a ballooning budget deficit.Most of the initiatives Singh has announced to date have required only an executive order, so this session of parliament poses the biggest test yet of his reform drive.
If he fails to get key allies and the BJP on board, his reformist legislative agenda could stall. Among the reform bills due to be introduced are measures to allow up to 49 percent foreign investment in local insurance companies and domestic pension funds. Currently, the cap for insurers is at 26 percent and foreign investors are barred from buying into pensions.
Uncertainty surrounding the passage of these bills has contributed to a 3.8 percent fall in the benchmark BSE stock market index since the start of October. The rupee, meanwhile, has shed all of its gains since the government launched its new economic reform drive in September.
Analysts attribute the fall to a host of factors, including the global downturn, a ballooning deficit and fears that the promised reforms may not be fully implemented. It was not clear on Wednesday whether the government would relent and allow the vote on retail reform to go ahead or if it would concede only to a motion allowing discussion of the move but not a vote, a less risky proposition.Singh's biggest coalition ally, the Trinamool Congress party, has withdrawn its support over the reform, leaving him in charge of a minority administration at a time when he is trying to revive growth in Asia's third-largest economy.
Trinamool is pushing for a vote of no-confidence in thegovernment during the winter session, which - if lost – could bring the government down and trigger a national election, well before it is due in 2014. For now, few opposition parties have the stomach for an early election, preferring instead to score political points by harrying a weakened government.But the highly fluid situation means nothing is certain."We expect a rocky ride," Citi Research said in an analyst note that questioned whether the government would be able to pass legislation given its minority status, despite its insistence that it has done the maths and has the votes.