India's Singh Wins Parliament Vote on Nuclear Deal (Update2)
By Cherian Thomas and Bibhudatta Pradhan
July 22 (Bloomberg) -- Prime Minister Manmohan Singh won India's first confidence vote in a decade, giving him a mandate to pursue the nuclear energy accord with the U.S. that brought his government to the brink of collapse.
Singh's Congress Party-led coalition won enough votes for a majority in the 541-member lower house of parliament, speaker Somnath Chatterjee said. The result extends Singh's four-year leadership of the world's biggest democracy and lessens the chance of an election before the government's term ends in May.
``The government will press on the accelerator regarding the nuclear deal,'' said N. Bhaskara Rao, chairman, Centre For Media Studies, a political policy group in New Delhi. ``Singh will also attempt to move ahead on other economic reforms.''
Singh had to demonstrate his strength after his communist allies withdrew support on concern the accord that permits India to buy nuclear technology will weaken the nation's foreign policy. Singh won 275 votes in his favor and 256 against in the confidence motion.
``Parliament has spoken in an unambiguous manner,'' Singh told reporters outside parliament. ``This augurs well for the country's development and for India's efforts to find its rightful place in the comity of nations. It is a convincing victory.''
Seek Approval
India can now seek the nuclear deal's approval from the International Atomic Energy Agency and the Nuclear Suppliers' Group, a mandatory requirement before the U.S. Congress can ratify it. By avoiding an early election, Singh also has a chance to ease foreign investment rules, blocked by his erstwhile communist allies.
``We have to work with other parties who are not opposed to economic reforms and we'll try to take forward the process,'' Finance Minister Palaniappan Chidambaram told reporters after the confidence vote.
Indian stocks rose in U.S. trading after the government's victory fueled speculation that Singh may be able to introduce laws to attract foreign investment.
ICICI Bank Ltd., India's second biggest, rose as much as 11 percent, set for the biggest gain almost four months, to $33.19. HDFC Bank Ltd., the third-largest, climbed 6 percent.
Hurled Allegations
The two-day debate was repeatedly adjourned as lawmakers cutting across party lines shouted down the speakers and hurled allegations.
Parliamentarians from the Bahujan Samaj Party alleged that an emissary from the government threatened them with the prosecution of their leader, Mayawati, chief minister of Uttar Pradesh, unless they supported the motion.
The main opposition Bharatiya Janata Party lawmakers displayed purported bundles of currency notes in parliament, which they said were offered to their lawmakers in return for support to the government.
Bharatiya Janata Party leader Lal Krishna Advani had pledged to renegotiate the nuclear energy accord if it came to power, since the deal makes India ``subservient'' to the U.S.
The 2005 accord signed between Singh and President George W. Bush gives India access to fuel and nuclear reactors without joining the 1970 Nuclear Non-Proliferation Treaty. It will lift restrictions imposed on suppliers to provide India with atomic technologies since it tested a nuclear weapon in 1974 without being listed as an atomic weapons state.
As a first step, the IAEA board will vote Aug. 1 in an extraordinary meeting on whether to endorse the plan, which will give inspectors access to 14 civilian atomic reactors. The inspections agreement is a key condition for a U.S.-Indian nuclear cooperation treaty.
`More Support'
``There's more support here than there,'' for the nuclear deal at this point, White House spokeswoman Dana Perino said at a press conference in Washington before the vote. ``They're going to need a lot of energy, and one of the best ways to do that is through clean burning nuclear energy.''
Singh says the accord will help increase nuclear generation 10-fold and end blackouts in the world's second-most populous country after China. Shortage of power and other infrastructure shaves 2 percentage points from India's annual economic growth, the finance ministry estimates. India needs to bridge that deficit to sustain growth of over 10 percent and end poverty.
``India needs to grow at the rate of at least 10 percent per annum to get rid of chronic poverty, ignorance and disease which still afflict millions of our people,'' Singh said in a prepared speech distributed at parliament. ``A basic requirement for achieving this order of growth is the availability of energy, particularly electricity.''
Investment Limit
Besides securing India's energy needs, the prime minister also wants to increase the foreign investment limit in insurance to 49 percent from 26 percent, remove a 10 percent cap on the voting rights of foreign investors in non-state banks and open pensions business to overseas companies -- plans which have been blocked by the communists since he came to power in May 2004.
Amar Singh, whose Samajwadi Party replaced the communists as the government's main ally, said July 10 he may back legislation easing curbs on foreign companies expanding in insurance, pensions and banking.
Financial reforms, including development of a corporate bond market, pensions and insurance will spur investment and add as much as 1.5 percentage points to India's economic growth, according to Lehman Brothers Holdings Inc. India's $912 billion economy has grown an average 8.9 percent in the past four years.
`Intense Lobbying'
``There is optimism that one could expect to see some progress on areas such as banking, insurance, foreign direct investment etc,'' said Rohini Malkani, an economist at Citigroup Inc. ``However, given the intense lobbying behind the trust vote, we believe that reforms could encounter stumbling blocks and meaningful progress will occur only once political certainty is restored.''
Samajwadi Party, a one-time adversary of Manmohan Singh's Congress party, said it's not seeking anything in return for support, except fresh policies to tackle inflation, currently at a 13-year high.
The prime minister also had to reach out to four jailed lawmakers, half a dozen independent members and a former minister in his coalition who was acquitted in a murder case, to extend his four-year rule. Singh's term will end in May.
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