India votes

A parliamentary vote on Tuesday could thrust Indian politics into full-scale election mode. Communists withdrew support for the Congress-led government earlier this month, leaving the status of the minority administration unclear and plunging Congress into frantic bargaining mode ahead of a major no-confidence vote.

It has secured support from the Samajwadi party, a useful potential ally in the politically significant state of Uttar Pradesh. But this alone would not fill the gap left by the Communists. Moreover, the tactics being deployed by parties have raised questions about the state of Indian democracy -- the influence of small parties, for example -- and the business climate.

Business and politics

Political manoeuvring has had the media transfixed, particularly where it has included a role for the bickering Ambani brothers of Reliance fame. Anil Ambani has links to Samajwadi, whose newly declared support for the government was this week linked to reported plans to increase tax on petroleum companies.

Such a move would impact directly Anil’s brother, Mukesh, whose Reliance Industries is a lead player in the oil industry. It would follow an intervention by Mukesh that recently threatened to upset talks by Anil’s Reliance Communications with South Africa’s MTN. Reliance Industries has claimed that it has first right of refusal over divestments in Reliance Communications.

The scale of cash-rich Indian conglomerates is such that their demands are hard for politicians to ignore. Combined, the output of the Reliance companies represents around 5% of national GDP. There are numerous other players, including the Tata Group, with similar clout.

Signs of closeness to big business are not popular with voters, especially since Prime Minister Manmohan Singh and Minister of Finance Palaniappan Chidambaram (both traditionally strong on finance and economy issues) must defend their business-friendly policies on issues such as export controls, foreign direct investment limits and liberalisation.

The search for a legacy

The legacy question hovers. It may have been with this in mind that the Prime Minister has risked his administration by pushing ahead with the US civilian nuclear deal -- the move which finally provoked a long-predicted Communist-Congress split. But even if the government survives, progress here, as in other areas, is unlikely to pick up dramatically in the near term.

Meanwhile, foreign policy is under the spotlight and economic problems mount (inflation is almost 12% and would dominate an election campaign). Its hopes to revive its dominance of the Indian political scene are not improved by the poor performance of the heir to the Gandhi dynasty, Rahul, on the campaign trail.

If an election comes early, Congress will not cheer -- but its chances of a victory are helped somewhat by the disarray of its opponents:

• While the opposition Bharatiya Janata Party is on the up, there are questions around its prospects, strategy and leadership.

• Hopes of a 'third force' in Indian politics seem unlikely to bear fruit: The Communists have lost credibility in their West Bengal stronghold (ironically, in part, due to support for business-friendly policies) and their potential allies, the traditionally low-caste BSP, have not replicated last year’s success in Uttar Pradesh.

More coalition government seems likely in any case, something that will be of concern to Congress should it win -- given its poor record on managing relations with allies.