Trinamool Congress (TMC), a regional party based in West Bengal state and led by firebrand politician Mamata Banerjee, has been a thorn in the side of Prime Minister Manmohan Singh´s administration since elections in 2009.[break]
Banerjee has already described the reform package as "anti-people", saying a hike in diesel prices will spur inflation and that the opening of the retail sector to foreign multi-nationals will hurt millions of small traders.
"We may withdraw from the coalition... and we are ready to relinquish our ministerial portfolios as well," Sultan Ahmed, a TMC lawmaker and junior tourism minister, told AFP on Tuesday.
"We will support whatever decision our leader takes. Mamata Banerjee will not compromise as it would send the wrong signals to her voters."
Last December, Banerjee´s refusal to accept retail reforms forced the government into a humiliating U-turn but the policy was re-launched last week.
"If the (government) does not roll back the hike in diesel price and withdraw decisions... in multi-brand retail, we will take decisions, however hard they may be," she told crowds in Kolkata at the weekend.
The TMC, which has six ministers in the government and 19 MPs in the 543-seat parliament, is due to meet in Kolkata town hall on Tuesday and make an announcement later in the day.
Premier Singh insists the diesel price rise and economic reforms are needed to reverse a slowdown in economic growth and to boost public finances.
On Friday, his cabinet cleared new rules inviting foreign supermarkets such as Walmart into the retail sector and allowing foreign airlines to take stakes in domestic carriers.
The measures came soon after diesel rates were raised by a steep 12 percent, sparking protests across the country.
Banerjee has said she does not wish to topple Singh´s government, while Finance Minister P. Chidamabram on Monday expressed confidence that the reforms would be pushed through.
"I do not think that the government is facing any threat," Chidamabram said. "There are allies both in the government and outside. I am confident that they will continue to support us."
Trade unions, backed by the main opposition Bharatiya Janata Party (BJP), have called for a nationwide strike on Thursday.
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