No compromise with Mamata Banerjee; Congress counts on Mulayam Singh Yadav, Mayawati

New Delhi/Kolkata: Unwilling to give in to Mamata Banerjee's demands, the Congress has virtually written off her differences as irreconcilable and is trying to consolidate the support of other key partners to ward off mid-term elections. That makes this a season of opportunity for Uttar Pradesh powerhouses Mulayam Singh Yadav and Mayawati. Both do not participate in the UPA but provide outside support.

The ruling coalition or UPA is in a minority without Ms Banerjee and the 19 Lok Sabha MPs of her Trinamool Congress, who quit the alliance last night to protest against decisions on fuel subsidies and allowing the arrival of foreign mega-chains like Wal-Mart to set up shop in India. Sources say that on Friday, when Ms Banerjee's six ministers are scheduled to meet the Prime Minister to resign, he may make a last attempt to convince them of the need for big-ticket reforms, but neither side expects a rapprochement. "The government is not in danger...whenever we have taken decisions, we have managed the numbers," said senior minister Ambika Soni.

If other allies remain loyal, the government has 305 MPs - it needs 272 to stay in power. The BJP says it will ask for a special session of parliament where the Prime Minister will have to prove his majority.

The Prime Minister and Congress president Sonia Gandhi met with senior Congress leaders this morning and reportedly decided that in addition to holding their ground on the retail sector, they would not make other concessions to propitiate Ms Banerjee. (Poll: Should the government give in to Mamata Banerjee?) Till this morning, there had been talk of a partial rollback of diesel prices, which were increased by Rs 5 last week, and of increasing the number of subsidized gas cylinders each household is entitled to. But that speculation dissipated when the Congress announced that in states where it is in power, families will get nine subsidised cylinders a year, up from the limit of six decided last week - a signal that it is upto state governments to reduce the burden on customers, and that the ball is in Ms Banerjee's court. (Read: Congress-ruled states to relax LPG subsidy cap to 9 cylinders)

At an aggressive press conference this afternoon in Kolkata, Ms Banerjee accused the Congress of "concocting stories" that she had been kept in the loop about the decision to lift restrictions on foreign retailers. "It was discussed at the UPA coordination committee meeting," said senior Congress leader Digvijaya Singh, referring to a group set up after the Congress was accused by allies of keeping them in the dark about important decisions. Ms Banerjee attended a recent meeting of the coordination committee; sources say that she told the PM that she wanted to talk to him privately about retail reforms; when he called her, she was unavailable.

Though the policy to allow 51% Foreign Direct Investment or FDI was cleared first in November by the cabinet, it was shelved after Ms Banerjee threatened to pull out of the UPA. Sources say that on Friday, when the cabinet decided to implement the reforms, many senior ministers were also caught off-guard. The policy had not been listed in notes circulated before the meeting. Though Commerce Minister Anand Sharma had a phone conversation with Ms Banerjee the night before, he did not refer to FDI in retail. The government had informed other allies Sharad Pawar, Farooq Abdullah, and TR Baalu about its plans - allies who it was confident would not block the reform.

Both Ms Banerjee and the Congress traded charges today of phoning and texting each other to clear the air before the Trinamool went public with its decision to drop out of the government. Ms Banerjee reportedly showed her colleagues an SMS she sent on Friday to Mrs Gandhi, which she claimed went unreturned. The Congress says that the Prime Minister phoned the Trinamool leader but his call was not returned. (Read: Call me, maybe? Phones, SMS-es didn't connect PM, Mamata and Sonia)

As long as other allies do not follow Ms Banerjee's lead, the UPA is not in imminent danger. The DMK, a member of the UPA with 18 MPs, has said it remains with the government, though it will participate in tomorrow's nationwide protest against FDI in retail, and the new diesel prices. (Read: Won't pull out of UPA, say DMK sources, but will take part in bandh) Ms Mayawati, whose Bahujan Samaj Party has 21 MPs, has said it will skip the strike, though the party opposes FDI in retail. (Read: Mayawati helps government, her party to skip bandh tomorrow) Mulayam Singh Yadav, who has 22 MPs, is using the UPA's vulnerability to make it squirm. His Samajwadi Party is among the loudest proponents of tomorrow's strike, and he has said his support to the UPA should not be taken for granted. "Let the Congress be enlightened," he said today, of the political situation, "that it has to give people more than corruption and rising prices." (Read: This is a wake-up call for Congress: Mulayam)

If Mr Yadav decides to break-up with the UPA, Ms Mayawati could take the lead role in saving the government. Her party was delivered a humiliating defeat in the recent elections in Uttar Pradesh because of allegations of deeply-entrenched graft. Mr Yadav's son, Akhilesh, swept the state, replacing her as chief minister. Early elections will allow the Samajwadi Party to capitalise on that voter sentiment and make large gains in parliamentary seats. Ms Mayawati, on the other hand, needs time to rebuild her party's image and support base.