India's new leader: a market reformer in populist times

In his sky-blue turban and his white tunic scrupulously buttoned up to his neck, India's new prime minister designate, Manmohan Singh, has always seemed a little out of place in the rough and tumble world of Indian politics.

But in 1991, when Dr. Singh took on the most difficult job in India - finance minister - at a time when the country was weeks away from financial collapse, it became clear that India had found the right man at the right moment.

With calm logic and steely persuasion, Singh put together a slate of economic reforms that wiped away the socialist-style industrial and trade regulations that had stifled the economy for decades. Then came the hard part: Convincing his own Congress party, which still espoused socialism, to pass these reforms.

"There was a lot of opposition in Parliament and quite virulent reaction in the press that made Dr. Singh's work a lot harder," recalls Shankar Acharya, who was Singh's chief economic adviser. "But he didn't make it an ideological issue, he made it clear that we had to do this to get where we wanted to go as a nation."

As prime minister of the world's largest democracy, a nation where nearly 300 million people live on less than a dollar a day, Manmohan Singh may need every inch of his integrity to keep economic reforms moving ahead. Even at the growth rate of 7.4 percent, India is a country where both the foreign investor and the everyday laborer feel uneasy. Balancing the sometimes competing demands of both - particularly given his party's left-wing allies - may prove to be Singh's greatest challenge.

"The left within Congress itself is the much bigger hurdle," says Surjit Bhalla, a friend of Singh's and an economist at the pro-market think tank Oxus Research and Investment in New Delhi. "But if anybody can do it, it's [Singh], because of the kind of person he is, because of the kind of record he has."

Singh is known as a devout Sikh who lives simply. Unlike his predecessor, Atal Bihari Vajpayee, he never drinks. He is an academic with degrees from Cambridge and Oxford, a bureaucrat who worked for the Indian state and for the United Nations, and finally, a politician first elected at the age of 59.

The adjectives that friends and rivals use to describe Singh sound like a Boy Scout code: gentle, humble, honest, committed, sincere, completely unflashy.

Jagdish Bhagwati, a college friend of Singh's and an economist at Columbia University, says that Singh's integrity is so high that he didn't use his connections to get his daughter into college.

"My wife was on the admissions committee, but he never called me once to use influence on [his daughter's] behalf," says Mr. Bhagwati. "In Indian politics, that's unheard of. That's the whole reason why people go into politics."

His strength of heart is matched by strength of mind. Party leader Sonia Gandhi leans on him as her chief economic adviser; few rivals can outdebate him on facts. The one area where Singh is found lacking is the very stock and trade of politics: populism.

"He's looking deeply misfit for the age of the 24-hour news channel," says Saeed Naqvi, a senior political analyst here in New Delhi. "He's a deep thinker, very professorial, but he's not into sound bites."

While India's stock markets have welcomed Singh's ascendance, most analysts here recognize that he faces no easy task. The party has taken a firm campaign stand on halting all further privatization of state-owned industries, particularly profit-making ones like the oil and gas industry. In addition, the next wave of reforms will probably be unpopular ones, such as changing labor laws and removing price controls for India's farmers.

Yet while many Congresswallas like Singh - a former socialist - embraced the market reluctantly, pro-market zealots like Mr. Bhalla say that the party will be in a better position to make these harder policy changes than the outgoing conservative, pro-business BJP government.

Bhalla says he believes Congress will take on one of the tougher jobs first: Changing the price structure for agriculture. At present, India buys wheat and rice from farmers at high prices, and then sells them to Indian customers at subsidized prices. It's a lucrative deal for farmers, but it's a loss to government coffers and it has depleted soil planted with only wheat for a decade.

"It's a political hot potato, but it's the first thing that he will try to change," says Bhalla.

Some market watchers have fretted that a Congress government - backed by Leftist parties like the Communist Party of India (Marxist) - would slow down the pace of reforms, particularly for sacred-cow issues like labor reform. But Bhalla says that Congress may be in a stronger position to push through these reforms, with left-wing and labor parties on their side.

"The left cannot go against whatever Congress and the reformers want because they have nowhere else to go," he says. "Yet the left is needed for any change in policy on labor, you need the labor on your side."

With characteristic understatement, Singh told reporters Thursday that he looked forward to working together with his new coalition partners, and to receiving advice from Congress party leader Sonia Gandhi. "I am sure all allies and supporting partners will strengthen our bonds and we will provide a stable government for five years," he said.