How Sonia Gandhi was persuaded to back reforms

 It had been a brutal August for the Congress party: economic growth was wilting, the monsoon rains were failing and the opposition had it cornered on yet another corruption scandal.

In step Sonia Gandhi to breathe life keen on the self-worth of the judgment party's lawmaker, exhort them at a get-together to "stand up and fight, fight with a sense of rationale and struggle violently". It was a gorgeously forward speech from the by and large extreme matriarch of a rule that has ruled India for largely of its post-independence era.

And thus far few at the assembly were alert that just a week prior she had perform an even more dramatic U-turn, conflicting to a raft of economic reform that would be unveiled on September 13 as well as 14.

Gandhi has no representative supervision post, but as legislative body do president and torchbearer of India's widely revered first family, she has the last word on big guidelines issues: and used for her, societal good has until the end of time come ahead of liberalising the nation.

nevertheless, more than a dozen officials and party leaders close to the secretive outer circle of the Italian-born manager told Reuters that Gandhi was positive of the could do with for grave action to turn aside a duplicate of the crisis that took India to the brink of bankruptcy in 1991.

"This time there was a very grim setting," said Rashid Kidwai, a Sonia Gandhi biographer who was given an account of the arguments made over weeks by Prime Minister Manmohan Singh and his new backing minister in front the closed doors of colonial-era regime bungalows in New Delhi and even on a plane journey.

"It's not that she wanted to go for all this, but it was made very clear to her that, if she didn't, there would be far more dire penalty," Kidwai said.

Sources said the trigger for the reform campaign in Asia's third-largest nation came with the return of P. Chidambaram as finance minister on August 1.

An well-expressed Harvard-educated technocrat in the midst of a track record as a reformer, he replace Pranab Mukherjee, a left-of-centre Congress stalwart who had consistently warned Gandhi against radical reforms that could cost the party votes.

"Pranab was from the old discipline of Indian politics," said a senior government official, who spoke on condition of anonymity. "The PM and the investment minister had to persuade Gandhi that good economics was good politics."

Her compliance in the end led to this month's "big bang Friday" as, a day after taking an axe to expensive economic patronage on diesel, the path announce that the trade present would be disengage to native superstore chains and the bar on foreign investment in both airlines and broadcasters would be lifted.

In sum, these were the most wide-ranging restructuring since Singh took office in 2004 and - in the breach of 48 hours - they dispel the image of a prime rector who was losing his mojo as India's high-trajectory spiralling faltered.

A RELUCTANT REFORMER

However, insiders say Gandhi remains instinctively wary of trade and industry liberalization and circumference the chart deficit. For months, she had alleged out against cutting fuel subsidy that are expected at the poor and the country's rural majority, fearing the impact on the Congress party's fortune.

She only agreed when Singh and Chidambaram spelled out that new growth generated by reforms and improved investor sentiment would have a trickle-down effect and provide funds for welfare spending in time for elections due by mid-2014.

She only agreed when Singh and Chidambaram spelled out with the purpose of new augmentation generated by reform and better shareholder emotion would boast a drip outcome and provide finances for welfare expenditure in time for elections due by mid-2014.

Reuters review more than 30 letters written by Gandhi to the prime vicar and US diplomatic cables on the loose by WikiLeaks that portray her as passionate about social issues, and attached to protecting the poor.

That means the sudden burst of reforms could be cut short if Gandhi - who Forbes magazine ranks as the world's sixth most powerful woman - sees no benefits for the rural poor on whom her party relies for votes.

Indeed, party sources said she will now focus on passing a bill on universal food security in December, a populist plan that would cost billions of dollars at a time when her government is under intense pressure to rein in spending.

"She just wants enough budgetary resources available to finance her welfare schemes," said Swapan Dasgupta, a prominent journalist and commentator who leans towards the opposition.

"She has never spoken about reforms. What she has ready is make administration think of reform as a low precedence and a taking sides burden - she has entrenched that mindset in the party."