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Win-win: Manmohan Singh gets the nod
By Indrajit Basu

KOLKATA - Sonia Gandhi's refusal - twice in two days - to become India's next prime minister may be as surprising as her Congress party's election win itself, but Manmohan Singh as the replacement candidate may just be what the doctor ordered for the country's economy, stock markets, industry chiefs and foreign experts say.

In a day of high drama, on Wednesday afternoon Gandhi once again confirmed that she would not take the premiership, even after senior members of her party resigned to pressure her, and crowds of supporters swarmed her house in New Delhi. On Tuesday night, despite intense support, Gandhi said that her "inner voice, my conscience" would not let her take India's top job.

Eventually on Wednesday, Congress members circulated a resolution electing Singh as the leader of the Congress's "parliamentary party" in place of Gandhi, which means that his name would be put forward to President A P J Abdul Kalam on Thursday for confirmation.

Singh, 71, is a former finance minister and the architect of India's economic reforms that began in the early 1990s to roll back decades of central control. To most experts, Singh is the best choice for the post. Gandhi's is an extremely clever move, as she gains, the Congress gains, and India gains.

Martin Hutchinson, a Washington-based ex-international investment banker who specializes in investment opportunities in emerging markets, said the future of India partly rested on who got the prime minister's job. "A reformer [like Singh] locks in economic progress, whereas an old-guard socialist, or a weak leader without intellectual background [Gandhi], raises the risk profile of foreign investment in the country considerably," he said.

For the country's stock markets, perhaps nothing could be a better balm in chaotic post-election India as Singh as the next prime minister. The markets remained bullish on Wednesday despite the political uncertainty early in the day. The 30-share Mumbai stock exchange's Sensitive Index, which opened 65 points higher at 4,942, soon breached the 5,000 mark to touch an intra-day high of 5,060 on strong buying support across the board. It eventually closed up 129 points on the day at 5,006. The S&P/CNX Nifty Index of 50 stocks on the National Stock Exchange rose 64 points to close at 1,568.

Said Hutchinson: "The principal uncertainty among foreign investors over the incoming Congress-led government was the fact that Sonia Gandhi promised to the electorate that she would attempt to boost growth by additional injections of public spending [which would have more than likely, given the Gandhi family's fiscal history and belief system]. That would have quickly made India's fiscal position run out of control, bringing economic growth to a juddering halt. One could be optimistic if Manmohan Singh himself were to be the prime minister."

Singh became a household name for an entire generation of Indians in 1991, when, as finance minister, he brought the country away from the verge of bankruptcy through his famous economic liberalization that opened India's decades-old closed economy - considered to be a caged tiger - to global forces. Through those policies he also articulated his conviction that India would emerge as an economic power, a position that the country eventually attained almost a decade later. Thus, as one of the more non-political faces of Indian politics, Singh is now best known as the "liberator" of the Indian economy.

Under his stewardship, India was transformed from an aid-dependent, inefficient, state-controlled autarky into a fast-growing part of the global economy, drawing energy from the forces of the market instead of running scared from them. Singh commands respect, for his integrity, intellect and, significantly, the complete trust and backing he enjoys from the actual political leadership that has won the people's mandate to lead a new government.

He studied economics at Chandigarh, in Canada and at Oxford, and taught at Punjab University and the famous Delhi School of Economics. He began his tryst with economic policymaking in 1966, served as economic adviser, deputy chairman of the planning commission, governor of the federal bank - the Reserve Bank of India - and secretary general of the South Commission. He has won several awards for his work and contribution to society, including the "Padma Vibhushan" - the country's top award - in 1987, the Euromoney finance minister of the year award in 1993 and the Asiamoney finance minister of the year award in 1993 and 1994.

He was first elected to the Rajya Sabha - the upper house in the Indian parliament - in 1991, and has represented the Congress there since. In 1999 he contested the Lok Sabha - lower house - elections from South Delhi, but lost. At the peak of reforms in the mid-1990s, as well as in the 2004 elections, Singh was roped in as a star campaigner by the Congress to carry the message of economic reforms to the masses.

"We will have an economist as the prime minister who is also a unifying figure for the country," said a spokesperson from UBS Investment Research, Hong Kong, while the Indian brokering community feels that Singh's elevation means that the next finance minister will be either P Chidambaram or Jairam Ramesh. Both are considered as the Congress's other economic experts who are pro-free-market and pro-reforms as well. "Having strong, well-respected economists as prime minister and finance minister will give the Congress-led coalition enough clout to ward off threats from the left parties," said Ramesh Damani, a leading Bombay Stock Exchange broker, referring to the communist parties on which Congress will have to rely in parliament for a majority.

Industry chieftains, too, have given Singh their thumbs up. "Singh will be a good choice," said N Srinivasan, director general of the industry lobby the Confederation of Indian Industry, and according to Onkar Kanwar, yet another corporate honcho, "Singh will go a long way in providing the stability corporate India is looking for."

Meanwhile, Singh as the next prime minister certainly comes as bad news for the political opposition (read the Bharatiya Janata Party - BJP) "which, owing to a lack of any other tenable issues", say Congress members, "was threatening to jeopardize the country's political stability by raising the issue of Sonia Gandhi's foreign origin [Italian birth]". In fact, Sushma Swaraj and Uma Bharati, two prominent BJP members and ministers in the erstwhile coalition government that the BJP led, had even called on the president, urging him not to invite Gandhi to form the new government as a prime minister. "It [Sonia Gandhi's refusal] will bury once and for all the foreign-origin issue that has bedeviled her leadership of a Congress-led formation at the center," Congress party workers said.

Nevertheless, Gandhi's refusal to accept the prime-minister post appears to have reopened the issue of dual power centers that the Congress resolved decades ago. The tussle between government and party was settled in favor of the former during the tenure of Jawaharlal Nehru and Indira Gandhi, both of whom were powerful prime ministers. But things may be turned on their head now, say skeptics, as Sonia, Indira Gandhi's daughter-in-law, has opted out of government.

Premier-designate Singh, therefore, will have to keep looking over his shoulder as Sonia continues to operate out of the Congress headquarters as the party chief. As Congress president and its star campaigner, Sonia will have far greater power and political legitimacy than her hand-picked prime minister. "Sonia's word is bound to carry more weight than the prime minister's," said one political commentator.

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May 20, 2004

While Sonia dallies, markets spurt (May 19, '04)

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(May 18, '04)

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(May 15, '04)


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