New Delhi:
The PM will appear on television tonight with a 15-minute speech to explain the reforms that have hurtled his government into a minority. Mamata Banerjee's Trinamool Congress, the second-largest member of the PM's coalition, withdrew support this evening over the government's decision to increase diesel prices and open up the retail sector to foreign mega-stores like Wal-Mart.
Even the opposition concedes that the ruling UPA is not in any imminent danger because regional heavyweights Mulayam Singh Yadav and Mayawati will continue to lend external support despite differences over the economic reforms the Prime Minister has introduced. "Unfortunately, the government will use its survival as an endorsement of its policies," said Left leader Sitaram Yechury.
Sources say that Dr Manmohan Singh will describe the reforms as necessary for economic growth and creating jobs. "Lots of distortion is going on...some misinformation campaign is going on," said V Narayanasamy, Minister of State in the Prime Minister's Office, as opposition parties and even some allies fight the liberalisation of the reform sector, formally notified by the government last night.
Mr Narayansamy conceded that in the new scenario, the government will find it tricky to introduce other big-bang reforms that the PM wants to lead. "We have to see which are the reforms which we can implement without much difficulty," Mr Narayanasamy admitted, "we will consult our allies and take them on board."
Senior ministers pointed out that between them, Mr Yadav and Mayawati contribute 43 MPs, taking the UPA safely past the 272 votes it needs to remain in power. A vote of confidence, they said, is therefore not required.
New reforms cleared on Friday included slashing a tax on overseas borrowing by Indian firms and implementing a scheme to encourage individuals to invest in the stock market. The government also hopes to allow more foreign investment in the insurance sector and reduce sugar subsidies for the poor - the price of sugar available under the Public Distribution System or PDS could go up by Rs. 3. That may not go down well with allies like Mr Yadav and the DMK, who have objected to last week's increase in diesel prices and the cap on subsidised cooking gas for households.
Since Ms Banerjee announced her decision to drop out of the government earlier this week, Mr Yadav had hinted but not committed that his support to the government will continue. Today, he ended the suspense for the Congress by announcing that he will stand by the coalition while opposing reforms like FDI in retail. He also said that his allegiance with the UPA is prompted by his commitment to keeping the "communal forces" of the BJP at bay.
Mr Yadav has always been a parlous partner. His Samajwadi Party was voted into power in Uttar Pradesh earlier this year, a victory enabled by his son, Akhilesh, who is now chief minister. Mr Yadav's support at the centre will come with strings attached - his son's government has been soliciting large financial packages and concessions from the UPA. Mr Yadav's stand on reforms will also be guided by his state's votebank, which is likely to position him against the centre.
Dealing with Mayawati for now will be less complicate. After her humiliating defeat by Mr Yadav's party in the Uttar Pradesh elections, she needs time to rebuild her support base, and will therefore help bolster the UPA to avoid early elections.