UPA names Mukherjee as presidential candidate

Reuters: The Congress Party named Finance Minister Pranab Mukherjee as its nominee for President on Friday, capping a week of political turmoil that exposed the fragility of a coalition government that has lurched between crises as the economy sputters. Mukherjee is expected to step down by 24 June, and Prime Minister Manmohan Singh could take charge of his portfolio for the next several months, a source close to the Finance Minister told Reuters on condition of anonymity.

Singh’s reputation as the architect of landmark economic reforms in 1991 that unleashed two decades of faster growth has been badly tarnished by widespread criticism of his leadership. Investors and business leaders complain that his government has favoured populist policies that fail to rein in spending on subsidies and bring down stubbornly high inflation.

There is no obvious successor to Mukherjee, but analysts said filling the vacancy was less important than the government overcoming internal divisions that have led to policy flip-flops on major economic reforms and scared off investors.

The government first though must work to gain the support of political parties for Mukherjee’s candidacy for the largely ceremonial post.

“The UPA appeals to all political parties...to support Pranab Mukherjee for the office of president,” Singh’s office said in a statement after a meeting of the Congress Party and its allies.

Congress Party leader Sonia Gandhi officially nominated Mukherjee at the meeting, though one key ally, West Bengal Chief Minister Mamata Banerjee who rejected Mukherjee’s candidacy, did not attend the meeting.

Banerjee, who has proven an unpredictable ally, this week proposed that Singh’s name be considered, an effective vote of no-confidence in the prime minister that raised the spectre of the fragile coalition government breaking apart at a critical time for the economy.

But Congress appeared confident on Friday that it had the votes for the 19 July election by federal and state legislators as several other major regional parties said they, too, would back Mukherjee.

The announcement came on the eve of Singh’s departure to Mexico where he will attend next week’s meeting of the Group of 20 leading industrial nations that is expected to be dominated by the European debt crisis.

Singh’s government has largely blamed India’s economic troubles on the euro zone crisis, drawing fire from economists and business groups who say it is ignoring the political paralysis at home that has left policy-making adrift.

In the March quarter, growth in Asia’s third-largest economy skidded to a nine-year low of 5.3 per cent even as inflation rose to nearly 7.6 per cent in May.

Wide current account and fiscal deficits have battered investor sentiment and recently sent the rupee tumbling to a record low, raising the spectre of a balance of payment crisis like the one India faced in 1991.