India?s new ruling coalition got down to putting its policies into practice on yesterday while Hindu nationalists, consigned to the opposition after a shock election defeat, vowed to return to power.

Analysts and markets were unimpressed by the centre-left coalition?s plans to balance growth with a higher emphasis on the rural sector, announced on Thursday after marathon negotiations with Communist parties which provide it pivotal support. The benchmark Bombay stock index fell over two percent by midday while bond prices also fell and the rupee currency was subdued.

The Hindu nationalist Bharatiya Janata Party (BJP), which headed the previous coalition government, said the April-May election in which it lost power did not give a clear verdict.

«It was a fractured and divided vote, not in favour of any one party or group of parties and definitely not in favour of any one individual,» said BJP leader and former deputy prime minister Lal Krishna Advani.

«The BJP?s future is bright,» he told a news conference, the first he has addressed since the election defeat.

«The setback we have received is temporary. I am confident that we will be back. And we will play our part in fulfilling the dream that we have of a great India.»

The BJP and its allies got 185 seats in the 545-member parliament while the Congress party-led ruling coalition won 219. Leftists and independents won the rest.

Dependent on Communist parties for a majority in parliament, the Congress-led coalition?s policy blueprint had a definite slant to the left, although it promised pro-growth reforms.

Alhough investors said most policies were not unexpected, markets worried over an expected slowdown in the privatisation of state firms and how the government will fund plans to divert more resources to India?s vast and impoverished countryside.

Most Indian newspapers also gave a thumbs down to the Common Minimum Programme for the next five years, announced by Prime Minister Manmohan Singh and Congress party chief Sonia Gandhi.

<B>MOTHERHOOD AND APPLE PIE</B>

«Very Common and Very Minimum» said a front-page headline in the Indian Express.

«In its broad outline the common minimum programme is a ?motherhood and apple-pie? statement that promises heaven on earth,» the daily said in an editorial.

«We need to know what the promises mean for the government?s fiscal bottomline,» it said, referring to a yawning deficit.

The policy roadmap promises to continue reforms and aims for GDP growth of 7-8 per cent.

But analysts said the coalition had walked away from reforms in three crucial areas: privatisation of state firms, labour law changes and privatisation of power utilities.

The policy blueprint also subtly changed track on India?s foreign policy, distancing itself slightly from the United States and Israel and renewing an old friendship with Palestinians and Arab states.

But it vowed to direct funds to villages, to sectors such as education and health care and help the rural poor share in the spoils of India?s economic boom ? the failure of which is seen as a key factor in the defeat of the BJP.

The previous government had called the election early hoping to cash in on high growth and a peace initiative with old enemy Pakistan, but millions of rural poor voted against it for not percolating benefits to the countryside, where about 70 per cent of India?s one billion people live.

Advani admitted that the BJP?s campaign slogans of «Shining India» and «Feel Good» had failed to overcome local issues like rural debt and the lack of water.

«The slogans were not wrong but they were not appropriate,» he said.

But the new government?s desire to be different may have been overdone, analysts said. More expenditure on the contryside is planned and revenues will fall because of the slowdown in privatisation, they said.

«Show me the money», said an editorial in the Business Standard newspaper. «If all the constraints on revenue raising are taken into account and the expenditure commitments are central to political survival, there is a dire need for innovative methods of both raising resources and delivering services. Unfortunately, not one finds a mention in the document.»

<B>Y. P. Rajesh</B>