BREAKINGVIEWS - Gandhi-Hazare nexus important to Indian economy

Congress party chief Sonia Gandhi listens to her son Rahul Gandhi (L) at the memorial of former prime minister Rajiv Gandhi on the occasion of the former prime minister's 18th death anniversary in New Delhi May 21, 2009.

MUMBAI (Reuters Breakingviews) - The Gandhi name continues to cast a spell on India. Though unrelated to the icon of the nation's fight for independence, Rahul may well succeed his mother Sonia as head of the ruling Congress party. One of his challenges is to claim the anti-graft message of Anna Hazare, a present-day activist and follower of the Mahatma, before the opposition does.

News reports of Sonia Gandhi's poor health have brought speculation that Rahul will take over the party leadership in 2012, and may even be Congress's candidate for prime minister at the next general election in 2014.

If that happens, he will have a job on his hands. The current government of Manmohan Singh is in turmoil. It is riven by corruption scandals and a faltering economy and embarrassed by its inability to deliver long-promised economic reforms. In December Jim O'Neill, the Goldman Sachs economist who coined the idea of the BRIC economies, called India the most disappointing of them.

Crucially, the government's efforts to tackle corruption with the so-called Lokpal bill have failed to satisfy Hazare, whose decision to start another fast threatens a repeat of the mass protests of the past summer. The Lokpal bill was first proposed decades ago, and no government has ever taken it this far. But Hazare says the proposed law is not tough enough.

The Congress party has failed to embrace Hazare's message. Rahul still has time to correct that. He could make the powerful case that the best way to fight corruption is to remove the opportunities for civil servants and politicians to profit from bureaucratic complexity. That would mean rolling back state control, breaking up monopolies and pursuing other reforms -- rather than backtracking on promises to open sectors like retailing to foreign competition, as Singh's government did recently.

A more determined push to open up the Indian economy might not be something the socialist Mahatma would have readily endorsed. But it's a course that could benefit from Hazare's momentum, attract investment and boost growth -- all while giving Rahul Gandhi his own message.

(Editing by Richard Beales and Martin Langfield)

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)