Indian government on ropes as ally quits

India's Prime Minister Manmohan Singh scrambled to save his government on Wednesday after a key coalition partner quit, raising the prospect of early elections and undermining his 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 could cause the government to fall before the next elections due in 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 late Tuesday.

Singh held talks with his Congress party boss Sonia Gandhi as well as senior cabinet figures on Wednesday to discuss how to respond to the crisis caused by the announcement of a string of economic reforms last week.

"The reforms should be introduced only if they are for the people's benefit and I will not support anything that is against the interest of the masses," Banerjee told reporters in Kolkata on Wednesday.

A source in the prime minister's office said that the government intended to stand by its proposals, including the most contentious decision of allowing foreign supermarkets into the retail sector.

Local media reports suggested the government might partly roll back a 12-percent hike in the price of diesel, a tactic used in the past to placate the arch-populist and unpredictable Banerjee.

"They will stand by the reforms," said the source, who asked not to be named.

The ruling United Progressive Alliance II coalition (UPA II) is dominated by Singh's Congress party, but is dependent on Trinamool for a majority in parliament.

The policy changes unveiled last week include allowing foreign direct investment in retail by giants such as Walmart, opening up domestic airlines to foreign carriers, and hiking the price of heavily 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.

On Thursday, truckers, shopkeepers, trade unions and opposition political parties have organised strikes and demonstrations in cities across the country, forming a formidable alliance to resist the changes.

"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 observers 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."

B.G. Verghese, an analyst at the Delhi-based Centre for Policy Research, agreed that the odds on early elections had shortened but questioned whether it was really in the opposition's interests to go for the jugular.

"Mamata Banerjee's decision has raised the chances of an early election but whether this will benefit the opposition remains an open question," Verghese told AFP.

"For all the bravado spouted by politicians, currently no political party is ready for an election. The economy is in trouble, things look very uncertain, it is not the best time to go in for an election."

Trinamool's exit will make the government a minority administration, dependent on the support of unreliable regional parties from outside the coalition for its continued survival.

Neerja Chowdhury, an independent political analyst based in New Delhi, said the Congress had been left on the ropes by having to now keep other parties happy.

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

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