By Surojit Gupta
NEW DELHI (Reuters) - Indian Prime Minister ManmohanSingh's government won a vote of confidence in parliament onTuesday, ensuring the survival of the ruling coalition and acivilian nuclear deal with the United States.
The government said it would now push ahead with the pact,which would give India access to foreign nuclear fuel andtechnology and end decades of isolation, as well as worktowards reforms to liberalise the trillion-dollar economy.
"This will send a message to the world at large thatIndia's head and heart is sound, that India is prepared to takeits rightful place in the comity of nations," Singh toldreporters. "I have always said the deal was important and nowwe know it."
The United States welcomed the support for the deal inIndia's parliament.
"We will work closely with the government of India in thedays ahead for a rapid completion of the ratification processthrough the International Atomic Energy Agency, the NuclearSuppliers Group and the U.S. Congress," David C. Mulford, theU.S. ambassador to India, said in a statement.
The Indian government's joy at its victory was tempered bya bribery scandal, after opposition lawmakers interrupted thedebate to wave wads of cash to protest against what they saidwere bribes offered by the government to abstain.
The furore was described as one of the lowest points inparliamentary history, and led to fresh demands for Singh toresign, and catcalls preventing him from delivering hisconcluding remarks after the two-day debate.
The run-up to the confidence vote in the world's largestdemocracy was marked by both sides wooing regional andcaste-based parties.
The government even renamed an airport to honour the fatherof a wavering lawmaker. Others, in jail for murder andextortion, were freed for a few days to cast their votes. Someill members were wheeled in on hospital beds.
But in the end, the government won more comfortably thanexpected, by 275 votes to 256 with 10 abstentions.
Investors had expected a narrow win for the government, andsaid the victory could boost markets. The main share index hasrisen by more than 12 percent in the last four sessions.
"The next task for the government will be how much it willbe able to push through on the reforms front," said Agam Gupta,head of trading at Standard Chartered Bank in Mumbai.
"Stocks should start on a strong footing and bonds willalso get bought. This is a positive for all the asset markets."
But it will not be plain sailing for Singh.
"The bribery scandal will come back. Expect an oppositionoffensive in the coming weeks," said political analyst MaheshRangarajan.
Nevertheless, analysts said the government should nowsurvive until the end of its term, with polls due by next May.
PUSH FOR REFORMS
The confidence vote was sparked by the withdrawal of thegovernment's communist allies to protest against the nucleardeal, which they said would make India's security and energypolicies dependent on the United States.
The Hindu nationalist Bharatiya Janata Party (BJP) said thedeal would limit India's chances to test nuclear weapons.
Investors now hope the victory will give the governmenttime to battle rising inflation, which has hit the pockets ofmillions of poor voters, as well as to pass some economicreforms in sectors like insurance and pensions.
"We have a majority. Therefore, we have to work with otherparties to carry forward the reforms process," Finance MinisterPalaniappan Chidambaram told reporters after four years whenefforts to liberalise were often blocked by the communists.
The deal makes India a de facto nuclear power despite notsigning the Non-Proliferation Treaty and conducting nucleartests in 1974 and 1998.
It could unlock $40 billion in investment over the next 15years, according to an Indian business lobby group, as Indiaseeks new energy sources to tap its booming economy.
Despite the parliamentary victory, it is unclear if thereis enough time for the deal to be passed by the U.S. Congressbefore the Bush administration leaves office in January.
In Washington, State Department spokesman Gonzalo Gallegosacknowledged Congress had limited time to address the issuethis year, but said the Bush administration would push for itsapproval.
The agreement needs clearance from the governors of theU.N. atomic watchdog and a 45-nation group that controlssensitive nuclear trade.
(Additional reporting by Bappa Majumdar; Writing by SimonDenyer; Editing by Caroline Drees)
