July 6, 1998

Evolve a consensus on the norms for imposing President's rule

IWhen Sonia Gandhi became president of the Congress there were apprehensions, expressed by friends and foes of the party alike, that she could well be in a hurry to pull down the BJP-led Government at the Centre. The idea was fuelled by the apparent vulnerability of the ruling coalition, with its self-serving members like the AIADMK demanding the scalp of local rivals such as Tamil Nadu Chief Minister M. Karunanidhi as the flag-down fare for support. Many thought the BJP Government was a pushover. They speculated Sonia had moved quickly to assume the reins of her centenarian party so as to leave no doubt as to who its boss is should a new round of jockeying for power begin in the 12th Lok Sabha. The backdrop to such speculation was provided by the non-stop efforts of Marxist leaders like H.S. Surjeet and Samajwadi Party leader Mulayam Singh Yadav to gather Sonia's support in dislodging Prime Minister A.B. Vajpayee.

By not obliging her friends of convenience in being party to any toppling conspiracy, Sonia has shown a refreshing readiness to change the old mindset of Congressmen: of being unable to think of life in politics beyond the seat of government. Most recently, her relatively cold reaction to the invitation to join the Rashtriya Loktantrik Morcha, set up by Mulayam and Laloo Yadav, underlines the maturity of her judgement about the Congress' future role. The country, after perilously experimenting for 21 years with ragtag coalitions, is now about to accept that there is little political space beyond the BJP and the Congress. In their composition, these two parties allow the widest spectra of thoughts, intentions and regional as well as sub-regional identities. In these circumstances, Sonia's priority is to mould the Congress into a national alternative and to wait till she comes to power on her own terms -- rather than on those dictated by fractious regional chieftains or by ageing communists who would like to stay in power at all costs.

Globalised Rupee

The rupee's value is being linked to sanctions -- and much blame lies with India

A country's currency buys more than just goods and services. It buys confidence. That ability -- or the perception of that ability -- is what drives currency rates. If the rupee has gone anywhere but up, touching Rs 43 to the US dollar -- and there are many who expect it to measure Rs 48 by the end of this year -- then that is its value, a reflection of the strength or weakness of the economy. We all know that. But there is a worrying link that has developed for the past month or so: all of a sudden the value of the rupee is being linked to sanctions imposed by the United States. And there is little that anyone in the Ministry of Finance as well as the RBI is doing to dispel that notion even as the rupee is now being clubbed with foreign policy.

Such perceptions have to be reversed urgently. Markets and currencies across Asia have tumbled over the past few months. Moving steadily westwards, institutional investors have transferred hundreds of billions of dollars from countries they perceived to be weak. They effectively drove down free-floating currencies by pulling out their funds. That is a price, however unsavoury, to pay for a stake in the global village. But surely people realise that the plummeting won, baht and rupiah didn't owe their demise to their relationship with the US or any other country for that matter. Unfortunately in India's case, caught up as the investing public is in the general slowdown of the economy, a government perceived as indecisive, a system that frankly sees in a weaker rupee more exports and more import revenue -- both dreams can turn out to be tragically hollow -- sanctions are only fuelling speculative fires. This can lead to a run on the rupee. The government should bolster the currency, otherwise such a confluence of developments can be incendiary. This is most definitely a crisis of confidence. And there is earthly reason to make it worse.

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