Cong to get more room to manoeuvre on economic issues: Stratfor

With UPA coming back to power, India's foreign policy is unlikely to change, a prominent intelligence think-tank said today, observing that Congress' significant victory will allow it more room to manoeuvre on economic issues.      

"Congress' significant election victory will allow the ruling party a bit more room to manoeuvre on economic issues, such as promoting the development of special economic zones and on foreign policy issues that highlight an Indian interest to grow its relationship with the United States since the party is unlikely to rely on the leftist parties for support," Texas-based Stratfor said.      

It, however, maintained that the global financial crisis and the decentralised nature of India's political system will hamper the ability of Prime Minister Manmohan Singh, a trained economist, to implement any meaningful liberal reforms to encourage foreign investment, cut down on populist spending and manage a growing budget deficit.      

Stratfor in its news analysis on Indian elections also said that the US, which is looking to enhance strategic partnership with New Delhi, will have to do a tough balancing act between India and Pakistan. Stratfor said that for now, "India is staying on the sidelines" and looking to the US to "manage Pakistan's jihadist problems".      

However, the US is having a difficult time balancing its interest in pursuing a deeper partnership with the Indians while trying to elicit more cooperation from Pakistan in dealing with the jihadist insurgency, it said.      

Pakistan has a deeply ingrained fear that the US is merely "using Islamabad for short-term tactical gains against the jihadist threat" while its real interest lies in developing a long-term strategic alliance with Pakistan's rival India, Stratfor observed.      

"Therefore, Washington has a tough balancing act to maintain on the subcontinent and will likely take a couple of steps back - at least publicly - from any major foreign policy initiatives with the Indians in order to keep Pakistan focused on its northwestern border with Afghanistan instead of its eastern border with India," the intelligence think-tank said.      

It, however, warned that the dilemma over Pakistan's jihadist problem can cause some friction in the relationship between the US and India in the near term, but not enough to upset the strategic partnership that is developing between the two. 

Referring to its previous news analysis on India and South Asia, Stratfor said Pakistan's ability to rein in its militant proxies is weakening by the day and India is highly fearful of other major militant attacks on its soil.      

Still, India faces no good options in containing the threat since an Indian military reprisal for such an attack will fit perfectly with jihadist designs to destabilise the region, Stratfor observed.     

"Congress restrained itself following the November 2008 Mumbai attacks and may well be able to exercise similar restraint in future attacks given its sizable victory over India's more hard-line Hindu nationalist BJP, which accuses Congress of being soft on terrorism," it said.