India Steady

May 17, 2009 Editorial

Worldwide interest in the completed Indian general elections was especially high for reasons that went beyond the usual “fate of the largest democracy” that is usually plugged. India is one of the two “emerging economies” (the other being China) that is not only bucking the tide of depression but is doing so in style, with GDP expected to be above six percent this year.

As such, there was some trepidation in several capitals that a change of regime might result in a stuttering of its growth trajectory, which would only amplify the global downturn.
The return of the Indian National Congress (“Congress”) to the seat of power – and much less dependent on fractious allies – should help to allay those fears. The promise by Sonia Gandhi, the head of Congress that Manmohan Singh, the architect of the Indian economic turnaround from the nineties, would return as Prime Minister, should also be pleasing.
We can therefore expect an India that will continue with its mixed-market approach that utilises heavy governmental control over banking activities and continue to escape the worst of the financially induced meltdown.

The overall gains by Congress, but especially in South India, have confounded the political pundits who had predicted stronger performances from the regional parties.
The fall in support for the left-parties has placed them in a quite untenable position. As part of the last UPA coalition government, they fell out with Congress over the nuclear pact that had been signed with the USA. Even though they voted with Congress on other issues, they withdrew officially from the coalition.
Congress should now have much more leeway in its dealings with the US on the nuclear front – and also on the Obama-inspired AfPak front in the latter’s war against Al Qaeda. The US sees India as a key ally in that effort as well as providing a counterweight to China in Asia.

Internally, much had been expected from the BSP and its “untouchable” Dalit leader Mayawati. It was the first attempt to field a party that explicitly targeted the underclass at a national level and Mayawati was projected as a possible Prime Ministerial candidate that would emerge out of the expected fractured results.
However, while the BSP increased its overall number of seats Mayawati will have to remain for a while longer as Chief Minister of UP – not an unenviable position. She has in the meantime gained considerable experiencing in organising a national effort and should be stronger for the next go around.

The BJP, under its 81-year-old leader LK Advani, has emerged as the biggest loser. Most analysts had bought its hype of being able to match Congress but it now obvious that its strategy was deficient. Starting out as a fiercely nationalistic movement, it was ushered into power in 1998 under Vajpayee, but lost it as it lost its moorings and ran a urban-focused “India Shining” campaign in 2004 that did not impress the rural voters that were left out in India’s economic success.

The new leader Advani alienated many of its nationalistic allies by adopting much of the rhetoric of its opponents – without convincing his targets of his sincerity. The BJP will have to regroup – most likely under its charismatic leader from Gujerat, Narendra Modi.
Most worrying from a democratic standpoint is the obvious grooming by Congress leader Sonia Gandhi of her son Rahul, 38, as the heir-apparent of Nehru-Gandhi dynasty that has ruled India for most of its independent history.

Manmohan Singh has already announced that Rahul will be a Minister in his Cabinet, which most concede is in any event selected by Mrs Gandhi.
Rahul will most likely try to get some experience under his belt until Singh, who is seventy-six and recently suffered a heart attack, steps aside.
From our perspective, we should continue to cultivate good relations with this country with which we have historic links and which has stood by our side for many years.