That is exactly what Sonia Gandhi set out to do. They should have remembered the 1971 campaign slogan of Indira Gandhi - “Garibi Hatao” (Remove Poverty). Yet, analysts and observers kept waiting for Prime Minister Singh to introduce economic reforms that would free up the private sector. And Sonia Gandhi’s policies were a modern version of Indira Gandhi’s economic policy after her huge election victory in 1971. Most analysts missed the message that the policies of India would now be Sonia Gandhi’s policies and not those of Manmohan Singh. She reappointed Prime Minister Manmohan Singh but restructured the rest of the cabinet. This election delivered absolute power to Sonia Gandhi. For the first time since 1972, the incumbent party and prime minister were re-elected. The 2009 election was a huge victory for Sonia Gandhi, president of India’s Congress Party. The reality is that the story of today’s fall of the Indian economy was written in 2009 and it so happened.

Frankly, in our opinion, it was guaranteed. We say “perplexingly” because analysts and reporters seem surprised by the fall. The unkindest cut came from the ratings agency Standard & Poor’s (S&P) which warned that India could be the first BRIC country to be downgraded to “junk.” The S&P report was direct in placing the blame: “The division of roles between a politically-powerful Congress party president, who can take credit for the party’s two recent national election victories, and an appointed prime minister has weakened the framework for making economic policy, in our view.” India’s perplexingly sudden fall from its growth pedestal is the topic du jour among analysts and reporters. Dilip Gadkar, editor of Macro Viewpoints and CEO of G-Square Capital Management, a hedge fund advisory firm in New York, argues in this opinion piece that these problems are the result of populist politics combined with unsound economics – but India could bounce back faster than the pessimists fear. All indicators of business confidence reflect the growing gloom. Rating agencies are taking notice: Standard & Poor’s warns that India could become the first “fallen angel” among the BRICS countries (Brazil, Russia, India, China and South Africa) and Fitch has cut India’s rating outlook to negative. Interest rates remain too high, choking investment and growth. The growth in the index of industrial production (IIP) in April was just 0.1%. The GDP growth rate in the January-March quarter has slipped to 5.3% the earlier expectation was around 8%. Ministers are worried that anything they do - even a minor policy change produces winners and losers - will be given the color of corruption later. A campaign against rampant corruption in the government and bureaucracy has brought decision-making in New Delhi to a standstill. The problems of coalition politics have paralyzed the reforms process. Over the past few months, one crisis after the other has gripped India.

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