Regional leader to rescue Indian government in retail reform vote

NEW DELHI Thu Dec 6, 2012 5:45am EST

NEW DELHI Dec 6 (Reuters) - The leader of a powerful regional party said on Thursday she would back the Indian government in a parliamentary vote on its plan to allow in foreign supermarkets, virtually ensuring that an opposition motion against the reform will be defeated.

"Our party will vote in favour of the government tomorrow," the Bahujan Samaj Party (BSP) leader, Mayawati, said during a debate on a policy that would bring global chains such as Wal-Mart Stores Inc to India's $450 billion retail sector.

Prime Minister Manmohan Singh's minority coalition government won a non-binding vote on the same issue in the lower house of parliament on Wednesday thanks to abstentions from the BSP and another regional group, the Samajwadi Party.

It had looked set to lose in an upper house vote scheduled for Friday because it has fewer parliamentary seats there.

However, the capricious Mayawati's unexpected pledge of support from her party's 15 upper house lawmakers means the government may be able to count on as many as 117 votes, which - if the Samajwadi Party abstained - would be just enough to win in the 245-seat chamber.

Mayawati - whose power base is in the country's most-populous state, Uttar Pradesh - said her decision was partly based on the government's willingness to let individual states decide whether they allowed in foreign retailers.

A second win on the retail policy will be a much-needed boost for Singh as he tries to drive a second wave of reforms through a fractious parliament. The debate over retail reform has proved a costly distraction for the minority government, eating up two weeks of parliament's month-long winter session.

The government's win on FDI would clear the way for voting on bills aimed at attracting foreign investment to the ailing pension and insurance industries, two measures seen by financial markets as important steps in further liberalising an economy in the midst of a slowdown.

Indian shares recovered early losses after Mayawati's announcement, rising for the third day. Gains were led by a rebound in rate sensitive stocks on hopes of momentum on the pension and insurance bills.