Mulayam Singh Yadav, key to the survival of Dr Manmohan Singh's government, ended days of suspense today by confirming that his external support to the ruling UPA coalition will continue. "We need to keep communal forces at bay," said Mr Yadav, providing the Congress with some relief after the government it leads was reduced to a minority. The Samajwadi Party chief said that while his party is not happy with the Congress - he remains firmly opposed to new retail reforms - keeping the BJP out is a more exigent need. Mr Yadav also referred again to a Third Front, promising that this group will win the next election in 2014. Even in this statement, there is respite for the Congress - he ruled out early elections.
Though this will help tide over the immediate political crisis for the government, there are apprehensions that Mr Yadav could hold up the renewed reforms thrust in the economy. There are fears that after the TMC's exit, Mr Yadav knows that options for the Congress are shrinking. The support of Mr Yadav and Bahujan Samaj Party's Mayawati is critical for the government.
It is perhaps with this in mind, the Prime Minister's Office has told NDTV that it will go ahead with reforms that are not so controversial. Minister of state in the PMO V Narayansamy said, "We have to see which are reforms which we can implement without much difficulty." Several new reform measures are being shaped up by the Prime Minister, including increasing the cap for FDI in insurance and pension, which are going to be politically volatile. Mr Narayasamy also said that allies will be "engaged" at the time of decision making.
The decision to green-light the entry of super-chains like Wal-Mart created a political emergency with Mamata Banerjee
, the biggest ally of the UPA, deciding to quit the government. After months of criticism for policy paralysis, last week Dr Manmohan Singh took the politically-risky moves of reigning in fuel subsidies by increasing the price of diesel, and opening up the retail sector to foreign super-chains who can now own majority stake in an Indian partner. Ms Banerjee has said those policies amount to "selling the country" - her six ministers submitted their resignations to the Prime Minister this afternoon. (Read: Mamata exits today, PM likely to explain economic reforms on TV tonight)
To remain in power, the government needs 272 MPs in the Lok Sabha. After Ms Banerjee's exit, it has 254. Mr Yadav has 22 Lok Sabha MPs; Mayawati has one less. Though both do not participate in the UPA, but committed their support in letters to the President of India when the coalition staked its claim in 2009. Both regional heavyweights have indicated they will stand by the government, though Mr Yadav and other leaders of his Samajwadi Party have used the UPA's vulnerability to make it squirm. Mr Yadav and Mayawati are both opposed, like Ms Banerjee, to foreign direct investment in retail. Yesterday, Mr Yadav came together with leaders of the Left in a huge protest against the reforms. However, unlike Left leaders, he refused to join BJP chiefs at the venue of their demonstration against FDI in multi-brand retail.(Poll: Can a minority government push through more hard reforms?)
Mr Yadav's party is in power in Uttar Pradesh. His 39-year-old son, Akhilesh, wrested the state from Mayawati earlier this year, and became its youngest chief minister. The large Muslim population in Uttar Pradesh is a crucial votebank for the Samajwadi Party. Its leaders feel that if they pull support from the UPA, triggering mid-term elections, the BJP could benefit along with Narendra Modi, the Gujarat chief minister who is lobbying to be its prime ministerial candidate. The communal riots in Gujarat in 2002, in which more than 1200 people were killed, have damaged Mr Modi's reputation and credibility, especially among Muslim voters. Mr Yadav, sources say, wants to speed-bump any journey Mr Modi embarks on towards the national political landscape.
This is the UPA's second term and anti-incumbency is likely to hurt its chances for a third. A long list of financial swindles has damaged the public's perception of the Congress, allowing the opposition to accuse it of being tolerant of corruption.