By Raja Murthy
For a septuagenarian charged with leading the world's biggest democracy for the next five years amid the worst global economic downturn in even his life time, Indian Prime Minister Manmohan Singh, 76, has appeared unusually chirpy these past few days - perhaps too much so.
The parliamentary elections that ended last week in a strengthening of the mandate of the Congress party and its political allies appear to have produced a difference in Manmohan's body language. In his initial meetings with the Indian media this week, he appeared more confident and assertive, as if casting off the more familiar look of a meek, lost, elderly professor caught in a wild Saturday night college party.
The mood of optimism as Congress emerged with a higher-than expected 205 seats in the Lok Sabha (Lower House), the most by any single party, was not confined to the free-market worshipping prime minister, the first premier in 45 years since Jawaharlal Nehru to win a second, consecutive five-year term.
"The election results are good for India," said a happy Fayaz Ahmed munching a sandwich during lunch hour outside the Bombay Stock Exchange (BSE) on Thursday. Like many in India, he was prepared to back his confidence in the new government with cash, as he envisages more money being ploughed into building roads, railways and other infrastructure developments.
"My investment portfolio has changed towards infrastructure - that is the best sector to invest in now." Some politicians clearly think along similar lines.
India is expected to spend more than US$500 billion in improving infrastructure in the coming years, and share prices of companies such as GMR Infrastructure have strengthened since the election results came in at the weekend - GMR hit a 52-week high of 171.30 rupees on Thursday.
Ahmed, a small investor who works with a leading exporter of agricultural products, said he made a nice profit after India voted to give Manmohan and the Sonia Gandhi-led United Progressive Alliance (UPA) another chance.
"I was very confident that the UPA would win," said Ahmed, who was part of a larger-than-usual crowd in the searing mid-summer heat on Thursday, staring up at the electronic ticker flashing details of the BSE Sensex index, which hovered under the 14,000-point mark.
Unlike in recent weeks, no grim faces could be seen on Dalal Street, home to the BSE and the heart of India's financial center in Mumbai. But there was no festive celebratory atmosphere either. The lunch-time crowd knew only too well that the Congress had still fallen short of a 272-seat majority in parliament and that coalition politics will continue to feature strongly.
This was already evident in the grab to get hold of infrastructure-related portfolios even before the government was due to be sworn in on Friday evening.
Muthuvel Karunanidhi, the 85-year-old Tamil Nadu chief minister and a Congress ally, brazenly demanded the railways, shipping, telecommunications, surface transport and power portfolios for his son, daughter and grand nephew.
This was a little too much for Congress leaders, who refused to treat India's infrastructure as the family property of a wily old politician. The demands were politely rejected, which left open the question of whether a sulking Karunanidhi will agree to his Dravida Munnetra Kazhagam party being part of the UPA government or support it from outside.
Manmohan does have some leeway in his appointments. On Wednesday, he submitted letters of support from 322 members of parliament to President Pratibha Patil to retain his prime ministerial job. The cushion of 40 extra MPs gives him more room to execute controversial open-market policies, such as freeing fuel prices from regulatory control and selling stakes in profitable government-owned companies.
The probability that the government will sell some of its stakes in government-owned companies, also called public sector companies, appeared so certain that share values of 46 of these jumped by between 10% and 20% on Monday, adding another $37.79 billion to their capitalization.
India's central and various state governments own, for instance, 80.35% of the $61 billion Indian Oil Corporation, one of India's largest companies and a Fortune 500 listee. The oil and related energy industries are expected to be among key growth sectors in Manmohan's second period in office.
Yet while Congress feels it can withstand arm-twisting from the Tamil Nadu chief minister and his family, only a diehard optimist would bet on the prime minister, who has no personal political base, having a peaceful five years with other coalition allies, such as the 54-year-old mercurial Mamata Banerjee and her party.
Banerjee, who heads the Trinamul Congress Party, came to international prominence this year when, in uncompromising fashion, she drove away Ratan Tata and his project to build the world's cheapest car, the Nano, in West Bengal, in a row over the sale of agricultural land to be used as a factory site.
Mamata Banerjee is front-runner to replace the very successful Lalu Prasad Yadav as India's next railway minister. She is also expected to replace the routed communist parties in blocking the free-market policies so loved by Manmohan. The Left Front, a key ally of the previous UPA grouping, won only 15 seats compared with 35 in the previous general elections in 2004.
"Even though this new government does not need the left parties, the fact that it depends on people like Mamata Banerjee causes us concern," said V Satyan, assistant vice president of First Overseas Capital Limited, a financial firm whose offices are directly opposite the Bombay Stock Exchange entrance.
India's market analysts expect Manmohan's second term to feature fewer crowd-pleasing handouts, lower taxation, and disinvestment of public-sector companies such as Indian Oil Corporation. Selling off public-sector companies was among major issues over which Manmohan had a recurring battle with his erstwhile communist allies.
Satyan also expects the new government to generate more domestic sources of investment. "Foreign investors tend to run away whenever some bad news like a terrorist attack happens," he said. "It's much better for India's long-term growth if we depend more on local investors."
Manmohan's lack of a political base arises in part from his bureaucratic background; with a degree in economics from Cambridge University, he had stints as professor at the prestigious Delhi School of Economics, deputy chairman of the Planning Commission of India and governor of the Reserve Bank of India, before being appointed finance minister in 1991.
In that position, he played a vital role in opening up the economy. When he took over as finance minister, India suffered the humiliation of having to sell its gold reserves to pay off foreign debt. In 2009, he continues his job with India as one of the world's dozen trillion-dollar economies.
He was initially appointed prime minister by the Italian-born Congress leader Sonia Gandhi in 2004, to avoid controversies over her foreign origin that might have surfaced had she sought to lead the government personally. The political grandee and the learned economist have since built a strong relationship, with Gandhi remaining the center of power as Congress party leader and UPA chairperson (see India's dynamic political duo, Asia Times Online, Nov 7, 2009).
Manmohan's lack of political roots proved to be a strength as well as a weakness during his first prime ministerial term. While he has less need than others might have to pander to vested interests and has earned the respect of a nation, he has also showed a stubborn streak and a barely hidden impatience with democratic discussions. This was notable during his fixation with the controversial India-US civilian nuclear deal that he supported as almost an obsession.
Critics of the deal, which divided the county and nearly brought down the government in 2008, say the $100 billion of business it gives to the struggling US nuclear industry is a primary reason for the deal, rather than any scientific possibility of American nuclear reactors significantly solving India's energy problems.
Manmohan, however, claimed to be listening to his "inner voice", in the famous manner of former US president George Bush with whom he runs a mutual admiration society.
For a more harmonious second term, Manmohan would be advised to stick to listening to inner voices in matters regarding his personal life, but to heed the public voice in his position as a proxy leader of a coalition government in a democracy.
India and its economy now have a positive, possibly self-sustaining momentum, but woe betide leaders forgetting their place and taking the people for granted.
The Sensex Index, as if reflecting investors' more considered thoughts since the 17% gain to 14,284 on Monday that welcomed Manmohan's victory, fell back to 13,736 by Thursday evening.
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