India's communist parties will discuss on Tuesday whether to withdraw support for the government after Prime Minister Manmohan Singh said he would press ahead with a civilian nuclear deal with the United States "very soon".
Prime Minister Singh arrived in Japan on Monday for a G8 summit where he is expected to tell U.S. President George W. Bush -- the man who shook hands with Singh on the accord at the White House in 2005 -- that the delayed deal will go ahead.
The pact would be a major success for Singh, giving India access to U.S. nuclear fuel and technology and moving the Asian giant's trade and diplomatic relations closer to the West.
Leftist parties, which have given Singh a parliamentary majority over the last four years, threaten to withdraw if he moves the deal ahead with the International Atomic Energy Agency, the next step required for the accord to take effect.
A withdrawal would likely lead to a vote of confidence in the government, plunging India into more political uncertainty that has already hit markets. The government believes it will survive the vote, having won the backing of the regional Samajwadi Party.
Singh's comments on Monday about approaching the IAEA "soon" may have been the final straw for the left.
"By making this statement, the PM has put the entire democratic process in a ridiculous position," Communist Party of India (CPI) leader D. Raja was quoted in local media as saying.
"The left now has to act and withdraw," Raja added. The CPI is one of four leftist parties that prop up the ruling coalition in parliament.
Other left leaders said they may wait until Thursday to announce their formal withdrawal, when a meeting between the government and the communist parties is planned.
TOO LATE FOR THE DEAL?
IAEA diplomats said on Monday there was talk of a special July 28 board gathering to discuss the deal but any timetable for advancing it would be unclear until Singh authorised the IAEA to proceed.
"This meeting would be India-specific, but no date for it has been set yet. It would be premature at this point," said an IAEA official who, like the diplomats, asked for anonymity due to political sensitivities.
But some say it could already be too late for the deal to be passed before the end of Bush's term.
With time running out before the U.S. election in November, India needs to seek approval for the deal from the IAEA, then the 45-nation Nuclear Suppliers Group, where there is doubt about it since India is outside the Non-Proliferation Treaty, and finally ratification by the U.S. Congress.
The nuclear deal is potentially worth billions of dollars to U.S. and European nuclear supply companies and would give India more energy alternatives to drive its booming economy.
The support of the SP, which has a history of pragmatic alliances with governments, should ensure that Singh wins the vote and avoids an early election this year just as the government grapples with inflation at a 13-year high and signs of economic slowdown.
The Samajwadi Party has 39 seats in parliament, compared with 59 for the communist parties. The Congress-led ruling coalition needs the support of 44 lawmakers to reach a majority. It would try to win the other five seats from smaller parties.
India's political uncertainty has hit markets. Stocks fell 2.5 percent last week, pushed down not only by worries over the government's future but also by record oil prices and inflation.
On Monday, stocks rose 0.5 percent, partly on news that the government has secured the support of the Samajwadi Party.
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