BUSINESS

Indian government works to shore up coalition after ally withdraws support in protest

09/19/2012 01:57 EDT | Updated 11/18/2012 05:12 EST
NEW DELHI - India's ruling Congress party worked to shore up its governing coalition Wednesday after a crucial ally withdrew its support in protest over a raft of new economic reforms.

The departure of the Trinamool Congress left the government with only a minority of seats in Parliament, and Prime Minister Manmohan Singh's party is now dependent on the support of outside parties to remain in power.

It wasn't clear whether Congress could continue to count on those parties for support, and top party leaders met Wednesday morning to hammer out a new strategy for maintaining a parliamentary majority until the next scheduled elections in 2014.

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 the number of subsidized cooking gas canisters each family can receive annually. 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, protested and gave the government 72 hours to rescind them. When they didn't, party leader Mamata Banerjee announced Tuesday night that 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.

However, she said the party could reconsider its decision if the government backs down before she pulls her ministers from the coalition on Friday.

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 Wednesday.

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."

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