Indian gov't on ropes as ally announces split

India's government was left reeling on Wednesday after a key ally announced it would quit the ruling coalition as part of a growing push to derail a controversial economic reform drive.

The regional Trinamool party said late Tuesday it had decided to withdraw support from the Congress-led coalition in a move analysts said heightened the prospects of early elections, not currently due until 2014.

Trinamool's six ministers would submit their resignations on Friday and its 19 MPs would cease to offer support in parliament, the party's firebrand leader Mamata Banerjee told reporters.

"Our ministers will go to Delhi to resign. We will not stay in UPA II," said Banerjee after a meeting in the party's Kolkata stronghold.
The United Progressive Alliance II coalition (UPA II) is dominated by Prime Minister Manmohan Singh's Congress party, but it depends on Trinamool as its second-biggest partner for a majority in parliament.

The policy changes unveiled last week include allowing in foreign direct investment from retail giants such as Walmart and Tesco, as well foreign airlines, and a 12-percent hike in the price of subsidised diesel.

The number of subsidised gas bottles available to households was also cut in half as the government attempted to repair its badly strained finances, which have caused concern for investors and ratings agencies.

The government's opponents were quick to latch on to the split as a sign that Singh's days were numbered.

"The beginning of the downfall of the UPA government has started," said Ravi Shankar Prasad, spokesman for the main opposition Bharatiya Janata Party (BJP).

Congress insiders believe they will be able to stitch together a majority in parliament when it reconvenes in November by calling on other regional parties such as the Bahujan Samaj Party from northern Uttar Pradesh state for support.

But analysts said the prospects of the government making good on pledges to enact further reforms had been severely diminished and its term could be short.

"If the impression of a lame duck government deepens, it can only alter estimates about the longevity of the regime," said The Times of India.

"Bolder reform moves, pressing ahead with critical legislation such as banking, insurance and pension reforms, is an uphill task. Another fuel hike seems improbable," it added.

Neerja Chowdhury, an independent political analyst based in New Delhi, said Congress had been left on the ropes.

"The decision by Mamata Banerjee has left the government at a very vulnerable stage," he told AFP.

"They will need support from other political parties."

As well as the political opposition to its reforms, shopkeepers and hauliers have also organised a series of strikes for Thursday.

But Singh and his new reformist Finance Minister P Chidambaram have ruled out reversing the policies, arguing they are necessary to cut the state's spending and are vital to bring in foreign capital and investment.

The Economic Times hailed Singh's stand in a front-page editorial, saying its refusal "to give in to blackmail has served to show off political spine, and confidence that the government can manage its numbers without the Trinamool".

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