Indian government loses majority as Trinamool party leaves alliance

India's ruling alliance stumbles over reforms but avoids collapse with help from party


India's government lost its majority yesterday when a key ally finalised its divorce from the coalition, but it was saved from the immediate risk of collapse by securing the support of a regional party.

Six ministers from the regional Trinamool party handed in their resignations to the prime minister and president, in response to a series of controversial economic reforms rolled out in the past week.

All 19 Trinamool lawmakers will now join the opposition ranks, ending an uneasy alliance inside the left-leaning coalition and leaving Prime Minister Dr Manmohan Singh's Congress party dependent on outside support from other parties in parliament.

The Congress party has received backing from the Samajwadi Party from Uttar Pradesh state, whose 21 members have generally backed the government and who have vowed to prevent the opposition Hindu nationalist Bharatiya Janata Party from taking power.

Years of tension between Congress and Trinamool exploded last week after Singh's government announced a string of reforms, including allowing foreign supermarkets into the retail sector and increasing the price of subsidised diesel.

Fiery Trinamool chief Mamata Banerjee initially gave the government 72 hours to withdraw the reforms, then said on Tuesday that her party would quit unless her demands were met.

Samajwadi's populist leader, wrestler turned politician Mulayam Singh Yadav, is also against foreign supermarkets, underlining the difficulties the government will have in pressing ahead with the promised reforms.

Unruffled by the political developments, Finance Minister Palaniappan Chidambaram announced a tax incentive scheme for new investors earning under 1 million rupees (HK$143,000) a year who invested up to 50,000 rupees in the stock market.

"Gold is a dead asset," Chidambaram said. "There are millions of people with surplus assets and I hope this will encourage them to come to the market."

India is the world's largest buyer of bullion.

The new equity investment scheme was designed to boost domestic capital markets and promote a greater "equity culture", he said.

This article appeared in the South China Morning Post print edition as: Singh loses majority as ex-ally quits coalition