March 8, 2018 / 1:10 PM / in 3 months

Indian coalition partner pulls ministers from Modi's government

NEW DELHI (Reuters) - An Indian political party pulled its two ministers out of Prime Minister Narendra Modi’s government on Thursday in a dispute over concessions to lure investors to their southern state.

Civil Aviation Minister P. Ashok Gajapathi Raju and junior Science and Technology Minister Y.S.Chowdary, both of the Telugu Desam Party (TDP), resigned after Finance Minister Arun Jaitley declined to give “special category” status to Andhra Pradesh.

“We resigned because our home-state has been denied a special status,” Raju told reporters in New Delhi after submitting his resignation.

The TDP has not withdrawn support from the ruling coalition, Raju said, but the resignations may weaken the National Democratic Alliance (NDA), led by Modi’s Bharatiya Janata Party (BJP), ahead of general assembly elections in 2019.

In January, another regional ally, Shiv Sena, based in the western state of Maharastra, said it would run separately from the BJP in next year’s vote, the first major political group to break from the alliance since Modi became prime minister in 2014.

The resignation of aviation minister Raju may also hamper the sale of national carrier Air India. The government has said it would invite initial bids in the coming weeks.

The TDP, which governs Andhra Pradesh, said the federal assistance promised to the state was not enough.

Another coalition partner, the Janata Dal United, based in the east, has revived its own demand for special status for the state of Bihar.

Federal authorities formerly gave special status chiefly to states whose rugged terrain made it difficult for them to compete with other states in attracting investment.

Despite problems with its regional allies, Modi’s party has shown resilience, winning state polls across India.

A BJP leader said the government was stable and the ministerial vacancies would be filled soon.

But political analysts say Modi will have to improve his ties with regional parties ahead of next year’s polls to prevent the opposition from cementing new alliances to increase its presence in parliament.

Reporting by Nidhi Verma, Nigam Prusty; Writing by Krishna N. Das, Rupam Jain; Editing by Robin Pomeroy

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