NEW DELHI, 26 May 2004 — Prime Minister Manmohan Singh settled a row with a sulking regional ally, ending a rift in the ruling coalition three days after it took power but possibly setting up a bad precedent.

Manmohan was expected to announce a slight reshuffle of portfolios after coalition officials said the southern Dravida Munnetra Kazagham (DMK) party had been given the key departments of shipping and internal revenue which it had demanded.

Seven DMK ministers named in the 67-member council of ministers at the weekend had refused to take up their jobs until their demand was conceded.

And while the government was never under threat, the compromise with the DMK could encourage others in the Congress party-led coalition, made up of more than 15 parties, to flex muscles.

The worry was that coalition partners may start pulling in opposing directions on policy as well.

“One hopes this kind of coalition politics won’t affect the coherence of policy,” said political analyst Mahesh Rangarajan. “It hasn’t yet, but the concern is that it might.”

The coalition holds final talks today on its policies over the next five years, focusing mostly on the economy.

Communist parties, which are not formally in the alliance but provide vital support, are also involved.

“With the left, the debate is on specific issues and programs,” Rangarajan said. “With the regional allies, it’s over the loaves and fishes of office.”

Still, coalition officials said there were no anticipated problems in finalizing the Common Minimum Program and hoped to announce it on Thursday.

A draft of the policy already publicized says the government is committed to following pro-growth policies and that the country’s crucial reforms would be maintained, albeit with a “human face”.

Bombay’s stock market, worrying about a swing to the left in Asia’s third-largest economy, had a record one-day fall last week, but prices have since recovered.

But the worries are not over. The benchmark index fell up to three percent yesterday but then recovered to close 0.41 percent down, pleased that the rift with the DMK had been resolved.

The row was the first test for the soft-spoken Manmohan, who was pitchforked into the top job after powerful party chief Sonia Gandhi stepped aside.

“All issues have been resolved, we are very much part of the ministry,” said Dayanidhi Maran, a DMK minister who held talks with the Congress to resolve the row. DMK chief M. Karunanidhi embarrassed the ruling coalition on Monday by releasing a copy of an agreement that he had signed with a Congress official on the portfolios to be allocated, usually the prerogative of the prime minister.

Karunanidhi blamed a “coterie” of advisers around Manmohan and Sonia for reneging on the agreement on ministry positions.

The main opposition Hindu fundamentalist Bharatiya Janata Party trained its guns on the new administration, saying the jostling for Cabinet posts was a bad sign.

“The tussle for ministries and departments shows the hunger for power. It is a bad signal for governance,” spokesman Mukhtar Abbas Naqvi said.

Suspected Rebels Kill 10 in Kashmir

Suspected militants killed four policemen, four soldiers and two others in Kashmir overnight and yesterday in separate incidents, a police spokesman said.

He said three policemen were killed in an ambush by suspected rebels in the southern district of Doda late Monday.

The village of Panj Dhara, where the incident took place, was later sealed off and searches launched to arrest the militants. Some people were taken for questioning, police said.

In the neighboring district of Anantnag, suspected rebels shot dead a police constable and his friend yesterday morning, police said.

The slain constable was part of police’s counterinsurgency wing.

An army officer and three soldiers were killed and two civilians injured in an ongoing encounter with militants in Kashmir’s northern Kupwara district, a police spokesman said.

In southern Kashmir’s Rajouri district suspected rebels late Monday intruded into the house of a functionary of the state’s ruling People’s Democratic Party and shot him dead after dragging him out of his home, the spokesman said.