Q+A - Congress-led government faces confidence vote

A cut out of Prime Minister Manmohan Singh is seen through the flag of India's ruling Congress party at the state head office of Congress party in Mumbai October 22, 2009.

NEW DELHI (Reuters) - The Congress-led coalition government faces a trial of strength on Tuesday with some opposition parties demanding a parliamentary vote to force it resign over a hike in fuel and fertiliser prices.

Prime Minister Manmohan Singh is expected to survive the vote, but his margin of victory will signal the government's ability to pass major bills from opening up its $150 billion nuclear sector to allowing greater foreign stakes in pensions and insurance.

Here are some questions and answers about the vote, why the government will likely survive it and what the fate of pending reform proposals will be.

WHAT IS THE VOTE ABOUT?

At least 13 opposition parties, led by the Communists, have demanded a vote against an unpopular hike in motor fuel prices which has helped push headline inflation to a 17-month high of 9.9 percent.

If the government loses the vote, it must resign. The speaker will decide whether the vote will be allowed on Tuesday when parliament discusses budget allocations for ministries.

WHAT IS THE LIKELY OUTCOME?

Congress, like many observers, expects to survive the vote.

The ruling party received a boost when the BSP, a key regional party with 21 lawmakers said it would vote in favour of the government.

Congress managers have also sent feelers to smaller parties, which might abstain from voting.

Few parties, including the main opposition Bharatiya Janata Party (BJP), want an election. The main Communist party has said the vote is not to pull down the government, but to make it roll back the hike in taxes that made fuel more expensive.

Observers say even the BJP could end up abstaining. In a telling sign, the party has not yet sought a vote against the government despite vowing to demand one.

Some analysts have put the coalition's strength at 274, two more than the half-way mark.

WILL IT BE BUSINESS AS USUAL?

Even if the government survives a vote, it will be hobbled by its wafer-thin majority, raising questions about Prime Minister Manmohan Singh's ability to push through reforms.

With allies suspicious of opening up the economy and of its impact on their voters, crucial legislation will be further delayed, disappointing domestic and foreign investors.

The government has already suspended the introduction of a bill to cap operator liability in case of a nuclear accident, crucial for U.S. firms like General Electric and Westinghouse Electric to enter the $150 billion sector.

Other bills to open up the pension and insurance sectors and to allow foreign universities set up local campuses are also set to be put on ice for now.

WHAT ARE MARKETS THINKING?

Bond and stock markets have largely taken the events in their stride, with few participants expecting the government to fall.

If the vote goes against the government, markets would tumble on worries the political uncertainty would leave the economy rudderless just as it is rebounding from a slowdown.

(Editing by Malini Menon)