By C.J. Kuncheria
NEW DELHI (Reuters) - The Congress party-led government may postpone key reform bills including a nuclear liability bill to ensure support for the budget as it faces an emboldened opposition when parliament reconvenes on Thursday.
Prime Minister Manmohan Singh's coalition government is at its weakest since it was re-elected last year, with two allies withdrawing support and others expressing disquiet over a bill reserving parliamentary seats for women and a fuel price hike.
Opposition parties have seized the opportunity, and plan to introduce a special vote on the budget for the financial year that began April 1 which would force the government to resign if it loses.
In order to win support for the key budget bill, the government may have to defer other bills, one underwriting the liability of private nuclear reactor builders in case of an accident and another allowing foreign universities in India.
There is no immediate threat to the government over the budget bill. But reduced parliamentary support means the government will concentrate on ensuring the budget is passed rather than focus its energies on other reform bills.
"We have to firefight," Jayanti Natarajan, a senior Congress party official and lawmaker, told Reuters when asked about the difficulties the government could face over reforms bills.
"We'll now have to answer the opposition and then move on them (reforms)".
The left-of-centre Congress has 208 lawmakers in the 543-seat lower house of parliament, with allies taking it past the halfway mark. But its once comfortable majority narrowed after two allies withdrew support in March over the bill reserving seats for women in the national and state parliaments.
FRAGILE NATURE
The row over the bill underlined the fragile nature of the coalition's parliamentary support that limits its ability to push through any reform entailing painful adjustment to free markets.
Such a message of parliamentary weakness may also be complicating the Congress' other big-ticket programme -- a bill securing the right to food, which has been shelved for now in order to first ensure political support.
The government has already postponed placing bills on opening the insurance and pension sectors to foreign investments in parliament until it is sure about a consensus from its allies and main opposition parties.
The government wants to open up the insurance sector by raising the limit on foreign direct investment to 49 percent from 26 percent. It also wants to allow foreign funds to hold a maximum 26 percent in joint ventures with Indian firms in the pension sector.
But political opposition apart, the Congress' appetite for broad reforms, especially in the financial sectors, is also limited by its socialist old guard suspicious of free markets and its impact on the party's rural and poor voter base.
Congress officials say most of the contentious bills will be referred to parliamentary committees to buy more time for negotiations with opposition parties and allies as well.
Many saw the budget session as the government's best chance of pushing through contentious economic bills because the Congress party and some of its allies face elections in several key states later in the year and in 2011.
While Congress officials said much of their focus now was on marshalling allies so that the budget was passed smoothly, opposition parties prepared to put the government on the mat.
"This session is going to be very difficult for the government," said Nirmala Sitharaman, spokeswoman for the main opposition Hindu-nationalist Bharatiya Janata Party (BJP).
"So many parties are upset and the government is on the backfoot. There will be enough flak for the government to take".
Editing by Krittivas Mukherjee and Sugita Katyal
For more business news on Reuters Money visit www.reutersmoney.in
Reuters India
