After a week of political drama, the Prime Minister, in an unusual move, addressed the country on television to clarify his government's position on economic reforms.
Here are the 10 latest developments in the story:
In a tough message to the nation, Prime Minister Manmohan Singh said that difficult economic decisions that his government has taken are to revive the economy and investor confidence in India. He made several references to his government wanting to protect the aam aadmi and how it was for the benefit of the aam aadmi that these decisions are being taken. He said that no government wanted to burden the common man, but the economic situation was very difficult.
Strongly defending the introduction of foreign investment in retail, the PM said that there was enough space for "big and small to grow," in an attempt to allay fears that small shopkeepers will be wiped out by MNC giants. He pointed out to the benefits of FDI in retail, like food processing and coldchains, which he said will stop the massive wastage of food in the country. Acknowledging that some political parties were disagreed with the FDI decision, he said that it was up to states to allow foreign investments. (Read full speech)
He also said that the hike in diesel prices was imperative, because government couldn't continue subsidising the fuel, especially for those who drove "big SUVs". He also pointed out that the need was to increase diesel prices by Rs 17, but it stopped at Rs 5 and that kerosene prices were left untouched. He also defended a cap on subsidised LPG cylinder for households to six a year, saying more than half of India's families used no more than that. (Watch speech)
Mamata Banerjee reacted to the PM's speech on her Facebook speech, saying, "I want to ask what is the definition of aam aadmi? Is it not becoming clear that the use of the name of aam aadmi, and misuse of power of chair. Is it to finish aam aadmi? Is it the game plan."
The PM's speech came just few hours after the Trinamoool Congress withdrew support to the UPA government over the PM's reforms agenda. The Trinamool's top leadership, but without party chief Mamata Banerjee, who chose to campaign for local polls in Bengal, met the President and withdrew their letter of support.
After withdrawing support, the Trinamool Congress said that it will not ask for a trust vote, but would like to "vote on FDI". Since FDI in retail is a cabinet decision and not a legislation passed in Parliament, it can't be voted on. The Trinamool is more likely looking of a "sense of the House" where there is no vote, but makes public the positions of parties on an issue. The government is not threatened by a sense of the House motion but can embarrass it politically. Trinamool chief Mamata Banerjee has several times referred to the fact that in the winter session of Parliament in 2011, then-Finance Minister Pranab Mukherjee had said that FDI in retail will wait till there is consensus.
Earlier today, Trinamool's six ministers in the government resigned to the Prime Minister. Their resignation and the Trinamool's withdrawal of support are in protest against the government's decision to open up the retail sector to foreign companies, increase the price of diesel and cap the number of subsidised LPG cylinders for households. It was a short, three-minute meeting, in which the PM is understood to have thanked them for their work and expressed his sadness that they were quitting. The Trinamool leaders explained to him their party's position. (Read: Trinamool's letter to the President)
Trinamool's withdrawal of support does not put the government in any imminent danger because it has the external support of Mulayam Singh Yadav and Mayawati, who have 43 MPs between them. Mr Yadav confirmed this morning that he will continue to prop up the UPA. Neither Mayawati nor Mr Yadav participate in the government.
Along with the Mulayam Singh Yadav's and Mayawati's MPs, and the support of smaller players like Lalu Prasad Yadav, the UPA has 310 MPs in its favour. It needs 272 to survive. With this majority, there is no need for a trust vote, said senior ministers Salman Khurshid and Pawan Kumar Bansal. Parliament is not currently in session.
Minister of state in the PMO, V Narayanswamy told NDTV that the government would take allies on board before taking crucial decisions and said it would push first with reforms that it could "implement without much difficulty."