The Nationalist Congress Party has decided to pull out of the UPA government and support it from outside in protest against the way the party was treated by Congress, creating fresh trouble for the ruling coalition.
Party supremo Sharad Pawar, Minister for Agriculture, and the only other representative in the Union Cabinet, Praful Patel, Minister for Heavy Industry, have informed Prime Minister Manmohan Singh that they are tendering their resignation.
In a separate communication to UPA Chairperson Sonia Gandhi, Pawar has said NCP, which has nine members in the Lok Sabha and seven in the Rajya Sabha, will stay part of the UPA.
Despite these missives from NCP sent on Thursday, the Congress leadership was continuing to make efforts to retain the party in the coalition government.
The Congress Core Group including Gandhi, Singh and senior Ministers, met here this evening after which party sources claimed the crisis was being defused.
Congress sources claimed the NCP issue was discussed and "all matters stand settled". The issue is not about Pawar being number two in the Cabinet but about coordination, the sources said.
NCP, a stable ally of Congress for the last eight years, created a crisis of sorts for the government when Pawar sent a one line communication to the Prime Minister on Thursday expressing his decision to quit.
In the letters to the PM and Gandhi, the NCP chief said the party would like to keep out of the government and focus on its growth since it was small and elections were approaching.
Singh called him immediately for a discussion which was followed by a meeting with Gandhi on Friday morning.
During the discussion with both the leaders, Pawar raised issues of lack of coordination and consultation by Congress with allies and governance issues like excess food subsidy at the cost of funding for water projects.
Pawar also pleaded that the government should not go for excessively populist schemes at the cost of economy.
Sources said both Gandhi and Singh sought to persuade him not to press for their resignation.
Earlier in the day, fissures in the coalition came into full public view with NCP complaining of "serious issues" over the way the government and coalition was being run by the Congress leadership.
The prime minister reached out to sulking Pawar, describing him as a "very valued colleague" but there were no indications as to what the Congress leadership was planning to address NCP's concerns.
Pawar and Patel did not attend office.
Pawar later met his senior party leaders, after which Patel said NCP was "unhappy with some aspects" of the functioning of the government and the larger coalition and this has been conveyed to the Congress leadership.
Patel said the UPA-II was entering the last two years of its term and NCP wanted the government to be "more decisive" and "more committed" to the issues before the people.
"We do have certain issues on which we want some new direction," he said but added that the party continues to part of UPA. He dismissed reports that Pawar was peeved over not being granted number two status in the government.
Leaving the ball in Congress' court to address the party's grievances, NCP leaders will meet on Monday to discuss future course of action.
Shortly after Patel's press conference, the prime minister said in a statement to PTI that Pawar is a "very valued colleague" and that his knowledge, wisdom and experience are a "great asset" to his government.
Congress also sought to downplay the differences saying Pawar is a senior and respectable leader of UPA and all the issues with the party will be solved through talks.