When global markets speak

May 20, 2004

IN THE WAKE of Indian Prime Minister Rajiv Gandhi's 1991 assassination, fevered efforts arose to draft his widow as his successor. Sonia Gandhi's Italian heritage made that politically problematic, and in any case she was reluctant to serve. Roughly 13 years later, little has changed: Mrs. Gandhi's foreign roots hand political fodder to the Hindu nationalists just booted from power by her party, Congress, and she's still reluctant to assume the office in which both her husband and his mother, Indira Gandhi, were murdered.

But Mrs. Gandhi's decision this week to resist even stronger pressures to become India's prime minister may testify more to a different sort of foreign factor: the rapid globalization of the Indian economy. Financial interests from abroad are now so pervasive in India that they can exert powerful influence in a once relatively closeted nation. Just look at the Bombay stock market, which endured a record collapse with Congress' electoral triumph last week and which then sharply rebounded as Mrs. Gandhi demurred. In the few days in between, hundreds of millions of dollars fled India.

The falling market reacted first to the reasonable worry that Congress and its leftist allies would slow the privatizing of India's state industries under the Hindu nationalists. Then it rose sharply the last two days on reports that Congress will offer the prime minister's office to Manmohan Singh, the respected former finance minister who originated India's shift to lessening government economic control in the early 1990s.

As this generation's keeper of a family political legacy dating to modern India's founding, Mrs. Gandhi remains Congress' figurehead. But it now will be Mr. Singh's difficult task to guide the ascending Indian economy, even as he vows to try to spread India's new tech-driven wealth to the many millions of rural dispossessed who last week handed Congress another opportunity to lead.

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