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Reddy replaced Sidiq Koya as leader of the NFP in September 1977, following major internal strife which had resulted in the party's missing out on forming the government despite its narrow victory in the election of March 1977, and its subsequent crushing defeat in a second election held to resolve the political stalemate in September. Under his leadership, the NFP made substantial gains in the election of 1982, but fell short of ousting the long time Prime Minister Ratu Sir Kamisese Mara, and was subsequently deposed as party leader in favour of Koya in 1983. Following the military coups of 1987, however, he again took over the leadership of the NFP, and continued to lead the party throughout the 1990s. In the elections of 1992 and 1994, the NFP won a majority of the 27 seats in the House of Representatives then reserved for Indo-Fijians.
In the late 1990s, Reddy decided to negotiate with the Prime Minister, General Sitiveni Rabuka, on amending the 1990 constitution, which was widely perceived as racist, and was compared by many to South Africa's apartheid regime. As a result of these negotiations, assisted by Sir Paul Reeves, a former Governor General of New Zealand, a new constitution emerged, which removed all discriminatory provisions against Indo-Fijians (except the mainly honorary office of President, which remained reserved for a Fijian hereditary Chief). This was considered Reddy's crowning achievement. His glory was short-lived, however. In the ensuing election of 1999, he entered into an electoral pact with his former enemy, Rabuka, an alliance which proved to be his undoing. Many Indo-Fijians had not forgiven Rabuka for carrying out the coups of 1987 and for his role in the subsequent adoption of the 1990 constitution, and the NFP lost all of its seats. Reddy's parliamentary career of some thirty years had come to an end.