Indian Government Faces Tight Confidence Vote

India's government faces a tight vote of confidence in parliament on Tuesday that will decide the fate of a civil nuclear cooperation deal with the United States and could trigger a snap election.

CNBC.com

The vote pits the Congress-led coalition that negotiated the deal against its former communist allies and opposition parties led by the Hindu-nationalist Bharatiya Janata Party (BJP).

The result is far too close to call, obscured by a flurry of last-minute horse-trading as both sides try to attract the support of smaller, regional or caste-based parties.

If the government falls there will probably be an election this year. It is also likely to lead to the scrapping of the civilian nuclear agreement and throw economic policy into limbo just as inflation rises to a 13-year-high.

The nuclear deal would grant India access to foreign nuclear fuel and technology, unlocking $40 billion in investment over the next 15 years, according to an Indian business lobby group.

But the communists withdrew their support for the government in protest over the deal, saying it made India a pawn of Washington. The BJP says the nuclear deal limits India's ability to test nuclear weapons.

The vote is so close several MPs who are ill may be flown or wheeled in from hospital, and others, in jail for crimes such as murder and extortion, have been granted temporary release.

Tight Call

Investors are expecting a narrow win for the government, but were reluctant to take big positions in the stock market on Monday in thin trading.

"It is still tight, but the government will scrape though," said Bhaskara Rao, chairman of the Centre for Media Studies.

But others, like political commentator Praful Bidwai, were not so sure. "I wouldn't put my money on either side, it's just too confusing," he said. "This debate is not about any nuclear deal, it's about power-driven politics."

Prime Minister Manmohan Singh moved the confidence motion with a brief address on Monday, and will make a full defense of the deal and his government's record before the vote.

As the stormy debate raged on Monday, the mood on the government benches was upbeat, with MPs flashing victory signs and smiling. One opposition lawmaker privately conceded the government could "scrape through by five to six votes".

But weak party discipline, under-the-table deals and uncertainties such as MPs falling ill make the result very far from a foregone conclusion.

A government defeat would be a boost for the BJP, which has won a string of state elections this year against a backdrop of rising inflation and criticism that millions of poor Indians were not benefiting from the booming economy.

BJP leader L.K. Advani said his party did not oppose nuclear cooperation or a strategic relationship with the United States, but said the deal in its current form made India "a subservient partner".

A week ago the government was confident of securing a majority with the support of the regional Samajwadi Party (SP), which replaced the communists as its parliamentary support.

Since then there have been signs of a rebellion in the ranks of the SP, making the vote tougher to predict.

Copyright 2008 Reuters. Click for restrictions.