Mamata withdraws support, will UPA fall? Experts debate

The government obliged with a slew of reforms ranging from FDI in retail and aviation to a hike in diesel prices. But, the Trinamool Congress chief and West Bengal Chief Minister Mamata Banerjee had given a 72-hour deadline to the government to roll back fuel price hike, LPG cap and FDI in retail. Finally, the verdict is out and Mamata Banerjee has declared that she will be withdrawing support from the UPA if the government does not budge from its position.

In an interview with CNBC-TV18, AK Bhattacharya, Editor of Business Standard believes the TMC chief might carry out the threat of withdrawing its support. In that case, there will be some problems for the government because it has to immediately look for a new ally who will help them to maintain the required majority of 272 seats. However, if the government tweaks diesel prices slightly, Mamata might hold her decision and extend support for the UPA, feels Bhattacharya. 
Sunil Jain of Financial Express however, is a little optimistic about the situation. According to him, Mamata Banerjee’s exit would actually open up the way to reforms. Moreover, the possibility of an early election also becomes redundant because the SP and BSP is likely to support the government, opined Jain.
MJ Akbar of India Today believes UPA is now faced with two options, either to save the government or its credibility. Further, Congress has hardly recognized the need to please its allies during its tenure and has faced resentment from them. The government had been suffering due to this and after Mamata Banerjee's threat to withdraw support, it might actually add to its problems, explained Akbar.   Here is the edited transcript of the interview on CNBC-TV18. Q: Mamata Banerjee laying her cards out on the table, withdrawing support from the UPA. What is this going to mean now? Bhattacharya: This is a conditional threat. If the Congress leadership does not offer an olive branch and I would imagine the Trinamool Congress leader would finally carry out the threat of withdrawing its support from the UPA.
That means some problems for the government because it has to in the meanwhile, cobble together a new ally, a partner so that it doesn't fall short of the required majority of 272 seats. In the next series you would see a lot of backroom negotiations and a lot of calculations will go on because Mamata Banerjee has given 3 days of negotiating time. Q: She has given them 3 days to decide on whether they want to blink and whether they want to accede to any of those conditions, but you have seen what Chidambaram has had to say. He held the press conference with us yesterday, saying very clearly that there is no question of going back on any of those, perhaps they will, even if they do consider they may tweak diesel by a rupee or so. They may hike LPG from 6-10 or 6-12, but FDI in retail, do you really believe that this government will concede to Mamata Banerjee's demands? Bhattacharya: If at all there is a reversal, it will mainly be with respect to the diesel price and I don’t think this government will do it all over again, going back on FDI in retail. That would be pure embarrassment for any government.
I agree with you that there maybe a possibility of diesel price rollback, which I think government internally had budgeted for, which is why they went in for a steep Rs 5 hike. Hence, that rollback is possible and my sense is that if you make one gesture of that nature by rolling back the diesel price by a couple of rupees, Mamata Banerjee given her mood, given the long rope she has given to the UPA leadership here, she will say okay fine, thank you very much, I will stay on. Q: What do you make of this, Mamata Banerjee holding out a conditional threat saying given to my demands I will hold till Friday? Do you believe the government is going to want to play ball with Mamata Banerjee? Jain: I think the fact that Mamata Banerjee is given them time till Friday means that she is still trying to look for some options. It means maybe they increase the number of subsidized LPG cylinders to 8 or something but she is clearly looking for giving them one more chance.
So you could have her withdrawing but, I think it is unfortunate because the government has become a lot more unstable, it is in a minority and the fact that you have got an all India bandh call by the major opposition parties on Thursday makes it a bit more difficult. Basically, they think we don't know where the dynamics are, where it finally starts rolling, how it unravels and we are in an uncomfortable situation. It is something which clearly no government which is undertaking a major reforms path right now would like.
I think that’s one danger. But, the fact that the Samajwadi Party with 22 and the BSP with 21 seats is giving the government outside support suggests that we may not have an early election.
The good news as far as I am concerned is that a) with Mamta Banerjee out, if she finally gets out, you will have a chance of serious reforms in the railway. Remember, she is the same lady who sacrificed a minister when he dared to even think of a whisk of a reform. I think with Mamata Banerjee out if the government, it certainly has a bigger chance of moving forward not just on railways but, the land acquisition bill and allowing the pension bill to come through.
So many major reforms are stuck because of Mamata Banerjee. The government even though, it will be a minority government, don’t forget the major reforms of 1991 that Narasimha Rao brought about and we saw reforms by a minority government.
I am not that disheartened. I am sure the Sensex will fall 200-300 points tomorrow. But, I am sure the markets would have collapsed had it been open tomorrow. However, I am not so worried. Frankly, I think Mamata Banerjee is a big hurdle as far as reforms are concerned.
With her out, we can actually move faster. The government has got enough supporters outside. I think the most critical problem that we have to see is where the protest goes this Thursday and what kind of alliance is formed. But, let's not forget you cannot have alliance with the left and the right, it doesn't work. The BJP and the Left cannot be on the same side. Q: I want to go back to Mamata Banerjee's comments and read between the lines. I don’t want to say this but I did speak with Sonia Gandhi four days ago, we know that the Prime Minister met both with Sonia Gandhi as well as the Finance Minster, several meetings have taken place even this evening. If this government were actually serious about wanting to give into any of Mamata Banerjee’s demands why wait for her to hold a press conference, hold a gun to your head and look like you have capitulated again to Mamata Banerjee? If they were serious about giving into any of her demands maybe the government has decided that it is best to get rid of Mamata Banerjee, get on with whatever little time we have left and get on with decision making? Jain: Absolutely, I just hope you are right. I think the government has had enough and it's not that this government is fed up. We have got the serious threat of a ratings downgrade. There have been internal polls by the Congress party which showed that the Congress Party is going to do pretty badly. In fact, most of the polls by the big television channels suggested that the Congress is going to do badly.
I think Sonia Gandhi has got the message that you can't have a collapsing GDP, rising inflation and you can’t win the election. Q: Where does this leave the UPA? There is a window till Friday that Mamata Banerjee has held out for the government to make up its mind on whether it wants to play ball with her or not. If the government decides not to give into Mamata Banerjee’s demands, where does this leave the UPA? Akbar: The UPA has the option between saving the government and saving its credibility. That’s not much of an option. It is not something sudden; cuts have been visible for a long period. Every ally has essentially been resentful of the manner in which Congress has used its 206 seats, to behave as if it did not need the allies. They have been sort of suffering slings and arrows of their misfortune for a while and waiting for the moment and Mamata Banerjee has actually signaled that the moment has come. Q: What do you believe they are likely to do? Are they going to try and salvage whatever little is left at their credibility at this point of time? Akbar: I have no idea, you should ask Manmohan Singh or the finance minister who yesterday very forcefully and in terms of complete confidence said that not a thing would be changed – that yes, a certain token changes could be made by giving you instead of six LPG cylinders you would probably get eight or 10 as the price of all the allies lining up behind them. So, it is really something that you should ask them that now what you would do, but you must remember that the anger of the political class is also because the Congress has violated the sanctity of the most sacred space in India, which is the floor of Parliament. Last year, on the FDI debate, Pranab Mukherjee, leader of the house said very categorically clearly that government would not bring back FDI without consulting.