With both Mamata Banerjee and the government refusing to budge from their stand on the reform decisions taken last Friday, the Congress' core group has reportedly accepted that rapprochement is unlikely, sources have told NDTV.
However, the Prime Minister is likely to make one last attempt to persuade the Trinamool Congress to reconsider its decision of exiting the UPA government when its minister come to resign, sources have added.
Union Minister Ambika Soni said today that there was no threat to the government as the "numbers favour us". She added that the Congress was in talks with alliance partners.
Ms Banerjee and her party, the Trinamool Congress, say they will not reconsider their decision unless the government suspends Foreign Direct Investment in multi-brand retail, and reduces the prices of diesel, and increases the amount of subsidized cooking gas for households. The government has introduced a quota of six subsidized gas cylinders per year for households; Ms Banerjee's party has said 24 cylinders are necessary.
The Prime Minister has made it clear that there can be no adjustment in the new reforms in retail. Sources in the Petroleum Ministry also say that there's no decision so far on adjusting diesel prices or cooking gas quotas to propitiate Ms Banerjee.
Ms Banerjee's six ministers are scheduled to resign on Friday at 3 pm. They deny this offers a 72-hour window for a compromise with the Congress. Two of them arrived in Delhi today from Kolkata. They say they want to wrap up work before handing in their resignations to the PM. The Congress will reach out to them to explain the new economic reforms.
Ms Banerjee said the Congress was inaccurately reporting that she had been consulted or informed about the government's decision to allow foreign super-stores like Wal-Mart and Tesco to enter India to sell directly to Indian customers. She also said that contrary to what the Congress says, no attempt was made by the Prime Minister to contact her after the new reforms were announced. Finance Minister P Chidambaram said that the Prime Minister's call to Ms Banerjee was not returned. The Congress also says that party president Sonia Gandhi tried unsuccessfully to contact her last night after Ms Banerjee pulled out of the government.
Mulayam Singh Yadav has refused to commit to his party's support for the UPA. Mr Yadav's Samajwadi Party has 22 Lok Sabha MPs, three more than Ms Banerjee. He does not participate in the UPA, but provides external support. His party has said his support should not be taken for granted, that it will not participate in the government. The Parliamentary Board of the Samajwadi Party will meet tomorrow to decide its course. Mr Yadav is also taking part, along with the Left and the BJP, in a nationwide bandh or strike tomorrow against the centre's new policies. Another large member of the UPA, the DMK, is participating in the bandh. But its leaders say they are not keen on embarrassing the UPA and are unlikely to pull out of the government, especially if there is some change in diesel prices and the cooking gas policy.
Mayawati, whose BSP has 21 MPs, is key to the UPA's survival. Like Mulayam, she offers external support to the government, and is opposed to FDI in retail. But because her party performed abysmally in the recent elections in Uttar Pradesh, she has the most to lose if mid-term polls are held - voter sentiment against her party remains strong. Both Ms Banerjee and Mr Yadav have accused the Congress of running the UPA without consulting allies. "The Congress acts as if it has a majority," said Ram Gopal Yadav of the Samajwadi Party. Ms Banerjee said last night that her party had been shown "minimal respect" by the Congress.
The government has stressed that states have the freedom to decide whether to allow FDI in retail. Ministers have said that while Ms Banerjee may oppose the reform in her state, others would like to implement it. Ms Banerjee's party says that once super-chains like Wal-Mart enter some parts of the country, they will lobby and pressure the government to open other regions to them.