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The challenges facing Sonia

Published by The Straits Times, Singapore on 2004-05-15

MUMBAI (India) - A handful of top industrials had gathered at the swanky Taj Hotel here yesterday (Friday) to assess the results of the general election in which the long listless Congress Party made a remarkable return to power nationally by unexpectedly defeating a rightwing alliance that had made economic liberalization its mantra.

On the surface, of course, the industrialists expressed optimism about India's economic prospects under the stewardship of a party many of whose leaders are left of centre and less than enthusiastic about the private sector. They seemed sanguine, too, that India would continue to carve out a bigger role for itself in the international arena during this competitive era of globalization, forging stronger ties with Asian neighbors as well as Europe and the United States.

In private, however, the mood was one of anxiety.

'We miscalculated,' one business baron said, alluding to the formidable financial support that India's commercial elite had given to the defeated National Democratic Alliance, the rightwing coalition led by the Bharatiya Janata Party (BJP), which had ruled this country of 1.1 billion people for the last five years. 'Who would have thought that that woman would ever become India's prime minister? And where is she going to take the country?'

The first question is easily answered: Hardly anyone expected that Mrs Sonia Gandhi, the Italian-born widow of the late Prime Minister Rajiv Gandhi, would lead her Indian National Congress to an electoral victory in the 543-member Lok Sabha, the lower house of parliament. And fewer still imagined that the 57-year-old Mrs Gandhi, who never completed college, will form India's new government, perhaps as early as this weekend. (One Chennai astrologer who did make such a prediction last week has suddenly become a national celebrity; his fees have also soared.)

But the second question - about the directions of Mrs Gandhi's government - does not elicit ready answers, notwithstanding the flowery election manifesto of the Congress Party which promised all things to all people.

The clarity and decisiveness with which Mrs Gandhi provides those answers will determine whether the international investment community will continue to positively endorse India's equity markets; whether a re-energized combination of domestically mobilized funds and foreign inputs will generate millions of much needed jobs, especially for the growing tens of millions of unemployed youths; whether the vast rural sector will get critically necessary new irrigation and crop extending facilities; and whether Mrs Gandhi will be able to jumpstart social development on issues such as wider inoculation for children, more education and employment for women, better primary health care in India's 550,000 villages, and enhanced social justice in regions still hurt by feudal practices that emphasize the primacy of caste and communalism.

It's one thing to revitalize a moribund political party and lead it to victory at the polls; it's something entirely different to wield power in a country as kaleidoscopic and complex as India. While Indians overwhelmingly have ignored parochial criticisms about Mrs Gandhi's fitness to lead the country on account of her Italian origins, they are less likely to give her a long political honeymoon: The ubiquitous TV images of consumerism that dance through every part of this country have spawned a set of urgent expectations that political leaders will have to meet. The NDA lost not the least because its market-oriented policies did not adequately improve life in rural areas.

'It's not going to be easy for her to deal with the pressing issues facing the new government,' said Ms Sucheta Dalal, one of India's most astute economic and social commentators. 'In fact, it's going to be tough for Sonia Gandhi from the get-go because her leadership quality is an unknown factor.'

And so, as speculation mounts over the cast and composition of Mrs Gandhi's government, a variety of questions have emerged that the new prime minister will have to tackle with alacrity:

Will Mrs Gandhi build on outgoing Prime Minister Atal Behari Vajpayee's overtures to neighboring rival Pakistan? What about relations with the United States, always a sore point in domestic politics here because of Washington's close relationship with Pakistan? Will the new government want to consolidate economic and trade ties with Singapore and the South-East Asia region in general, or will it look more toward strengthening the nexus with the more impoverished states of South Asia whom India can influence more heavily? What about the NDA's enthusiasm for India to increasingly turn to Singapore as an offshore financial centre? Or will the Congress now look more toward its traditional friends in the Gulf, such as Dubai, from where a lot of campaign money reportedly came?

To be sure, Indian elections are rarely won on foreign-policy issues. That's why the Congress Party's election manifesto itemized the standard boilerplate issues of sadak, pani, bijlee, Hindi words for roads, potable water and electricity. These issues resonated powerfully among rural voters, whose poverty and lack of opportunities for upward mobility generated a resentment that the NDA was unable to both comprehend and alleviate.

How different will the Congress agenda be from the NDA programs that revitalized India's economy by trimming bureaucracies, cutting red tape, and promoting exports?

Yesterday, the Mumbai Stock Exchange's Sensex Index (which is composed of 30 'sensitive' industrials) fell by more than 300 points because the Congress Party's ally, the Left Front, said that it would oppose the privatization of public-sector behemoths that the NDA had initiated to obtain more revenues. Left politicians also suggested that higher interest rates, steeper oil prices, and more taxes for the wealthy were in the cards.

This is not the sort of rhetoric that will reassure foreign investors, who poured more than US7 billion into the Indian equities market over the last 12 months. Nor will it please foreign direct investors, who brought in an additional US$3 billion last year. And it's certain to annoy international institutions such as the World Bank, the International Monetary Fund, and the Asian Development Bank, whose continued cooperation India needs to ensure equitable economic development.

Indeed, the annual growth rate of at least 6.5 percent that the NDA sustained over the last few years may well be in jeopardy if the new government's economic and fiscal policies are calibrated too far to the left.

The rhetoric from India's leftist politicians - including those in the Congress - leaves the impression that they aren't aware that the politics of the left has long been discredited in the global bazaar. International investors are looking for continued adherence to the precepts of the free market, transparency in governance, a sustained commitment to reducing subsidies for kerosene and diesel oil, a sleeker bureaucracies, fewer controls on banks, and more job opportunities for India's middle class, currently estimated at 300 million people.

One hopes that, as Mrs Gandhi takes office, she will treat the leftist rhetoric of her allies as just that, crowd-pleasing elocution aimed at the galleries. One hopes even more that she has the wisdom to sift through what works and what doesn't in the area of governance, focusing on the central objective of generating jobs, widening health care, and expanding education opportunities for women. As she opens the curtain on a new political order in India, Mrs Gandhi needs to demonstrate an understanding that it's a competitive world out there - and that ruling India doesn't only mean managing the world's biggest democracy but also potentially its largest market.

Pranay Gupte,
Senior Writer and Global-Affairs Columnist

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