A former coalition ally said on Friday it would bring a no-confidence vote against India's government over its reform proposals, pointing to the fierce legislative battle lying ahead in parliament.
On Thursday, Prime Minister Manmohan Singh's cabinet quickened its dash for reforms, approving plans to open up the insurance and pensions sectors to foreign investors.
"The minority government cannot play such (an) immoral role. Let us move a no-confidence motion," the leader of the regional Trinamool Congress party, Mamata Banerjee, wrote on her Facebook page.
The new government proposals follow a highly contentious decision to invite foreign supermarkets into the retail sector last month, alongside other measures to reduce subsidies on gas and diesel and part-privatise state-owned companies.
While the latter could be decreed by the cabinet, foreign investment in the more sensitive insurance and pensions sectors must be approved by parliament where the ruling coalition is now technically a minority.
Banerjee, a populist who decries moves to cut subsidies or invite in foreign investors as "anti-poor", withdrew her party from the coalition last month.
To survive a no-confidence vote -- which could prompt early elections -- the coalition will have to rely on outside parties, many of which are hostile to foreign investment.
The government has proposed allowing foreign companies to own up to 49 percent in insurance companies, up from 26 percent now, and the same level in the pensions sector, which is currently closed to outsiders.
The ruling Congress party would "engage with all bodies" in parliament to get the measures passed, Finance Minister P. Chidambaram told reporters.
The cabinet also okayed a bill on Thursday to overhaul corporate regulation.
The government has stressed the need for "hard decisions" to encourage foreign and domestic investment to get the economy moving again.
India's growth right now is bumping along at 5.5 percent -- its slowest pace in around three years. Ratings agency Standard & Poor's warned in June that it could lose its investment-grade rating.
The Indian rupee soared to its highest level against the dollar since mid-April in early trade on Friday, which analysts say is down to optimism about the inflow of foreign funds.
