Although regulators stepped in to halt trading, the market started to gain confidence only when a new rumor began to make the rounds: rather than take the post for herself, Gandhi was going to nominate Manmohan Singh as India’s next prime minister. By midweek, when it was clear that the 72-year-old former Finance minister would indeed lead the new government, the markets had bounced back nearly to their pre-panic highs. “We know he’ll take the economic-reform process forward,” says top Indian industrialist Adi Godrej.
Will he? No one doubts Singh’s credentials as a reformer. He’s served on the board of governors of the International Monetary Fund and held the top two economic posts in India–head of the Reserve Bank of India and Finance minister, during which time he engineered the country’s initial liberalization. “He is not only one of the most decent persons,” says Somnath Chatterjee, a senior communist leader. “He is one of our most knowledgeable economists.” But the Oxbridge-educated Sikh professor has shown no taste for the rough-and-tumble of Indian politics; he’s eligible for the prime ministership only by virtue of holding a seat in the Legislature’s upper house, an indirectly elected position. (The one time that he did run for a seat in the lower house of Parliament in 1999, he lost.) The question is whether he will be able to strong-arm the leftist parties who are likely to oppose his more ambitious reforms. Asks one sympathetic, top government official, “Can the mild-mannered Singh play political brinksmanship when necessary?”
That brings up another, perhaps more important question: does he need to? In all the press conferences and photo ops announcing his ascension last week, Singh stood side by side with Gandhi, who will remain the Congress party leader. The back and forth over whether she would accept the prime ministership herself last week both acknowledged the level of opposition to the Italian-born widow–and underscored the depth of support for her as the accepted heir of the Nehru-Gandhi dynasty. Congress M.P.s greeted her decision to step aside with quite sincere cries of protest. “By turning down the top job, Sonia instantly elevated her stature and wiped away any criticism [of being called power hungry],” says a Congress party member.
Certainly her move has defanged the opposition BJP, which had hoped to revitalize its Hindu nationalist base by railing against her foreign roots. Singh is considered to be a man of such integrity that even BJP leaders–moderates and militants alike–were obliged to welcome his promotion. The party cannot simply revert back to its fire-breathing, anti-Muslim rhetoric: it lost badly in the state of Gujarat, where a BJP-led government was accused of complicity in the massacre of Muslims in 2002, and it was BJP leader Vajpayee who initiated the current, and quite popular, rapprochement with Pakistan. Nor would it have much credibility opposing reforms, which Vajpayee had promoted and the party had celebrated in its campaign. “The BJP will have to reinvent itself,” says a top official of the outgoing administration, “and it’s clear none of the old slogans can help much.”
At the same time, Congress’s communist and leftist allies are not as uncomfortable with the notion of economic reform as they once were. The Communist Party of India (Marxist), which rules West Bengal, has privatized some of the state’s sick state-owned industries while trumpeting its desire for more foreign investment. How fractious this political partnership proves to be may well depend on the pace at which the new prime minister pursues his economic-reform agenda–and how closely it follows leftist-party priorities. Their favorite causes: slowing, if not stopping, privatization; increasing farmer subsidies; and improving worker rights. Not all of these are necessarily obstacles: Singh has a sterling reputation for taking the plight of the urban and rural poor into consideration when he formulates economic policies. Last week, while he was promoting “privatization in the national interest” and “pro-growth” tax and investment regimes, he was also placing “increased emphasis on agricultural growth, education, health, food security and social security in the context of a fast-growing economy.”
Still, the road ahead will be tough. Singh has already had to roll back some of his allies’ more irresponsible pledges; last week he told Congress politicians in the Indian state of Andhra Pradesh that, despite their campaign pledge, farmers there were not entitled to free electricity. Congress’s leftist-coalition partners are emboldened by their record showing at the polls, and may believe they have a mandate to exact some serious concessions from Singh. Indeed, last week it appeared that while the communists would support the new government in Parliament, they did not plan to accept any cabinet-level positions. The move suggests that the left is looking for influence without responsibility–a sure sign that there will be skirmishes ahead.
How well Singh handles them will depend greatly on his relationship with Gandhi, which by all accounts is friendly and strong. She will need to give him her unqualified support, otherwise court intrigue could dominate the new government. For years some Indian pundits have looked longingly to China, where leaders freed from the demands of democratic politics have been able to force through reforms that have raised the wages and lifestyles of hundreds of millions of people. Ideally, India might have been led by a populist-technocrat, someone akin to Brazil’s President Luiz Inacio Lula da Silva or Thailand’s Prime Minister Thaksin Shinawatra. They are rare examples of leaders who understand economic reform and have the grassroots support to get it done. But if India can get that type of leadership from two people instead of one, it will still be a great day for Indian democracy.
