Six ministers from the regional Trinamool party handed in their resignations to the prime minister and president in a move triggered by a row over a series of economic reforms rolled out in the last week.[break]
"We tendered our resignations and we have given our letter of withdrawal of support from the union government," Trinamool´s Saugata Roy, who served as junior urban development minister, told reporters.
All 19 Trinamool lawmakers will now join the opposition ranks, bringing an end to an uneasy alliance inside the left-leaning coalition and leaving Singh´s Congress party dependent on outside support from other parties in parliament.
But while analysts said Trinamool´s departure increased the prospects of early polls, Singh appeared in no immediate danger after the regional Samajwadi Party vowed to keep out the opposition BJP party and their Hindu nationalist agenda.
"We will not allow communal forces to come into power. Why should I withdraw support to the Congress?" Samajwadi party chief Mulayam Singh Yadav told reporters in New Delhi.
It was unclear if Samajwadi, whose 21 MPs generally back the government, would join the coalition formally and take up posts in the government when Singh reshuffles his cabinet.
Years of tension between Congress and Trinamool exploded last week after Singh´s government announced a string of reforms including allowing foreign supermarkets into the retail sector and hiking the price of subsidised diesel.
Fiery Trinamool chief Mamata Banerjee initially gave the government 72 hours to withdraw the measures, then announced that her party would quit on Friday unless her demands were met.
She accused the government of allowing in foreign supermarkets in "an undemocratic and unethical manner", while speaking at a function in Kolkata on Friday.
"The government is selling out the country. You will lose your land, shops and livelihood if the decision is implemented," she said.
Even Samajwadi´s chief Yadav, a wrestler-turned-politician, is against foreign supermarkets entering India, underlining the difficulties the government will have in pressing ahead with promised new reforms ahead of elections due in 2014.
Finance Minister P. Chidambaram unveiled new measures to boost the economy on Friday, indicating the administration was looking to build momentum and change the perception of a government bogged down for years in corruption scandals.
The changes aim to encourage investors to put extra money in the stock market and spur more domestic companies to borrow cheaply abroad, leading to fresh leaps on the Bombay Stock Exchange.
The benchmark 30-share Sensex Index closed up 2.2 percent at 18,752.83 points, while the Indian currency also climbed, hitting a four-month-high against the dollar of 53.38 rupees.
Media-shy Prime Minister Singh, who has not spoken in public since Saturday, was set to make a rare televised address to the nation later Friday at 20:00 (1430 GMT) to explain the reforms and the political changes.
News reports suggested the government was also preparing to raise the cap for foreign direct investment in Indian insurance companies from 26 percent to 49 percent.
Despite the blitz of measures, the government faces a broad alliance of opposing forces.
Shopkeepers, traders and labourers blocked railway lines and closed markets across the country on Thursday in a day of protest organised by trade unions and opposition parties.
BJP heavyweight Narendra Modi, tipped as a future prime ministerial candidate, accused Singh on Friday of running a democracy "of the foreigners, by the foreigners, for the foreigners".
Analysts say Singh and his boss, Italian-born Congress party president Sonia Gandhi, appear to have been finally convinced reforms are necessary to improve India´s bleak economic outlook.
Deteriorating growth, a ballooning fiscal deficit and the threat of losing its investment-grade debt rating "all played a role in forcing the hand of authorities", said Credit Suisse economist Robert Prior-Wandesforde.
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