Gandhi Closer to Indian Leadership

Sonia Gandhi today moved closer to becoming the next prime minister of India, although some of the euphoria generated by her Congress party's stunning election victory was lost when the stock market fell to a four-year low.

The Congress party was forced to deny that its need to court left-wing parties to form a coalition government would harm economic reforms after the stock market tumbled by around six points, weakening the rupee.

Meanwhile, Ms Gandhi was today courting leaders of the parties making up a bloc expected to be part of a Congress-led coalition.

There has so far been some uncertainty over whether she will become India's next prime minister, arising from her refusal to explicitly say that she would be seeking the premiership.

Today, however, there were indications that she was moving closer to power. Oscar Fernandes, the Congress party general secretary, told reporters that there was a consensus among likely coalition partners that they would accept whoever the party put forward.

Mr Fernandes told reporters: "The allies have been saying: 'You elect your leader, and we will support it'." However, he did not specify that the leader would definitely be Ms Gandhi.

Sharad Pawar, the first ally to visit her today, said all parties in a coalition would decide "in a day or two" who will be prime minister. The likelihood is that it will be Ms Ghandi, who was born in Italy and would become the first foreign-born leader of India, the world's largest democracy.

Today's stock market fall showed that, if she did become India's leader, one of her first jobs would be to calm fears that the new government would harm the economy, but at the same time demonstrate that it could deliver on promises to help the rural poor.

The Congress party surged to victory on the back of discontent among poor rural voters, who felt left behind by the economic reforms championed by Atal Bihari Vajpayee, the outgoing prime minister.

His reforms mainly benefited the urban middle class while, for hundreds of millions of villagers, clean water, medical care, electricity, jobs and even enough remained as much out of reach as they had been several years previously.

Today's downturn in the markets reflected anxiety over how powerful the left would be in a Congress-led coalition. It polled its highest number of parliament seats ever, winning 63 in the 545-seat parliament. The Congress party has 220 seats.

Jyoti Basu, the senior leader of India's main left-wing party, the Communist party of India-Marxist, was among those meeting Ms Gandhi, the widow of the assassinated former prime minister Rajiv Gandhi, today.

The party's general secretary, Harkishan Singh Surjeet, said: "We oppose the disinvestment of profit-making state-owned companies. This policy has to be changed."

By the afternoon, the benchmark index of the Bombay Stock Exchange, the Sensex, tumbled by 6.24%, or 336.11 points, dropping to 5062.62 points, after opening 2.6% lower at 5261.81.

The Congress party led India to freedom from British colonial rule in 1947, and ran the country for 40 years. It is returning to power after an eight-year absence.