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The Rediff Special/ Alec Russell, James Lamont and Amy Kazmin in New Delhi

Mission for a mandate

April 01, 2009


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It is hard to believe that barely two months ago Manmohan Singh [Images] was having quintuple heart bypass surgery. The Indian prime minister appears robust, if a little tired, as he pursues a punishing schedule that yesterday involved taking time out from campaigning in hotly contested parliamentary elections to fly to London [Images] for the Group of 20 summit.

The hurly-burly of the world's largest democracy might not seem the natural stage for a cerebral 76-year-old technocrat credited with transforming India's economy when he was finance minister in the 1990s. But with the ruling Congress party facing a stiff challenge from the Hindu nationalist Bharatiya Janata party [Images], the mild-mannered Mr Singh has been displaying a rare combative streak.

Releasing the Congress manifesto ahead of India's month-long elections starting on April 16, the prime minister made a scathing attack on his main challenger, the BJP's L.K. Advani. He also slammed the "negative mindset" of his former coalition partners, saying those leftwing parties -- which opposed a new round of economic reforms and New Delhi's [Images] nuclear deal with the US -- could "not take the country forward".

Mr Singh is likely to be as direct at the London gathering tomorrow of heads of leading industrialised and developing countries, where he intends to use his position to advocate the interests of all developing nations hit by the financial meltdown.

"An agreement for effective, credible fiscal stimulus is the responsibility of all major economies," he tells the Financial Times at his official residence in New Delhi in his first interview since his emergency surgery in January.

"The problems of emerging economies should also be taken on board. The decline in capital flows that has taken place should be made good by providing adequate resources to the international financial institutions to come to the rescue of the emerging countries and low-income countries."

In his talks with world leaders, Mr Singh will deliver his message in his customary soft, measured tones. Yet it will be amplified by his personal clout as the thoughtful policymaker who, after prising open the economy, later gambled his premiership on the closer bond forged with Washington and oversaw Delhi's restrained response to last year's Mumbai terror attacks [Images].

After his summit appearance, however, he returns to the thrust of an electoral battle amid a faltering economy and disappointment among many, including himself, at his inability to make greater progress on the next wave of liberalising reforms. "Coalition has its own compulsions," he says.

"It is certainly true that we would have liked to move faster on some elements of the economic reforms but politics is the art of the possible."

Now fighting for a second term, Mr Singh and Congress are under considerable pressure, as the global crisis takes the steam out of India's economy, the vibrancy of which bolstered his own reputation.

Independent projections suggest growth in gross domestic product this year will fall below 6 per cent, after averaging 9 per cent in the last three years. Export-oriented industries have shed at least half a million jobs in recent months, many remaining workers have had their salaries cut and domestic consumption has plunged.

Analysts suggest the race is wide open as Congress, the BJP and a third grouping of leftist, regional and caste-based parties jockey to head the next government.

For Mr Singh, the contest is the chance to secure his own personal mandate. Five years ago, somewhat to the nation's surprise, the economist emerged as first Sikh prime minister of the majority Hindu country when Sonia Gandhi [Images], the Italian-born president of Congress and keeper of the flame of the Nehru-Gandhi dynasty, turned down the job in his favour amid national concern over her foreign origins.

But a Congress victory this time would allow Mr Singh to shed accusations of being little more than a proxy for Mrs Gandhi, potentially giving him greater leeway to pursue his own agenda. Hence the sharpened rhetoric.

In the interview, his most forceful language is reserved for India's perennial adversary, Pakistan. Since last November's terrorist attacks on Mumbai in which 179 people were killed, the Congress government has been careful not to open up its flank to the BJP on charges of being weak on national security.

In particular, it has sought to maintain international pressure on Pakistan, given that the Mumbai attacks were co-ordinated and led by Lashkar-e-Taiba, a Pakistan-based militant group. Pakistani officials insist that they have done all they can to dismantle LeT by arresting its senior leaders but Delhi is contemptuous of these claims.

Just last month, LeT trumpeted its responsibility for initiating a gun battle in Kashmir in which eight members of India's special forces and 17 militants were killed. Asked why LeT had been able to "bounce back so quickly," Mr Singh eschews the platitudes of international diplomacy.

Islamabad [Images] was either "unable" or "unwilling" to control LeT, he says. "The proof of the pudding is in the eating." Despite pledges by Pakistan throughout this decade that it would not be a launchpad for attacks against India, "in practice no effective action has been taken to control terror".

Asked about last Friday's calls by Barack Obama [Images], US president, for action against militant havens in Pakistan, he adds: "We all know the epicentre of terrorism in the world today is Pakistan. The world community has to come to grips with this reality."

Internationally if not at home, Mr Singh's stature is enhanced by what many identify as the biggest legacy of his premiership: the ground-breaking civil nuclear deal with the US, forged in partnership with the administration of George W. Bush.

The deal was controversial in India and the government only narrowly survived a no-confidence vote, though Congress subsequently held its own in a series of state elections. But its signing signalled a big geopolitical shift as the US appeared to earmark India as a vital Asian ally and possible regional check to the ambitions of China.

Whether India is able to assert itself constructively on the global stage, at a moment when the need for international co-operation is strong, is likely to be tested in London. In the countdown to the summit, India largely let China make the running for the developing world, as Mr Singh recovered from his operation and India's domestic focus shifted into election mode. But Mr Singh has strong views, which he will not shrink from airing. One of his strongest messages will be over protectionism, where developed countries in his view have to be better at living up to their promises to fight for free trade.

"Protectionism is not only on goods but also in the area of services," he says. "Some action by the developed countries, particularly the withdrawal of capital resources from the developing countries by the banks of the developed countries, is equally worrisome ... Protectionism of all sorts, including financial protectionism, has to be avoided."

Prudently, Mr Singh joins the chorus of world leaders playing down expectations of a summit breakthrough in tackling the financial crisis. But he indicates he will back the drive of many developing countries for a rethink of global financial institutions. The summit needs to push not just for collective measures to resume credit flows, he argues, but for a reordering of the balance of global power. He cites as an analogy the two years required to reach agreement over the shape of the World Bank and International Monetary Fund after the second world war.

As for the transatlantic debate over whether to push for deeper fiscal stimuli or to focus on regulation, he says there needs to be an "umpire" to ensure that developed countries honour their pledges.

If stimulus measures by leading economies in 2009 amount to 2 per cent of GDP, as the IMF estimates, that is probably adequate, he says. But the world needs a new monitoring body, "an expert crew" whether inside or outside the IMF to ensure stimulus measures are "sustained and maintained" next year, to ensure that each country "is doing its bit".

In Mr Singh's five years as prime minister, India has certainly done its bit for world economic growth. But the constraints of working in a coalition have checked Mr Singh's reformist drive. Pensions and banking reform and measures to make Mumbai a global financial centre are still in the in-basket. His erstwhile leftwing coalition allies and, it is widely believed, the more populist impulses of senior Congress politicians including Mrs Gandhi, have curbed his push for financial sector reforms.

He acknowledges that he is disappointed he could not sustain the momentum of reform. "Democracy has its problems ... The decision-making process is slow. But once decisions are taken they are far more durable."

Indeed, Mr Singh is adamant that whoever forms the next government, India will continue on its path away from the economic morass of the 1970s and 1980s. When he and his colleagues launched the economic reforms in 1991, he recalls, international friends asked him how he could be sure these would be continued by successor governments. Since then, he notes, India has had a handful of governments, yet none reversed the initiatives.

Tomorrow, global leaders will have the benefit of more of those calmly expressed thoughts. But as soon as he returns home he faces a rather more turbulent time. The path of India's economy may, as he insists, be secure � but his future is not. The summit may be either Mr Singh's final curtain on the international stage or the prelude to the next act.

THE GANDHIS: IN THE WINGS

Real power in India for the last five years, opposition leaders maintain, has lain not in the prime minister's residence but at 10 Janpath � the Delhi bungalow of Sonia Gandhi, Italian-born president of the ruling Congress party, writes Amy Kazmin.

Mrs Gandhi, widow of the assassinated former premier Rajiv Gandhi [Images], picked Manmohan Singh to be prime minister in May 2004 after she led the Congress to an election victory. He was a safe choice � widely respected as the architect of India's economic liberalisation but without a political base that might threaten the prospects of her son Rahul, an MP and heir apparent to a Nehru-Gandhi dynasty that began with Jawaharlal Nehru, Rahul Gandhi's [Images] great-grandfather and the first prime minister of independent India.

Despite differing impulses on India's most pressing economic needs, Mr Singh and Mrs Gandhi have sought to portray themselves as a well-functioning team, with the premier directing policymaking and government matters and Mrs Gandhi handling Congress party affairs. Mr Singh insists he has been free to pursue the policies that he has thought right, aided by a division of labour that has left Mrs Gandhi to manage the cut-and-thrust of coalition politics.

"The Congress party's management is looked after by Mrs Gandhi and I can concentrate on managing the world of government," Mr Singh told the Financial Times. "It is a distinct advantage."

Yet political analysts say the lines of authority are not so clearly drawn. Mrs Gandhi has taken an active role in managing people both inside and outside government and is said occasionally to have overridden the prime minister on high-ranking bureaucratic appointments, including ambassadorial posts.

She has also used her clout to override the reservations of both Mr Singh and powerful bureaucrats to the costly "national rural employment guarantee scheme", which provides 100 days of paid work a year to rural dwellers and is credited with boosting the rural economy.

However, Mrs Gandhi gave Mr Singh strong backing when he decided to stake his premiership on pushing through a civilian nuclear co-operation deal with the US.

As India moves towards elections, the logic of the Singh-Sonia combine seems to be holding. Rahul Gandhi, who kept a low profile during what has been his first parliamentary term, insists he wants to work on boosting internal party democracy before taking a greater role in government.

With India's economy slowing and the fiscal deficit growing, Mrs Gandhi declared last month that Mr Singh would remain prime minister if the party emerged in a position to lead the next government.


The Rediff Specials


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