Carbide Corporation's now-defunct pesticide plant in India's central state of Madhya Pradesh killed over 5,000 people immediately, with as many as 15,000 having died since, and affected the health of as many as half a million.

Last week an Indian court awarded a meager two years' imprisonment for causing "death by negligence" to the convicted former Union Carbide India Limited Executive Chairman Keshub Mahindra and seven other senior Indian executives. Worse, in the public eye, all seven applied for — and were granted — bail immediately after their sentencing.

Apart from what is regarded by the public as grossly inadequate punishment, the case's prime accused — Warren Anderson, 91, the former Union Carbide chairman — is still at large. The former Union Carbide boss has never been arrested despite two warrants being issued against him, the last in July 2009.

However, what has turned the heat on the government is declassified 1984 CIA documents that say the Congress Party played an instrumental role in helping Anderson escape from India. The documents indicate that the late Prime Minister Rajiv Gandhi, ruling UPA Chairperson Sonia Gandhi's husband, who headed the Congress government at the center at the time of the Bhopal gas leak, had aided Anderson's flight to the US.

According to the CIA, Anderson flew out of Bhopal on the official plane of Arjun Singh, then the chief minister of Madhya Pradesh (Bhopal is its capital) after being arrested on December 7, 1984, four days after the gas leak, and released on bail the same day.

With the lid blowing off the scandal, the UPA government is now finding it increasingly difficult to wash its hands of the twists in the gas leak case and the role played by the successive Congress regimes. Critics are convinced that Congress let Anderson off the hook in fear that his arrest would outrage the US and affect FDI flow. "It was a simple case of business overriding all humanitarian concerns," says a home ministry official.

"The Indian government probably thought that no matter what they do now, the dead of Bhopal can't be brought back, so why mess with lucrative foreign investments?" he said. "It feared a backlash from foreign investors who have become important players in the Indian economy following liberalization."

In a settlement brokered by the Indian Supreme Court in 1999, the company paid US$470 million as compensation to the Bhopal victims, just $550 for each victim, many of whom faced a lifetime of visits to hospitals. The compensation was calculated for roughly 180,000 victims, a figure quoted at that time by the government despite widespread protest against what was regarded as a substantial underestimate.

Despite the nationwide outrage against Union Carbide, now owned by Dow Chemical, the UPA government has still not put forth a strong case for Anderson's extradition from America. Activists say Dow Chemical, which bought United Carbide in February 2001, should now be now liable for Bhopal and should pay for a clean-up of the contaminated site.

"It's a shame that Indian ministers and officials as well as corporate chiefs are working overtime to get Dow off the hook and ease the way for its expanding investments in India. It wants to alleviate the concerns of American business regarding liability issues," a Delhi-based lawyer told Asia Sentinel on the condition of anonymity.

This attitude, analysts say, is sending the wrong signal to western corporations -- that they can set up industrial plants in India and reap profits without worrying about serious liabilities. The US has already rejected the possibility of any future action against Dow Chemical.

The verdict has also brought back into sharp focus the controversial Civil Liability for Nuclear Damage Bill, which has been making its torturous way through the legislature. Activists and opposition parties are demanding that the government re-examine the proposed legislation, which was tabled by the Indian Parliament last November. The bill envisages capping foreign companies' liability in the event of an accident at a nuclear power plant at US$10 million. It also proposes that in the event of an accident, the compensation amount to be the responsibility of the Indian state operator instead of the equipment supplier or the foreign company.

With India's civilian nuclear energy industry opening up to foreign corporations, and nuclear plants proliferating across the country, the nuclear bill's clauses have stoked fears of a disaster of the magnitude of the Bhopal tragedy.

"The proposed legislation seems aimed at protecting the foreign company, not the Indian public," a government minister was quoted as telling local media. "The draft nuclear liability bill would indemnify American companies so that they don't have to go through another Union Carbide in Bhopal."

The UPA government has now been forced not to table the nuclear liability bill in parliament in March this year and is reported to be reworking the legislation.

Meanwhile, to protect its business interests, the Obama Administration is hoping that the Bhopal gas leak verdict will not affect the contours of the bill.

"We hope that this verdict will bring some closure to the victims and their families and will not lead to opening of new inquiries into the role of Union Carbide in the disaster," Assistant Secretary of State for South and Central Asia, Robert Blake was quoted as saying.

That has outraged the Indian public, which has pressured the UPA government to seek to bring Anderson back and not rule out 'new inquiries' against Union Carbide. The pressure has forced the Obama administration to give "fair consideration" to a fresh request from India for Anderson's extradition. "We have an extradition treaty with India. And if India makes an extradition request to us, we will give it fair consideration," said State Department spokesman P J Crowley last week.

While such initiatives may bring little succor to the victims and relatives of those affected disaster, they would at least send signals to global corporations that they will not be able to get away with murder in India.

Neeta Lal is a New Delhi-based journalist contactable at neetalal@hotmail.com