Indian Prime Minister Manmohan Singh has embarked on the biggest gamble of his second term, pushing through policy changes opposed by members of his own coalition as he seeks to revive the economy and the fortunes of his embattled party.
After two years of stalled policy making and amid slumping support, Singh's Congress party-led cabinet Sept. 14 allowed overseas retailers to enter India, and said foreign airlines can own minority stakes in local carriers. While the second-largest party in the alliance, Trinamool Congress, vowed to take a "drastic step" if Singh, 79, doesn't abandon the laws and roll back a diesel price increase, opposition lawmakers called for a nationwide strike over policies they say will trigger job losses and hurt the poor.
"Congress has been committing harakiri by doing nothing," Satish Misra, a political analyst at the Observer Research Foundation in New Delhi, said by phone yesterday. "They have been pushed around so much that it was time to fight back."
The architect as finance minister of India's 1990s economic opening and recently the object of media ridicule, Singh may have judged that rivals unprepared for elections are not likely to try to topple the government, Misra said.
His administration has 18 months until the next election to ease gridlock in Parliament over corruption allegations and restore confidence in its management of an economy growing at near its slowest pace in three years. Warnings of a ratings downgrade to junk status and a 67-percent drop in foreign direct investment in the last quarter are spurring the boldest policy initiatives of a government re-elected in 2009.
India's complex web of national and local political tussles may ensure Singh -- branded an "underachiever" on the July 16 cover of Time magazine, and a "tragic figure" in a Sept. 5 Washington Post (WPO) report -- and his government last until a ballot in early 2014.
David Fuller's view 'Governance
is Everything', as we often say at Fullermoney, not least when evaluating emerging
Manmohan Singh, as a renowned economist who when Finance Minister was the architect of India's groundbreaking reforms and recovery from the country's economic crisis in 1991, is well qualified to address today's problems in the world's largest democracy.
The question was whether or not he still had the energy and strength of will to reinvigorate India's slowing economy during the remaining eighteen months of his Party's current term. Expectations were low but most people have been surprised by his latest initiatives mentioned in the article above, which have been well received by the stock market.
India's Sensex Index has been ranging higher since early June and is now challenging the year's upper boundary after what looks like a lengthy support building process. A decline back beneath 17,250 would be required to delay significantly further upside scope. India's Bombay Banks Index appears to have completed a lengthy consolidation of its 1Q 2012 gains and a break in the progression of rising lows since yearend would be required to offset scope for sideways to higher trading.