Indian prime minster-elect Sonia Gandhi faced her first crisis yesterday, before even taking power, when pivotal leftists refused to formally join her government and markets crashed on fears over economic policy.
Shares on the Bombay exchange plunged almost 16 percent -- the worst fall in its 129 years -- before trading was suspended a second time. They later recovered to about 9 percent down, on top of heavy losses last week. The rupee also fell 0.8 percent yesterday despite central bank support.
PHOTO: AFP
The crash, including a big drop on Friday, has wiped billions of dollars off the value of India's listed companies. Hundreds of bro-kers and small investors protested outside the bourse on the day Gandhi was due to visit the president to claim power.
PHOTO:AFP
Leftist parties, which hold more than 60 of the new parliament's 545 seats, decided not to formally join Gandhi's Congress party and its allies in the coalition expected to be sworn in tomorrow. They have pledged to support her from outside on vital votes, such as confidence motions, but the decision has stoked concerns about the government's stability and fears the communists will wield their power without responsibility.
"The whole tug-of-war is economic policy. Either the left should be in the government and take responsibility for implementing those policies or they should give unconditional support if they are supporting from outside," said a trader with a leading brokerage in Mumbai.
"It makes no sense to remain outside and then dictate terms. Outside support will make the government that much more unstable," the broker said.
But Congress spokesman Jaipal Reddy said: "There are no doubts about stability of this government. There will be no difficulty."
Investors fear the leftists, led by the Communist Party of India (Marxist), the third largest party in the parliament with 43 seats, will block or slow key reforms in Asia's third largest economy, especially privatization of bloated state firms.
Senior Congress leader Manmohan Singh, the father of India's economic reforms more than a decade ago, stepped in quickly to reassure investors.
"We are not pursuing privatization as an ideology, but we are not against privatization where it is called for in the national interest," he told reporters. "Our fiscal and other policies will seek to create a favorable climate for enterprise."
But at exactly the same time, just a few kilometers from where Singh was speaking, communist leaders were calling for increased subsidies for farmers, the return of some import restrictions and the axing of the privatization ministry.
However, Communist Party of India leader A.B. Bardhan also said the parties would support some stake sales in government firms and welcomed foreign investment.
Analyst Prem Shankar Jha said the power of the communists after Congress' surprise ouster of the ruling Hindu nationalist-led coalition could take India back to the instability of the mid-1990s when leftists were also pivotal.
"By staying out, the communists will be free to criticize anything the Congress does. This will constantly erode the confidence in the government," he said.
The Italian-born Gandhi was expected to visit President Abdul Kalam to claim power yesterday, armed with letters of support totalling more than 320 seats. That includes the leftist bloc.
If Kalam agrees, her new government is due to be sworn in tomorrow, making her India's first foreign-born prime minister and the dynasty's fourth.
Asian perspectives of the US have shifted from a country once perceived as a force of “moral legitimacy” to something akin to “a landlord seeking rent,” Singaporean Minister for Defence Ng Eng Hen (黃永宏) said on the sidelines of an international security meeting. Ng said in a round-table discussion at the Munich Security Conference in Germany that assumptions undertaken in the years after the end of World War II have fundamentally changed. One example is that from the time of former US president John F. Kennedy’s inaugural address more than 60 years ago, the image of the US was of a country
‘UNUSUAL EVENT’: The Australian defense minister said that the Chinese navy task group was entitled to be where it was, but Australia would be watching it closely The Australian and New Zealand militaries were monitoring three Chinese warships moving unusually far south along Australia’s east coast on an unknown mission, officials said yesterday. The Australian government a week ago said that the warships had traveled through Southeast Asia and the Coral Sea, and were approaching northeast Australia. Australian Minister for Defence Richard Marles yesterday said that the Chinese ships — the Hengyang naval frigate, the Zunyi cruiser and the Weishanhu replenishment vessel — were “off the east coast of Australia.” Defense officials did not respond to a request for comment on a Financial Times report that the task group from
BLIND COST CUTTING: A DOGE push to lay off 2,000 energy department workers resulted in hundreds of staff at a nuclear security agency being fired — then ‘unfired’ US President Donald Trump’s administration has halted the firings of hundreds of federal employees who were tasked with working on the nation’s nuclear weapons programs, in an about-face that has left workers confused and experts cautioning that the Department of Government Efficiency’s (DOGE’s) blind cost cutting would put communities at risk. Three US officials who spoke to The Associated Press said up to 350 employees at the National Nuclear Security Administration (NNSA) were abruptly laid off late on Thursday, with some losing access to e-mail before they’d learned they were fired, only to try to enter their offices on Friday morning
STEADFAST DART: The six-week exercise, which involves about 10,000 troops from nine nations, focuses on rapid deployment scenarios and multidomain operations NATO is testing its ability to rapidly deploy across eastern Europe — without direct US assistance — as Washington shifts its approach toward European defense and the war in Ukraine. The six-week Steadfast Dart 2025 exercises across Bulgaria, Romania and Greece are taking place as Russia’s invasion of Ukraine approaches the three-year mark. They involve about 10,000 troops from nine nations and represent the largest NATO operation planned this year. The US absence from the exercises comes as European nations scramble to build greater military self-sufficiency over their concerns about the commitment of US President Donald Trump’s administration to common defense and
RSS