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India: PM doubles down on reforms, ally confirms pullout

India's Congress Party aims to push for additional reforms, even as moves to hike diesel prices and allow foreign investment from companies like Walmart is likely to prompt a no-confidence motion.
Manmohan singh india reforms 2012 9 21Enlarge
Activists shouting anti government slogans in Jammu, India on Sept. 20, 2012. Prime Minister Manmohan Singh faced a crunch day on September 21, 2012, in his bid to drive through economic reforms, with a one-time coalition ally set to formally withdraw support from his beleaguered government. Barring an unexpected last-minute compromise, six ministers from the regional Trinamool party were to resign their posts in New Delhi and its 19 lawmakers will end their uneasy alliance inside the coalition, which came to power in 2009. (STRDEL/AFP/Getty Images)

India's Prime Minister Manmohan Singh looks set to double down on economic reforms, even as he faces a rebellion from a key ally that is likely to result in a no-confidence motion next week.

According to the Hindustan Times, on Thursday Singh formally notified a measure that will allow "multi-brand" retailers like Walmart into the market with foreign investment of up to 51 percent in local ventures--defying calls to withdraw the move from West Bengal's Mamata Banerjee, whose Trinamool Congress controls 19 parliamentary seats. Moreover, Singh plans to present additional reforms, such as settling an outstanding tax conflict with Vodafone and raising the cap on foreign investment in the insurance sector, in the near future, the paper said.

As GlobalPost reported Thursday, Singh's United Progressive Alliance government is unlikely to fall, even though the loss of Banerjee's 19 seats puts it under the majority mark. But with Banerjee confirming Friday that she intends to pull out, a no-confidence vote is reportedly likely next week, according to NDTV.

The Trinamool Congress has indicated that once they have withdrawn support, they will push for a no-confidence vote, the news channel said. "According to the schedule we are going to the PMO around 3 pm and then we will go to President. We will go all out to protest against FDI, curb the price rise and launch a movement to withdraw diesel price hike, withdraw subsidy from the LPG and reduce price of fertilizers. Farmers are crying and people are crying.They should take fresh mandate or these actions are unethical," the channel quoted Trinamool Congress leader Mukul Roy as saying.

Reports suggest that Vodafone may be compelled to pay some $1.5 billion in taxes associated with its 2007 acquisition of Hutch telecom, but it could skate on interest and penalties that boost the bill to around $2 billion.

Meanwhile, Singh is ready to increase the cap on FDI in the insurance and pension sectors to 49 percent from today's 26 percent, according to HT.

As GlobalPost reported Thursday, India faced a nationwide strike, or "Bharat bandh," over Singh's moves to open the market to foreign retailers like Walmart. But the response was muted in Delhi and other Congress-ruled states, according to Indian papers. More importantly, perhaps, though there was violence in Banerjee's West Bengal and the bandh was strongly enforced in Bharatiya Janata Party-ruled states like Gujarat, the protests were weak in Uttar Pradesh, according to the HT.  That could be a crucial indicator, because without Banerjee's votes, Singh's coalition government will need the support of either Mulayam Singh Yadav's Samajwadi Party or Mayawati Kumari's Bahujan Samaj Party -- both of which are based in Uttar Pradesh.

Tune in later, as the prime minister is scheduled to address the nation to explain why the latest round of economic reforms is needed.

http://www.globalpost.com/dispatches/globalpost-blogs/india/india-singh-reforms

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