Indian coalition partner walks out in reform protest

A key partner in India's ruling coalition withdrew support from the government Tuesday in protest over economic reforms unveiled last week, in a blow that threatens the administration of Prime Minister Manmohan Singh. The regional Trinamool Congress party said its six ministers would resign on Friday and its 19 MPs would cease to offer support in parliament to the coalition leader, the Indian National Congress. The United Progressive Alliance II coalition (UPA II) is dominated by Singh's Congress party, but it depends on Trinamool as its second-biggest partner for a majority in parliament. Tension in the grouping, which has seen repeated clashes between Trinamool and Congress, has led to speculation about early elections before their scheduled date in 2014 and Tuesday's events greatly increase the chances. "Our ministers will go to Delhi to resign. We will not stay in UPA II," the head of the Trinamool Congress, Mamata Banerjee, told reporters after a meeting of senior figures in Kolkata. The populist firebrand, who said the reforms would hurt the poor, said: "Unfortunately we have not received any respect from Congress despite being their important coalition partner." 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. "They have to withdraw FDI in retail if they want us to stay. They have to reverse their decisions on LPG (gas) subsidy, and diesel prices should be cut by three rupees," Banerjee said. Singh and his reformist new 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. "We continue to consider Mamata Banerjee our valuable coalition partner. We will discuss all the issues raised by her," Congress spokesman Janardhan Dwivedi told reporters. Senior Congress figure Mani Shankar Aiyar speculated that Banerjee was simply playing a high-stakes game of poker and was trying to wrench concessions from the Congress before the Friday deadline for her ministers' resignations. Trade unions, backed by the main opposition Bharatiya Janata Party (BJP) and other regional parties, have called for a nationwide strike on Thursday against the reforms which have been welcomed by business leaders and investors. The country's biggest union of truckers announced Tuesday it would also join the day of defiance, as did another coalition partner, the DMK party from southern Tamil Nadu state. "I am glad that she (Banerjee) has taken this decision. She has shown the Congress how a wrong economic policy should be opposed," said BJP leader Ravishankar Prasad. Singh's government and the Congress party, assailed by a string of corruption scandals since its re-election in 2009, had long been accused of policy paralysis. With legislation held up by a perceived lack of political courage as well infighting in the coalition, optimism about India's vibrant prospects has slowly drained away. Congress insiders believe they will be able to manage in parliament by calling on other regional parties such as the Samajwadi Party or the Bahujan Samaj Party from northern Uttar Pradesh state for support. "She (Banerjee) has made the situation very difficult," said R.B. Guha, a political science professor in Kolkata. "The Congress will now have to appease so many other regional parties to stay in power. "They will be able to manage to stay in power but its a very tricky situation."