India gov’t faces heat over economic reforms

By MANIK BANERJEE
Associated Press

KOLKATA, India (AP) _ A key ally of India’s ruling coalition withdrew its support from the government Tuesday to protest recent economic reforms, including a move to open the country’s huge retail sector.

Ministers from the Trinamool Congress party will resign from India’s Cabinet on Friday, its leader Mamata Banerjee told reporters in the eastern city of Kolkata.

The departure of the ally and its 19 lawmakers from the Congress party-led ruling coalition wouldn’t immediately weaken the government, which still has the support of over 300 legislators and needs 272 to stay in power. But it would leave the government vulnerable to the whims of its other allies, most of which strongly oppose the surprise move to allow foreign investment in the retail sector.

Congress party spokesman Janardhan Dwivedi said it still considers Banerjee a “valuable ally,” leading to speculation that she might be cajoled into rejoining the coalition before her party’s ministers resign on Friday.

Decisions by the government to open airlines to foreign capital, sell minority stakes in four state-run companies and hike diesel fuel prices have also drawn sharp criticism.

Opposition parties have also criticized the reforms, which were announced last week. Some, including the Hindu nationalist Bharatiya Janata Party and leftist groups, have planned a countrywide strike and protests on Thursday.

“The people want a reversal of this entire set of policies that the government is trying to impose,” Brinda Karat, a lawmaker with the Communist Party India (Marxist), told New Delhi Television channel.

Banerjee had initially demanded that the government reverse the reforms within 72 hours. On Tuesday she called the new retail policy a “disaster” for India’s poor.

Banerjee was also one of the loudest critics of the government’s previous attempt to open the retail market to foreign companies such as Wal-Mart, which ended last year in a humiliating back-down for the ruling party.

Earlier this week Finance Minister P. Chidambaram ruled out any rollback of the contentious measures.

The reforms are aimed at boosting growth in a slowing economy and come after months of policy paralysis as the government battled a series of corruption scandals. Business leaders have welcomed moves to reduce the government’s massive subsidy burden by increasing the price of diesel fuel.

The decision on retail investment would allow foreign companies to own majority stakes in supermarkets and other big retailers for the first time. However, individual states would have the right to decide whether to let the retailers operate in their territory.