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By Manoj Kumar and Satarupa Bhattacharjya
NEW DELHI, March 20 (Reuters) - The Indian government is
unlikely to call a snap election despite its biggest ally
abruptly quitting the ruling coalition, as it needs time to
implement flagship welfare schemes and hopes the economy will
improve, government sources said on Wednesday.
The withdrawal of the Dravida Munnetra Kazhagam (DMK) has
rattled markets, which are worried that it has left Prime
Minister Manmohan Singh unable to pass reforms needed to turn
around the worst economic slowdown in a decade.
That, in turn, has fired speculation that the government,
which is in a minority in parliament and relies on the support
of powerful but unpredictable regional parties to stay in power,
could call a quick election before its term officially runs out
However, leaders in the ruling Congress party told Reuters
the government will wait in order to pass legislation aimed at
shoring up its popularity, which has been punctured by
corruption scandals and anger over high prices.
"We have been given a mandate for five years and we intend
to ensure that it is not aborted," Jairam Ramesh, rural
development minister, told Reuters.
But big-ticket economic reforms such as opening the pensions
and insurance sectors to foreign investors are likely to face
stiff opposition in parliament, analysts said. A major regional
party that often votes with the government said on Tuesday it
would oppose the measures.
It particular, the government wants to pass a bill ramping
up food subsidies for hundreds of millions of poor who form its
core vote base and helped it win back-to-back general elections.
It also wants to widen a system - currently being rolled out in
different parts of the country - of handing out money to poor
families to pay for essentials such as cooking gas.
"We are not looking to hold early elections. We want to do
the full term not just to pursue our welfare programmes but also
to allow the economy to revive," said a senior Congress party
Senior party leaders also hope that India's economic climate
will improve in line with predictions from the finance ministry,
which has forecast growth picking up to 6.1 percent or more next
fiscal year from 4.5 percent in the last quarter.
Congress is also worried that it does not yet have a
credible leader to replace the 80-year-old Singh.
Rahul Gandhi, the son of party chief Sonia Gandhi who is
seen by many as the prime-minister-in-waiting, has faced
questions over his leadership capabilities and has so far shown
reluctance to step into Singh's shoes.
"There is no strong leader in the party today," a party
NO 'LAME DUCK'
News of the DMK's withdrawal, which was sparked by a row
over censuring Sri Lanka for alleged war crimes committed during
the island nation's civil war, sent shares to their lowest
levels in more than two weeks.
The government sought on Wednesday to dispel the notion that
it has become a "lame duck" administration, and said it was
still able to pass reform legislation in parliament.
"I am sure on the merits of reform bills, political parties
will support the government," Finance Minister P. Chidambaram
told a news conference, adding that the DMK pullout would not
affect the government's ability to cut the fiscal deficit.
He would not answer a question on whether an early election
The DMK submitted a formal letter of withdrawal to the
Indian president on Tuesday night, and its five ministers
submitted their resignations on Wednesday.
The source of the row is a draft U.N. resolution on
allegations that Sri Lankan troops committed war crimes in the
closing stages of the 25-year-long civil war against its
minority Tamil population, charges Sri Lanka denies.
The DMK wants India move amendments to the resolution to say
that Sri Lankan forces committed "genocide" during the civil
war, and get an international commission to investigate abuses.
The DMK, based in the southern state of Tamil Nadu, has
often pressured the Indian government to do more to protect Sri
Lanka's minority Tamil population.
Chidambaram said that the government was working towards
amendments and was therefore surprised at the DMK's pullout.
(Reporting by Manoj Kumar, Nigam Prusty, Annie Banerji, Anupama
Chandrasekaran and the Mumbai bureau; writing by Matthias
Williams, editing by Ross Colvin)