This week's about-turn is a stark demonstration of the drift of a party, which - with Singh as its finance minister - kicked off the reforms in 1991 that loosened the government's stifling grip on the economy and catapulted India from near-bankruptcy into a long period of stunning growth.
Since it won a second term in 2009, the Congress party has taken no major policy initiatives to further reform.
Instead, an outcry over corruption that brought protests by millions of middle-class urban Indians earlier this year has frozen the government into inaction.
Since its re-election, Congress has seen its popularity decline.
In addition to the widespread disgust with the corruption swirling around the government, Singh and his septuagenarian-packed cabinet are increasingly seen as out of touch with the needs of a globalising India.
Congress is now in danger of losing power in Andhra Pradesh, one of its biggest voting blocs, and it stands virtually no chance of winning next year's election in the political heartland state of Uttar Pradesh.
Image: A police commando patrols a street past posters of Prime Minister Manmohan Singh, wearing blue turban, and Congress party President Sonia Gandhi, left, during a public rally in Imphal, India on December 3, 2011. The Prime Minister and the Congress President addressed the rally and inaugurated several projects in the capital during their day-long visit.