New Delhi: The Congress has strengthened its hand against the Opposition and Left allies with a farmer-friendly Budget, raising a chance of early elections and reviving hope for a controversial nuclear deal.
Congress leaders had been reluctant to push forward the civilian nuclear cooperation deal with the United States in the face of staunch opposition from their communist allies, who had threatened to bring down the coalition over the issue.
US officials warned this month that time was fast running out for the deal, which would end decades of nuclear isolation for India and allow it to access international nuclear fuel and equipment. Many analysts had all but written the agreement off.
But Union Finance Minister Palaniappan Chidambaram upset those calculations on Friday with a Budget aimed squarely at elections and India's rural poor, with a $15 billion scheme to waive loans held by 40 million small farmers.
Elections have to be held by May 2009, but the Congress now has less to fear from an earlier vote, analysts say, meaning its leader Sonia Gandhi might just call the Left's bluff over the nuclear deal.
"It's a pre-election Budget, a Budget with an eye for early elections, but whether or not they will go for it I don't know," said Mahesh Rangarajan, a political analyst and history professor at Delhi University. "Sonia Gandhi has to make the decision."
Newspapers reported on Friday that the government was close to concluding a nuclear safeguards agreement with the International Atomic Energy Agency in Vienna, a crucial step in tortuous negotiations over the agreement.
The deal would also need to be ratified by the 45-nation Nuclear Suppliers Group and go back to the US Congress for final approval, in good time before America's own elections in November.
Supporters of the deal like nuclear expert RR Subramanian were in good spirits. "This is nothing short of an election budget," he said. "They have virtually said goodbye to the Left. The nuclear deal will be done by July and elections will be in October. This budget clearly indicates the deal has been saved."
But others said a lot still needed to be done on the nuclear deal in a short space of time. "It's 5 to 12 as far as many people are concerned," said one Western diplomat, "but I think it could go through."
"They may have left it too late, but there is obviously one last bid to push it through," said political analyst and columnist Prem Shankar Jha.
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