UPDATE 3-India govt wins parliament vote; reform doubts remain

* PM Singh’s govt wins vote handsomely

* Smaller parties help govt

* No major push seen on economic reforms – analysts
(Adds quotes, updates count, details)

By Bappa Majumdar and C.J. Kuncheria

NEW DELHI, April 27 (BestGrowthStock) – India’s Congress-led
government sailed through a trial of strength in parliament on
Tuesday, with smaller parties giving it a leg up to achieve a
surprisingly strong victory despite a recent string of
troubles.

Prime Minister Manmohan Singh’s government was backed by
289 lawmakers in the 545-strong lower house, while the
opposition managed 201 votes against. Two parties walked out on
the vote, adding to abstentions.

Despite the handsome win, Singh and his reformist aides are
not likely to move on major reforms to open up the economy,
seen needed to sustain double-digit growth rates like in peer
China.

The vote was demanded by opposition parties against an
unpopular hike in fuel and fertiliser prices which they said
stoked inflation and hurt the poor, but which the government
say is needed to cut the fiscal deficit from a 16-year high of
6.9 percent of GDP.

“Certainly it has strengthened the government’s hand, but I
don’t necessarily think it is a sort of push forward for
reforms. There are a lot of other issues it needs to address,”
Abheek Barua, chief economist at HDFC Bank, said.

Most of the coalition’s wavering allies and other small
parties lined up behind the Congress as they feared a no-vote
would strengthen the main opposition Hindu-nationalist
Bharatiya Janata Party (BJP).

Financial markets had largely ignored the parliamentary
row, correctly anticipating no threat to the government.

Apart from reluctant allies, there is resistance to reforms
from the socialist Congress old guard, who remain suspicious of
the impact of liberalisation on their rural and poor voters.

“Inflation is an issue which has worried even the Congress,
specially several state governments, and they still have to
deal with it and some truant allies,” N.R. Bhanumurthy,
professor at think-tank National Institute of Public Finance
and Policy.

Political misgivings had forced the government in March to
defer a bill to cap liability in case of a nuclear accident,
crucial for firms like General Electric (GE.N: ) and Westinghouse
Electric to enter India’s $150 billion civil nuclear sector.

Other long-pending bills include those to allow greater
foreign stakes in pension and insurance, or to permit foreign
universities to set up local campuses.

Government officials and analysts say these changes are
needed for India to overhaul its creaky infrastructure and
increase its trained workforce, key to accelerate growth.

CONGRESS SPRINGS BACK

In the run-up to the vote, barely a year after Congress
returned to power with a stronger mandate, the coalition had
appeared wobbly, lurching from one predicament to another.

Two allies pulled out over a bill to reserve legislative
seats for women and others expressed disquiet over issues
ranging from high prices to a cricketing scandal.

The tide turned in Congress’ favour when Mayawati, the
chief of the Bahujan Samaj Party of lower castes, decided to
cast her lot with the government despite misgivings over its
policies.

The anti-government alliance’s numbers were further thinned
when two former allies walked out of parliament after a verbal
spat with the main opposition Bharatiya Janata Party.

Few parties, including the BJP and the communists, want an
election now, and had said the vote was to force the government
roll back the decision to hike prices of petrol, diesel and
urea.

Outside parliament, the communists and their allies shut
down shops, offices, trains and airports in several states as
they enforced a dawn-to-dusk strike protesting inflation that
is running at a 17-month high of 9.9 percent.

The demand for Tuesday’s vote was sparked by a decision in
February to raise subsidised petrol prices by 6 percent and
diesel by 7.75 percent, and to let firms set prices of most
fertilisers, moves to help improve state finances.

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(Additional reporting by Nigam Prusty; Editing by Jeremy
Laurence)

UPDATE 3-India govt wins parliament vote; reform doubts remain