Manmohan Singh, Agência Brasil

Soaring inflation and differences among political allies over the nuclear pact between India and the United States are threatening to derail the minority government led by Prime Minister Manmohan Singh, with a clutch of unwieldy minority parties seeking to accomplish their own ends at the government’s expense. There have been widespread reports in the media of threats by Manmohan Singh to resign over the issue.

Last year the treaty was put on the back burner when it threatened the survival of the ruling United Progressive Alliance government, whose biggest component is the Congress Party, with 145 members of 545 in the Lok Sabha, or parliament. But now India’s government is being forced by circumstances to act whether it wants to or not.

Rising global energy prices are a major factor, along India’s twin deficits. Inflation peaked at 11 percent last week and is projected to remain at 9.8 percent for the year before falling back to about 5 percent in 2009. In addition to rising fuel subsidies, the government, with an economy racing along at a 7.5 percent annual gross domestic product increase, is faced with fertilizer subsidies, rising civil service pay, farm loan waivers and falling tax revenues which would raise the fiscal deficit to an alarming 6.1 percent of gross domestic product if hidden off-budget items are included. The high energy prices are expected to triple the current account deficit to 3 percent, raising the spectre of a depreciating rupee.

The rising crude prices are forcing the government to look beyond hydrocarbons as energy sources. With nuclear the other option, agreement with the US is crucial because it gives India access to civilian nuclear technology even though it has not signed the Nuclear Non-proliferation Treaty, which is necessary to secure the supply of nuclear fuel to India’s existing nuclear reactors. Australia recently refused to supply uranium to India as it is not a signatory to the non-proliferation treaty.

Manmohan Singh is seeking to finalize an India-specific safeguards agreement with the International Atomic Energy Agency (IAEA), so that the US can follow up by approaching the Nuclear Supplier Group, which has 45 members, not all of whom look favorably on the agreement. Countries like China may also oppose it if there is significant opposition in NSG. Then there is the question of whether the lame-duck administration can push the pact through Congress before President George W Bush’s term ends in January.

Ironically, Manmohan Singh is facing his most serious difficulty from his own supporters, leftist parties including the Communist Party of India and the Communist Party (Marxist), along with the Revolutionary Socialist Party and the Forward Bloc. They are adamant that the government back away from the agreement, saying it is an excuse to forge a closer “Indo-US strategic alliance.” They also allege that the spectre of a uranium shortage was created by the Congress government in a bid to force through the pact and are demanding that the government instead make progress on the Iran–Pakistan–India (IPI) pipeline to solve India’s energy crisis.

The leftist parties have been surviving on anti-US rhetoric since their ideology was discredited due to the disintegration of the Soviet Union, China has been another model but to their discomfort the Chinese have diluted their ideology and opted for a modified version of capitalism. In this situation, Indian communists have been hoping to survive on their anti-US stance. But the nuclear agreement would take even that away from them, making it difficult to indulge in anti-US rhetoric if the government supported by them signs an agreement that leads to a deepening Indo-US strategic alliance.

The alliance partners are also concerned about Muslim voters, saying the nuclear pact with the US would alienate Muslims. Strong Muslim aversion became apparent when the Indian Union Muslims League (IUML), a major ally of the Congress in Kerala, threatened to quit the coalition if the government went ahead with the agreement. Muslims League leader Panakkad Shihab Thangal said the party would reconsider its support of the central government and withdraw the Minister of State for External Affairs E. Ahamed, from the council of ministers. Nationalist Congress Party MP Tariq Anwar has also stated that “Muslims in the country do not want a deal with [US President George W] Bush."

The leftist parties have warned the Samajwadi Party, with 39 members in the Lok Sabha, of a Muslim backlash if it supports the nuclear deal. The Congress party has been sending feelers to Samajwadi to support the government in the event that the leftist parties withdraw their support. Samajwadi, however, is keeping its cards close to its chest.

The soaring inflation, the result of skyrocketing global food prices as well as energy concerns, is another worry, restricting the possibility of any political heroics on the nuclear issue. Past experience has shown that voters have shown little mercy to governments which have failed to control prices.

No party except for the opposition Hindu nationalist Bharatiya Janata Party, which led the government from 1998 to 2004, wants to risk an election. The dominant view in Congress, headed by Sonia Gandhi, is for the nuclear pact, but their leaders are worried that the issue may not have the votes and they are unwilling to sacrifice the government and go to the electorate with inflation at a 13-year high. The leftist parties are adamant, however, saying they might even seek help from the BJP to pull down the government if it takes steps to ratify the pact.

In India, coalition governments have been the norm since 1996 and are likely to be so in foreseeable future, with the concept of national parties seriously eroded in the last few years. Major parties including Congress and the BJP must depend on smaller regional parties to form governments. This culture of coalition has also evolved several trouble-shooting mechanisms, with leaders like Pranab Mukherjee and George Fernandes enjoying reputations as trouble-shooters. This time the Congress government and the leftist parties are looking to the Tamil Nadu chief minister M Karunanidhi and head of the regional Dravida Munnetra Kazhagam Party to mediate the impasse.

The Congress is also trying to appease the leftist parties by hinting it will start negotiations on the IPI pipeline. Other leaders of the alliance including Lalu Prasad and Ram Vilas Paswan have offered guarantees that if the leftists allow the government to go to the IAEA, they will ensure that the pact will not go further. Earlier the Congress government refused to give a similar written guarantee saying that it would damage the government’s reputation internationally.

Manmohan Singh knows that time is running out. He wants to give President Bush a clear assurance when he meets with him in Japan during the G-8 summit from July 7 to 9. Both governments want to complete the deal so that it can be cited as an important achievement of their respective regimes.

Manmohan Singh has been constrained on several economic issues by the leftist parties, leading to complaints that he was more effective in his role as finance minister from 1991 to 1996 than as prime minister. Singh now does not want an important foreign policy achievement of his regime to go waste.

The alliance in any case will be facing elections in six states in November. Things are not likely to change significantly by then. In all probability the results of that election will be repeated in April next year when general elections are likely if the Congress government manages to complete its full term. What is stopping Congress from going for ratification is the lure of staying in power for another six months. Congress’s decision to sign IAEA agreement may annoy the leftist parties, but after the general elections if the members of the present UPA coalition are in a position to form a government, the leftists will have no option but to support them. Moreover, it is also possible that the leftist parties may not withdraw support as elections at this juncture would only benefit the BJP. Whether Congress is willing to put its foot down this time remains to be seen.