How PM 'led' Sonia Gandhi into reforms

Sep 27 2012, 11:28 IST
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SummaryIt had been a brutal August for India's Congress party...

It had been a brutal August for India's Congress party: economic growth was wilting, the monsoon rains were failing and the opposition had it cornered on yet another corruption scandal.

In stepped Sonia Gandhi to revive the morale of the ruling party's lawmakers, exhorting them at a meeting to stand up and fight, fight with a sense of purpose and fight aggressively. It was a stunningly assertive speech from the normally temperate matriarch of a dynasty that has ruled India for most of its post-independence era.

And yet few at the gathering were aware that just a week earlier she had performed an even more dramatic about-face, agreeing to a raft of economic reforms that would be unveiled on Sept. 13 and 14.

Gandhi has no official government post, but as Congress party president and torchbearer of India's widely revered first family, she has the last word on big policy issues: and for her, social welfare has always come before liberalising the economy.

However, more than a dozen officials and party leaders close to the secretive inner circle of the Italian-born leader said that Gandhi was persuaded of the need for urgent action to avert a repeat of the crisis that took India to the brink of bankruptcy in 1991.

This time there was a very grim scenario, said Rashid Kidwai, a Sonia Gandhi biographer who was given an account of the arguments made over weeks by Prime Minister Manmohan Singh and his new finance minister P Chidambaram behind the closed doors of colonial-era government bungalows in New Delhi and even on a plane journey.

It's not that she wanted to go for all this, but it was made very clear to her that, if she didn't, there would be far more dire consequences, Kidwai said.

Sources said the trigger for the reform campaign in Asia's third-largest economy came with the return of Chidambaram as finance minister on Aug. 1.

An eloquent Harvard-educated technocrat with a track record as a reformer, he replaced Pranab Mukherjee, a left-of-centre Congress stalwart who had consistently warned Gandhi against radical reforms that could cost the party votes.

Pranab was from the old school of Indian politics, said a senior government official, who spoke on condition of anonymity. The prime minister and the finance minister had to persuade Mrs. Gandhi that good economics was good politics.

Her acquiescence in the end led to this month's big bang Friday when, a

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