Indian PM raises hopes of fresh economic reforms

NEW DELHI — Investors are hoping Premier Manmohan Singh, who unleashed radical reforms that turned around India’s economy two decades ago, can work some similar magic after assuming the finance portfolio once again.

On Friday investors drove the benchmark Sensex share index to a two-month high, spurred by hopes that the 79-year-old Singh can put the mojo back into the once-booming economy, which is growing at its slowest pace in nine years.

“He’s got the economy’s pulse. There’s a lot of hope building that he will take some right steps,” Amisha Vora, joint managing director of one of India’s leading brokerage houses, Prabhudas Lilladher said.

A survey of India’s top 150 chief executives by business group Assocham found expectations of “renewed energy being infused” into the economy since the ex-World Bank economist took control of the finance ministry last week.

Singh, who replaced veteran politician Pranab Mukherjee after he stepped down to run for India’s mainly ceremonial presidency, has already spoken of the need to revive the economy’s “animal spirit”.

“We need to work to get the economy going again and restart the India growth story,” Singh told senior finance ministry officials, calling for a reversal of “the climate of pessimism”.

As finance minister in 1991, Singh ignited the fuse for rapid growth as India teetered on bankruptcy, by embracing free markets and cutting through suffocating red tape.

Many had hoped that as prime minister he would execute a “second-generation” of changes to propel growth into double-digits and allow hundreds of millions of Indians to escape poverty faster.

But his Congress Party-led coalition has dismayed investors by being unable to push through planned reforms due to opposition from within and a string of multi-billion-dollar corruption scandals.

While Singh’s rallying cry last week improved business sentiment, analysts say he must now find the deeds to match his words.

“He will have to walk the talk and there will have to be a political sign-off from coalition allies on his actions,” CLSA economist Rajeev Malik said. — AFP