Economist to be India's premier

Singh was architect of 1991 restructuring of Indian economy


NEW DELHI, India - Manmohan Singh, the gentlemanly Oxford-educated economist who oversaw India's first wave of economic liberalization in 1991, will be the country's next prime minister.

Singh was elected leader of the Congress parliamentary party yesterday, officially making him the party's prime minister-designate. The party's Italian-born leader, Sonia Gandhi, announced Tuesday night that she would not become prime minister as expected, a decision based on her longtime reluctance and on growing opposition to her foreign origins from ardent nationalists.

In many ways, Singh, the architect of the opening and restructuring of the Indian economy, is an apt choice to lead India as the country fast grows into a global economic power.

But India is also at a pivotal point in determining how much further and faster to open its economy and dismantle the still-strong vestiges of a quasi-socialist era, including subsidies and state-owned enterprises. It will also try to ensure that economic benefits reach beyond the growing middle class.

"Nobody today is against reform," Singh, 71, said in a December interview in his office at parliament's upper house. "The question is, how do you package reform so it is not seen as merely an elitist exercise."

Singh was the leader of the opposition until last week, when the Congress party scored an electoral upset over the coalition government led by the Hindu nationalist Bharatiya Janata Party. Reform, Singh added, "needs to be seen to benefit the masses."

For India, Singh's swearing-in will be historic, and not just because of the extraordinary political drama of the past week. A Sikh, Singh will be India's first non-Hindu prime minister. In a milestone that says much about this vast nation's diversity and capacity for coexistence, Gandhi, an Italian-born woman raised a Roman Catholic, is making way for a Sikh prime minister who will be sworn in by a Muslim president, A.P.J. Abdul Kalam.

Born in western Punjab in 1932, Singh attended Punjab University, then Cambridge University. He earned his doctorate at Oxford University. He has held almost every important political post in the country, from governor of the Reserve Bank of India to economic adviser for prime ministers starting with Indira Gandhi.

But Singh's most important role - and the reason the stock markets rose yesterday upon confirmation of his selection as prime minister - came in 1991. He was called into urgent service by then-Prime Minister P.V. Narasimha Rao to extricate India from a balance of payments crisis. For the first time in its history, India was on the verge of defaulting on its external debt obligations.

Singh quickly devalued the rupee in two stages to avoid provoking political opposition. He also began dismantling the "license permit raj," the complex system of permits and permissions that essentially gave bureaucrats control over business decisions. He lowered taxes, initiated deregulation and began opening the economy to foreign investment and competition.

In his public statements, Singh has shown himself to be a diplomat, or perhaps skilled in using an economist's jargon to soften his message.

Rather than saying, for example, that industry needs greater power to hire and fire, he spoke in one interview several years ago of the need to "address the rigidities that are constraining growth" in the labor market. "Of course," he said then, "we must reassure the trade unions that our interest is to create jobs and not destroy industrial relations."

The delicate balancing act between compassionate rhetoric and pragmatic reform will be sorely tested as Singh forms a new government and attempts to put his reformist policies into effect.

His Congress party needs the support of the country's communist parties to form a government, but for now those parties have indicated that they will provide support from outside rather than participate in the Cabinet. Singh will need to keep them happy while pursuing the long-term policies he believes the country needs. A friend said Singh was not relishing the prospect.

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