NEW DELHI — Sonia Gandhi, the Italian-born leader of the Indian National Congress party, will formally stake claim to be India's next prime minister on Tuesday, party officials said Monday night, after the country's stock market recorded its biggest single-day fall amid concerns over the new government's approach to economic reforms.
Gandhi is expected to be sworn in on Wednesday. But before she takes office, she is facing formidable political and economic challenges.
The Hindu nationalist Bharatiya Janata Party, which lost to the Congress party in an upset last week, said Monday it would boycott Gandhi's inauguration to protest her foreign origin and would continue to raise the issue. The Communist parties allied with Gandhi's party said they would support the new government but not join it, which could make policy consensus more difficult.
And investors' fears that economic reforms could be slowed or halted because of pressure from the left so badly rattled India's stock markets that regulators suspended trading twice on Monday. The Communist parties, for example, have voiced opposition to the privatization of state-owned companies.
The Bombay stock exchange's benchmark index dropped 20 percent at one point — the biggest fall ever — before recovering to close down 11 percent, the steepest drop since 1992.
The market had already experienced a major sell-off Friday, following election results Thursday that turned the BJP-led government, which had begun actively pursuing economic reforms, out of office, and threw up the likelihood of a new government led by the Congress party with support from the Communists.
Gandhi decided to present her claim to the prime ministership only after political allies and senior colleagues convinced her Monday night that she should not step aside for a less controversial candidate.
Gandhi, 57, is the widow of former prime minister Rajiv Gandhi, and the daughter-in-law of former prime minister Indira Gandhi, both of whom were assassinated.
Although she was not elected to Parliament until 1999, she led the Congress party from decline and disarray to its unexpected victory last week. While the Congress party fell far short of winning a majority, as the single-largest party it will lead the formation of the government. Gandhi would be India's first foreign-born prime minister, and the prospect has roused the ire of the country's Hindu nationalists. On Monday, the BJP said it and its allies would boycott Gandhi's swearing-in to show their displeasure.
"It is a black day in the history of India," said Venkaiah Naidu, a BJP spokesman, announcing the boycott.
However, the departing prime minister, Atal Bihari Vajpayee, will attend as a matter of protocol.
In another blow to the Congress party, Gandhi's new Cabinet will not include members of the country's Communist parties, or Left Front.
While in theory that could give the Congress party a freer hand and may ease investors' fears, in practice it may make governing more difficult, since the left will have the power of the veto without the responsibility of policy formation.
"When we disagree, we should have room to express ourselves," said Harkishan Singh Surjeet, the 88-year-old leader of the Communist Party of India (Marxist), one of four Communist parties in the front. The Congress party and the Communists are pitted against each other in two crucial states, Kerala and West Bengal, and Congress officials said the Communists felt they could not sell a Congress-dominated alliance to party leaders in the states.
The Left Front won more than 60 seats in the election, making its support critical for the formation of a government. Since the results were announced, Communist leaders — as well as some Congress party officials — have attacked the economic reforms that had gained momentum under the BJP government.
The Congress party's likely choice as finance minister, Dr. Manmohan Singh, who initiated the reforms as a former Congress party finance minister in 1991, sought to calm markets Monday by reassuring investors that a Congress-led government would be "committed to the orderly and healthy development of financial markets that reflect the fundamentals of the economy," and that the government's policy would be "pro-growth, pro-investment, pro-savings and pro-employment."
But it was clear that the Congress party is trapped to a degree between the markets and the Communists, not to mention its own internal factions. Singh was careful to state that "we are not pursuing privatization as an ideology," adding, "wherever privatization is necessary in the national interest it will be carried forward."
As the day's trading ended, another chapter began to unfold at 10 Janpath, the home of Gandhi. Rather than going to President APJ Abdul Kalam to form the government, as many had expected, Gandhi summoned the entire Congress party parliamentary delegation to her house, along with the political allies with whom she will form the government.
For two hours, Gandhi huddled with allies, senior colleagues, and her children, Rahul and Priyanka. As her parliamentary party waited nervously outside, rumors swirled that she planned to step aside in favor of a consensus candidate as prime minister.
But just before 9 p.m., Singh emerged to say that Gandhi would meet with Kalam Tuesday morning, thus cementing her anointment as prime minister.
An adviser to Gandhi, who spoke on condition of anonymity, said that she had never planned on being prime minister as she campaigned. But, the adviser said, she had been surprised both by the Congress party's victory and by the subsequent support for her leadership from Congress party electoral allies, some of which had previously questioned her right to lead the country.
On Monday, the BJP's continuing criticism of her foreign roots and vow to boycott her swearing-in, as well as the stock market plunge, apparently had prompted Gandhi to consider again that it might be best to step aside.
Ultimately, however, the adviser said, some allies and senior colleagues persuaded Gandhi to serve as prime minister.
Gandhi has navigated similar shoals within her own political circle before, which makes it possible that her moment of doubt was partly engineered to shore up and demonstrate her support. In 1999, she resigned after some Congress party members questioned her right to rule, and then returned to lead the party after appeals from party members. The dissenters left the party, although they are among those now supporting Gandhi as prime minister.
It is unlikely the BJP will come around in similar fashion. Over the weekend, some BJP members said they would mobilize a nationwide campaign against Gandhi, and on Monday, Naidu, the party spokesman, said the party would give "moral support" to any such mass movement.
BJP officials said they will push for a law barring a foreign-born citizen from leading the country, although they never promulgated such a law during six years in power.
For a party, and a nationalist movement, floundering after a stunning electoral defeat, the opposition to Gandhi provides an immediate issue with which to rally disheartened loyalists. Although leaders who started vitriolic attacks on Gandhi's Italian origins during the campaign fared poorly at the polls, Naidu said Monday that the boycott would "give expression to the sense of outrage of millions of Indians."