UPDATE 3-India's Sonia Gandhi chairs first party meeting since surgery
(Adds meeting over, quotes)
By Frank Jack Daniel and Arup Roychoudhury
NEW DELHI, Sept 15 (Reuters) - Sonia Gandhi, the head of India's ruling Congress party, chaired on Thursday her first party meeting since travelling to the United States more than a month ago for undisclosed surgery and leaving behind a rudderless government.
The 64-year-old's absence coincided with a plunge in popularity for the centre-left party, buffeted by high inflation and the biggest national protests against corruption since the 1970s.
Gandhi held a short, closed-door meeting at her New Delhi residence attended by cabinet ministers and party officials to discuss candidates for a crucial assembly election in Uttar Pradesh state next year. The Italian-born politician did not appear in public.
"She is looking very good and very fit. She has completely resumed her duties," Congress party general secretary Digvijay Singh told reporters as he left the meeting.
"It doesn't seem like she came back from an operation."
No images of Sonia Gandhi have been released by her party since she slipped out of the country in early August for a serious operation. A still image of Sonia sitting in the backseat of a car was shown on broadcaster CNN-IBN on Thursday, believed to be the only image seen of her since the operation.
Critics say the meeting, very brief for a gathering to decide on candidates for the election in the country's most populous state, may have been an attempt at trying to calm fears over who runs the world's largest democracy.
The Uttar Pradesh election is likely to be key to the ruling party's fortunes and whether it will be able return to power in national elections in 2014.
Congress party insiders have told Reuters they are thrilled at the return of Gandhi but privately worry about the lack of direction in the party as well as the perceived failure of Prime Minister Manmohan Singh to manage day-to-day tasks of the coalition government.
Sonia's son Rahul, who is head of the Congress party's youth organisation, is being groomed to take over from his mother, most likely around the time of the 2014 general election.
His performance during his mother's absence and lack of hands-on approach during the mounting protests led by hunger striker Anna Hazare have raised concern about whether he is able to lead the party, in power for most of the time since independence in 1947.
RULING FROM BEHIND THE SCENES
Sonia Gandhi has not disclosed the nature of her illness or how serious it is, but several media reports said she was operated on for cancer at a specialist hospital in New York.
The party has declined to comment.
Gandhi rules the country from behind the scenes, with Singh in charge of day-to-day affairs, but the setup has increasingly come under criticism as economic reforms have stalled and growth has begun to slow.
Singh's popularity has especially taken a severe beating for failing to address rampant corruption.
One of his ministers from an allied party was jailed on corruption charges and a Congress party member has also been jailed over graft, pending trial.
Singh is widely respected for ushering in economic reforms that brought fast growth to Asia's third largest economy, but the government has lurched from crisis to crisis since he returned for a second term after a 2009 election.
The party's performance the Uttar Pradesh election will be a barometer of the Gandhi's chances of keeping power in the nation of 1.2 billion.
The coalition government is still reeling from scandals over the awarding of telecoms licenses and during the build-up to the 2010 Commonwealth Games, along with a parliamentary logjam that has stalled economic reforms.
The Gandhi family, descended from India's first prime minister, Jawaharlal Nehru, has long enjoyed a status approaching royalty. They are not related to independence hero Mahatma Gandhi, a close ally of Nehru.
Main political parties have largely shied away from commenting on Sonia's absence, but criticism is mounting over the way the country is being run. (Additional reporting by Manoj Kumar, Nigam Prusty and Paul de Bendern; Editing by Robert Birsel)
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