NEW DELHI – Congress Party leader Sonia Gandhi (search) worked swiftly Friday to build a new coalition government, but the euphoria of her election victory faded as stock markets plummeted on fears that her leftist allies plan to wind back fundamental economic reforms.
The uncertainty has been compounded by Gandhi's refusal to state outright whether she will grab the prime ministership and become India's first foreign-born leader as early as Saturday.
Congress, the party that led India to freedom from British colonial rule and then ran the country for 40 years, is returning to power after an eight-year hiatus.
It is riding a surge of discontent among poor voters who disagreed with the Hindu fundamentalist views of outgoing Prime Minister Atal Bihari Vajpayee (search) and felt his economic policies had made their lives worse.
The leftists appealed to pensioners with dwindling savings and people who lost their jobs to increased competition or privatization of state companies. They won 63 seats in the new Parliament — their best-ever showing. Gandhi's hopes of forging a workable government hinges on their support.
Harkishan Singh Surjeet, of the Communist Party of India-Marxist (search) — a key Congress ally — sent jitters through investment circles when he declared that the sale of profit-making state-owned companies must stop.
A.B. Bardhan, general secretary of the Communist Party of India (search), another leftist ally, said the government's privatization ministry "can go to the devil."
The statements caused investors to pull their money out of state oil companies and banks, even India's premier high-tech firms.
The Bombay Stock Exchange (search), the Sensex, tumbled 6.11 percent on Friday to close at 5069.46 points — the worst one-day plunge in four years. The National Stock Exchange dove 7.92 percent to close at 1581.40 points — its biggest single-day decline since it began operations a decade ago.
Congress party leaders said nothing to calm investors. But after the markets closed, a senior Congress leader, Anand Sharma, told The Associated Press, "This is a temporary hiccup."
"Where is the panic? We are the original reformers," he said, referring to economic liberalization that began in the late 1980s when Sonia Gandhi's assassinated husband, Rajiv, was prime minister.
As concerns over economic policy raged, the key issue of who will head the new government remained unresolved.
Gandhi, 57, is originally Italian, but has held Indian citizenship for 15 years.
As they rallied support from allied smaller parties to form a government, she and other Congress leaders were hesitant to state outright that she will take the top job, once also held by her mother-in-law, Indira Gandhi (search), who was assassinated.
Congress general secretary Oscar Fernandes (search) said the party, as the largest member of the planned coalition, would choose the next premier. Their elected Parliament members will meet Saturday, and an announcement could be made then.
However, Sharad Pawar, a key ally who visited Gandhi on Friday, said the coalition partners will decide "in a day or two" who will be prime minister. Pawar had opposed Gandhi as prime minister when she had a chance to form a government in 1999, because he objected to her foreign birth.
Meanwhile, crowds gathered outside a wall surrounding Gandhi's house. About 300 people set off fireworks, hurled garlands, and chanted "Long Live Sonia Gandhi."
Her son — newly elected Parliament member Rahul Gandhi (search) — and her daughter Priyanka Vadra (search) joined the Congress leader in shaking hands across the metal barricades. A roar went up as Rahul, 34, climbed over a fence and plunged into the crowd.
Until the national leadership issue is resolved, defeated Prime Minister Vajpayee will remain at the helm. Although he has officially resigned, President A.P.J. Abdul Kalam (search) asked him to stay on until the new government is formed.
The final tallies for 539 Parliament seats show Congress and its allies plus the leftist parties winning 279 seats, a majority of the 545-seat Parliament. Four more constituencies will revote later this month and two members are appointed.
Vajpayee's Bharatiya Janata Party (search) and its allies had 187 seats, and other smaller parties and independents had 73.
During his nearly six years in office, Vajpayee, 79, energized the economy, but that success couldn't deliver quick prosperity to millions of rural poor.
Some 300 million Indians live on less than a dollar a day. Most poor lack even the most basic infrastructure, electricity and potable water.