Hours before Mamata Banerjee meets her party leaders to make what she described over the weekend as "hard decisions," her party has listed three plans of action that it is considering in retaliation for the government's decision to hike diesel prices, limit subsidised cooking gas cylinders for families, and open up the country's retail sector to foreign investors.
"There could be a pull-out of ministers from the UPA, there could be withdrawal of support from the government or ministers will not attend office," said Sultan Ahmed to Press Trust of India. Mr Ahmed is one of six ministers from Ms Banerjee's party in Delhi. To pacify her, the government may increase the number of subsidised cooking gas cylinders that households are entitled to.
Sources say the Prime Minister is likely to reach out to Ms Banerjee in an attempt to persuade her to remain in his coalition government. The PM did not call Ms Banerjee yesterday but may do so today, sources said. Ms Banerjee, who is the Chief Minister of West Bengal, has 19 Lok Sabha MPs, making her the second-largest party in the UPA, after the Congress. "Negotiations are on... we understand the compulsions of our allies and expect them to understand our compulsions," said Congress spokesperson Renuka Choudhary.
Last year, Ms Banerjee's threat to exit the UPA forced the government to suspend its plans to allow foreign direct investment or FDI in multi-brand retail. On Friday, the government in a surprise move said it would go ahead with the reform which means supermarkets like Wal-Mart can sell directly to the Indian customer with a local partner. Ms Banerjee responded with predictable fury, but the government has made it clear that this time around, it will not capitulate.
Finance Minister P Chidambaram said yesterday that there was no question of a rollback of the decisions taken last week. "It is imperative to keep growing economically... We will convince our allies that what we have done is necessary" and also that "there is no threat to the government, it is stable."
The Congress-led government is sticking to its reform agenda because it knows Ms Banerjee has limited options. Should Ms Banerjee quit the UPA, other parties will lend their weight to the coalition to keep the government from falling. So Ms Banerjee's exit will only force her out of the power equation at the centre.
The Samajwadi Party, headed by Mulayam Singh Yadav, has 22 Lok Sabha MPs as compared to Ms Banerjee's 19. Mr Yadav's party has opposed FDI in retail, and has said it will not allow the reforms in Uttar Pradesh, where Mr Yadav's son, Akhilesh, is chief minister. But there has been no talk of ending the external support that Mr Yadav critically provides to the UPA. Mayawati's BSP, another regional powerhouse with 21 Lok Sabha MPs has taken a similar stand.
Ms Banerjee's government has also rejected newspaper ads placed by the centre that point out that states can drop fuel taxes to bring prices down. "States have very limited avenues of income and by asking the states to slash taxes they are trying to destroy the federal structure," said Minister Subrata Mukherjee.
Opposition parties ranging from the Left to the right will hold a nation-wide strike on Thursday to protest against the reforms in retail on the grounds that super-chains like Wal-Mart and Tesco will obliterate thousands of corner stores and the livelihood of many small farmers. The government has been stressing that states have the right to decide whether to allow FDI in retail, and that Ms Banerjee's opposition must not over-ride other states' prerogatives to introduce reforms.
(With inputs from agencies)