India's coalition seeks to shore up failing support
Political ally abandons ruling Congress Party over economic reforms
India's ruling Congress Party is working to shore up its governing coalition after a crucial ally withdrew its support in protest over a raft of new economic reforms that included a rise in fuel prices and lifting restrictions on foreign retailers.
The departure of the Trinamool Congress has left the government with only a minority of seats in parliament, and Prime Minister Manmohan Singh's party now depends on the support of outside parties to keep power.
It wasn't clear whether Congress was assured of their support, and top party leaders were developing a new strategy for maintaining a parliamentary majority until the next scheduled elections in 2014.
Information Minister Ambika Soni denied any threat to the ruling coalition: "Who says the government is in danger? I haven't heard anyone say that."
Yet party leaders watered down the new restrictions on cooking gas subsidies, saying that in Congress-ruled states families should get nine subsidized cylinders a year, up from the limit of six the national government had decided last week.
Congress officials insisted this was not the start of a rollback on reforms.
"These decisions were taken after the most careful consideration. They stand," Finance Minister Palaniappan Chidambaram told reporters.
Economic reforms rattle country
Singh has come under intense criticism in recent months for presiding over a government riddled by corruption scandals and too weak to make any major policy decisions even as the nation's once enviable economic growth rate plunged.
He stunned the country last week by announcing a reduction in the massive subsidies for diesel fuel and a limit on subsidized cooking gas. His cabinet then passed a basket of surprise reforms, opening up the country's enormous retail sector to foreign competitors such as Wal-Mart, allowing airlines to sell stakes to foreign carriers and pledging to sell off chunks of four state-run companies.
The West Bengal-based Trinamool Congress, which has been seen as an obstacle to reforms here, demanded the government rescind the decisions. When it didn't, party leader Mamata Banerjee announced Tuesday night she was pulling out of the government.
She called the new retail policy a "disaster" for India's poor, and said there were 50 million people in the unorganized retail sector whose jobs were under threat.
Though she initially left open the door to rejoin the government if it backed down, she appeared unwavering at a strident news conference Wednesday, lashing out at her former allies for keeping her in the dark about the reform plan and painting herself as the defender of the common man.
"Reforms have to come from the grassroots, they cannot come from the sky," said the populist Banerjee, famous for wearing a simple white cotton sari and sandals.
National strike planned
Opposition parties and even some government allies were planning a nationwide strike for Thursday to protest the economic changes.
Mulayam Singh Yadav, whose Samajwadi Party has given outside support to the government, criticized Singh's party as weak and arrogant.
"The government should get some political sense," he said.
Top officials from his party said they would meet Thursday to decide what to do, but insisted they were ready if the government was to fall and national elections scheduled.
Business leaders, who have hailed the reforms as crucial to reinvigorating the economy, tried to buck up the government.
Industrialist Anand Mahindra tweeted: "Again, we urge the Govt to stand its ground. Right-thinking Indians will be less than amused by partisan politics in a fragile economy."