Left Allies Lift Gandhi, Depress Indian Stock Market

Gandhi allies send shares diving
http://www.guardian.co.uk/india/story/0,12559,1217304,00.html

Randeep Ramesh in Delhi

Sonia Gandhi looked almost certain to become the first
foreign-born leader of modern India last night after
winning the support of the country’s communist parties.

But celebrations were overshadowed by steep falls on the
country’s stock market as concerns grew about the
pivotal role of the left.

Italian-born Mrs Gandhi is likely to confirm that she
will become prime minister today, and become the fourth
member of the Nehru-Gandhi family to run India.

"Definitely, she has emerged as the PM," the Congress
general secretary, Oscar Fernandes, told reporters
yesterday.

The Congress parliamentary party will meet today to
elect its new leader and to thrash out a common minimum
programme with its allies that will form the basis for
the next government’s policies.

In a surprise turnaround for the party which led India
to independence but had been out of power for eight
years, Congress captured 145 of the 543 seats in the new
parliament.

With its allies and the support of the Communist Party
of India (Marxist), a Congress-led coalition would have
279 seats, seven more than needed for a majority.

Atal Bihari Vajpayee, the outgoing prime minister,
confirmed that he would continue to lead the Hindu
nationalist Bharatiya Janata party. Despite the result,
the BJP still insisted Mrs Gandhi was unfit to govern
India because of her foreign roots.

"We are not opposed to Sonia Gandhi as an individual,"
said the BJP president, Venkaiah Naidu.

"But we are clear about one thing - the high offices in
the country should be held by people of Indian origin."

But the jubilant scenes outside the Gandhi home reaf
firmed analysts’ views that the India’s first political
family has again cast a spell over the 600 million-
strong electorate.

The rise of the left in India is almost as remarkable as
the political success of Mrs Gandhi.

The CPI(M), which has ruled the state of West Bengal
since 1977, netted its largest-ever parliamentary tally
and along with its allies controls 62 seats - 15% of the
India’s 14th parliament. Its politburo will meet today
to decide whether to back Congress from inside or
outside the government.

The party has been pragmatic in power, banning strikes
in the software industry in West Bengal. Its wily 88-
year-old leader Harkishan Singh Surjeet forged a friend
ship with Mrs Gandhi in 1999 when she sought his help
over the issue of her foreign origins.

The price of friendship for the communists is likely to
be a key ministries in the new government and a halt to
India’s privatisation process, which had lured billions
of dollars of foreign cash into the stock market.

The prospect of communists taking office in India, a
first in itself, saw the Bombay stock exchange slide
nearly 330 points to close at 5069. It was the worst
one-day plunge in four years.

"I shudder to think what would happen to the markets if
the communists took control of any of the key economics
ministries," said Siddarth Mathur, a strategist with the
investment bank JP Morgan in Bombay.

Manmohan Singh, the most probable choice of Congress
finance minister, rushed out to talk to reporters in an
attempt to reassure panicked markets: "We are not
pursuing privatisation as an ideology. What we want is
to create a climate for enterprise."

There was also some disquiet over the possible effects
on the nascent peace process between Pakistan and India.

"Of concern to Pakistan is that without Vajpayee’s
moderate leadership, the BJP was likely to revert to its
pro-Hindu, anti-Pakistan rhetoric again and put the
Congress government on the defensive," the Pakistani
journalist Najam Sethi said in a front-page comment in
Daily Times.

But JN Dixit, a former ambassador and head of the
Congress party’s foreign policy team, said the peace
process would continue.

"The Congress has been consistent, unlike the BJP, on
the issue of dialogue with Pakistan on all issues
including Jammu and Kashmir," he said.

"We have always advocated formal and informal talks."

Mr Dixit also told the Guardian that any new American
request for troops to be sent to Iraq would "only be
considered on the basis of what happens after the summer
in Iraq ... Let us see if the United Nations becomes
involved".