Fight over caste threatens India's economic reform plans

A battle over affirmative action for low castes threw the Indian parliament into disarray on Monday, threatening to derail the government's ambitious timetable for passing reforms this week that are aimed at opening up Asia's third-largest economy.

The lower house of parliament was due to vote on a bill to attract more foreign investment to banking, but proceedings were repeatedly disrupted by members of parliament angry at a plan to allow lower castes preferential promotions in government jobs.

"It won't happen, shut it down," shouted the MPs from the Samajwadi Party (SP) who surrounded the speaker's podium in the house. The house was finally adjourned until Tuesday.

The SP represents mainly the Yadav caste, may of whom are lower middle class, along with poor Muslims. Its supporters will not benefit from the promotions quota bill, which is aimed at lifting members of the lowest castes in the Hindu hierarchy.

In the SP's home state of Uttar Pradesh, thousands went on strike from government offices and burned posters of Sonia Gandhi, chief of the ruling Congress party.

Prime Minister Manmohan Singh's government wants parliament to approve policies aimed at attracting foreign capital into banking, insurance and pensions before a recess this week, along with a bill to help land acquisitions for industrial and infrastructure projects.

The measures are part of a package of policies the government and business leaders say are needed to stabilise India's economy, which is running high fiscal and external deficits and is on track for the weakest year of growth in a decade, at below 6 percent.

Disruptions are common in parliament. In the first three weeks of the month-long session the government has passed no major reforms but it was able to fight off resistance to a flagship policy to allow foreign supermarkets to trade in India.

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