The unanticipated victory of the Congress-led coalition has brought forth not only new equations within India but also different expectations for the neighbouring region.

Dr Manmohan Singh, although not yet a member of the Lok Sabha, has been sworn in as the new Indian Prime Minister on 22 May, at the head of a 67-member Coalition Cabinet that includes 28 Cabinet Ministers, of whom 18 are from the Congress Party. Several Congress veterans have been included alongwith leaders of the DMK, NCP, RJD, LJP, JMM and TRS -- all of whom had Cabinet aspirations. Surprise inclusions were however that of former Lok Sabha Speaker Shivraj Patil and former Deputy Speaker PM Sayeed, both of whom were defeated in the recent polls.

The decision by Sonia Gandhi to subordinate her personal ambitions to party interest has gained for her a high moral platform and also lent that much more respect for her Party. It was indeed a masterstroke that has caught the members of the Indian Opposition by surprise. The goons in the BJP and the RSS who spearheaded the hate campaign against Sonia must now know that they appear to be more 'bullies' than the 'champions' of Hindu Indian ethos.

Sonia's simple decision, effectively put at rest the possible confrontation that was being planned by her political opponents. Potential controversy because of her 'foreign origin' was nipped in the bud through a pre-emptive strike. Her gesture, because of her 'inner voice' will make her that much more popular with the electorate who will see this as a sacrifice on her part and that of her family for the greater good of India. One can only hope that the essence of this step will not be lost on other leaders in the region.

This choice has also underlined the secular aspect of current Indian politics -- the President is a Muslim, the Prime Minister is from the Sikh community and the Leader of the Parliamentary Party belonging to the ruling Coalition is from the Christian faith. The concept of minorities having access to highest leadership positions in India has been proved. It has been, in its own way, a public relations coup. The unsavoury details of what happened in Gujarat a few years ago will now be viewed more as an aberration in the context of modern India.

Dr Manmohan Singh has an enormous responsibility that has been thrust on his shoulders. He has a difficult and unenviable task to live up to the aspirations of the upper middle class and the affluent sections in India alongwith its many foreign investors. One must admit that his first steps have been correct. His reputation as a reformist has restored a degree of calm among the business circles. His comments ahead of taking over as Prime Minister were significant in this regard. He mentioned that his government will be committed to an orderly and healthy development of the capital market and that its policies will be in favour of growth, investment and employment.

These are good ideas, but achieving them might not be that easy for the new Prime Minister. The most important dilemma for him will be whether the government (with its rural poor and strong agriculture lobby), should have as its priority growth or distributive justice, deficit control or more subsidies. One of the important allies of the Congress-led Coalition, the Communists, want to retain subsidies on food, fertilizer, electricity and almost everything else. The Congress on the other hand is committed to "attain and sustain" economic growth of 8 per cent to 10 per cent, which will require reducing India's chronic budget deficit.

The new Administration will also have to take on the unpopular task of businesses having more leverage in hiring and firing workers. This will assume special importance given the fact that the Indian textile industry will want the right to hire contract workers before the December 31 expiration of the quota system of garment imports by the United States and other developed countries. As the global textile market opens up, Indian business will want their government to help them catch up with Chinese manufacturers. This will require amendment of India's antiquated labour laws. This might mean the sacking of numerous workers, which as everyone knows does not help in any eventual re-election scenario. Consequently, the assignment ahead will be delicate. The important question will be whether the Communists will look the other way if Congress tries to change the labour laws? One would assume that the Communists might, if the Prime Minister juxtaposes his technical competence with social conscience.

It is true that Dr Manmohan Singh in the past, as Finance Minister, made some effective contributions towards reform. He abolished the system of government licensing in most industries, slashed import tariffs, opened oil refining, telecommunications and the stock market to foreign investors. He also broke the government's monopoly on mutual funds. This time, however, he has to go that extra mile of progressive economics knowing full well that total hands-off style of management will not be compatible with the declared Congress philosophy of 'selective privatisation'. The phrase, 'needs of the common man,' will cast its own shadow on every strategic decision pertaining to economic policies. The Indian Prime Minister commands respect for his integrity and intellect, but will need sharp skills to manage the wide-range of party leaders (with their diverse agenda) who have looked only to the Nehru-Gandhi dynasty to lead. They will be a handful of disparate allies with competing demands.

I will now turn to the social and international equation.

The Indian Prime Minister has said that the main emphasis of his government's programme would be on providing education, universal health care and better housing for tens of millions of slum dwellers as well as boosting food production in the mainly agricultural economy. Any critic would say -- easier said than done. However, I feel that this time round, the Congress-led Coalition will have the necessary resources to achieve a part of this goal. The robust economic trend within India should generate employment, particularly in the services sector, and also facilitate the growth of more small industrial units. As in some parts of India, the rest of India should also be able to profit from better healthcare and higher primary and secondary educational participation with a benevolent left-mix government in New Delhi.

He has also reiterated that India will seek "most friendly relations" with her neighbours, "more so with Pakistan than with any other country." Such sentiments are indeed welcome, given the fact that no problem is intractable if there is a political will to work towards just and durable solutions. The decision to appoint Natwar Singh as the External Affairs Minister will bring rich experience into the scene.

We need to follow Indian foreign policy initiatives in the region with great care. For India, Pakistan is the most important player in South Asia. Consequently, not too much should be read into the postponement of talks between the two countries to reduce the risk of nuclear war. There has been a transition and that makes such delay understandable. The Pakistan Government should make all efforts to continue its dialogue with India and try to stimulate confidence building measures. We also need to support every effort taken by these two countries towards crisis management. It must be remembered that regional stability will be possible only if there is greater understanding. The excellent opportunity initiated by the last SAARC Summit should not be lost.

The new Indian Prime Minister can strengthen this emerging process and take it forward. As an eminent economist, he knows more than anyone else that it is poverty, illiteracy and lack of effective social tools that are our common enemy. Reduction of tension will free our economic potentials and facilitate development and growth.

There is some speculation that the new Indian government, consistent with the old Congress philosophy, will be less enthusiastic about Israel and lining up behind Washington in its fight against terror. It would be careful about assumptions of this nature. One would think that the current matrix that exists between India and these two countries and their implied spheres of influence will not permit a great deal of distancing from existing positions. Any change might affect the emerging status of India in terms of defence strategy, trade, outsourcing opportunities and investment. That, more than anything else, will persuade them to maintain their current status quo, but probably, with a slight suggestion of balance.

Dr Singh, because of his background and party affiliation, will also be aware that Bangladesh, under the changed scenario, will now hope for a quick, fair and just resolution of some of the existing bilateral problems. The questions of equitable trans-boundary river water management and sharing, the prospect of greater trade access into India of Bangladeshi goods and the completion of the demarcation of international borders will have to be addressed. This will help in fostering friendship and reducing concerns.

Muhammad Zamir is a former Secretary and Ambassador.