SONIA GHANDI’S MASTERSTROKE

India’s stock market collapsed this week in a panic free fall after the return of the Congress Party in last week’s elections. The investor freak-out increased when it seemed that Congress would have to include India’s Communist Party of Marxism-Leninism in its ruling coalition.

Then came Sonia Gandhi’s masterstroke.

The party thrown out of power, the Bharatiya Janata Party (BJP) was a Hindu nationalist outfit with a penchant for jingoistic appeals to Hindu fanaticism. When the widow of Prime Minister Rajiv Ghandi (assassinated in 1991, son of Indira Ghandi, herself assassinated in 1984), Sonia Ghandi became Congress Party leader, she was a perfect foil for the BJP – because she was born Sonia Maino in Orbassano, Italy near Torino and raised Roman Catholic.

After the Congress victory last week, the country fully expected Sonia to become India’s new Prime Minister. The markets tanked, and BJP was rejoicing, knowing that every mistake she made could be used to ramp up Hindu passion against her. So she stuns the world, refuses the PM-ship, and anoints a little-known fellow named Manmohan Singh in her stead. Brilliant.

In one stroke, she takes all the wind out of BJP’s sails, and thrills every investor and businessman in India. For Manmohan Singh is a living legend in the Indian business community. A Ph.D. from Oxford, he is the man who singlehandedly brought India out of a hopeless socialist poverty pit and created her now-bursting economy. Starting in 1991 as Finance Minister, he instituted a series of pro-capitalist economic reforms that “unleashed India’s entrepreneurial spirit” as he put it, while forcing corporate India out of its stagnant subsidized protectionism.

Manmohan Singh was determined to make basic structural changes in India’s economy that would enable her to become a major global player in the world economy – and he succeeded. He is a Hero of Capitalism. Ayn Rand would have saluted him.

When in power, the BJP continued and built upon Singh’s reforms. Now Singh has the chance to fully complete the process. And now may be an excellent time to place investment bets on the Indian economy.