July 21 (Bloomberg) -- Indian Prime Minister Manmohan Singh is counting on four jailed lawmakers and half a dozen independent members to extend his four-year rule in a confidence vote tomorrow, the first in a decade.

Singh's Congress Party-led coalition and its supporters control 264 seats in the 541-member lower house of parliament, seven short of the 271 majority. The four imprisoned lawmakers - - serving time for murder, kidnapping and arson -- were released for the two-day debate under constitutional provisions guaranteeing their right to vote.

``Every vote counts,'' said Congress lawmaker Giridhar Gamang, whose ballot in the last confidence test in 1999 toppled the Bharatiya Janata Party-led government by a single vote. ``The Congress party will spare no effort.''

The debate was forced by Singh's former communist allies, who withdrew support over an accord with U.S. President George W. Bush that will allow India to import nuclear reactors and fuel. The vote may turn into a test of Singh's plans to ease curbs on foreign investment in insurance, pensions and banking as the economy slows from its best performance in six decades and inflation accelerates to the fastest in 13 years.

``It's difficult to say which way the vote will go,'' said Subhash C. Kashyap, the top bureaucrat in India's lower house of parliament between 1983 and 1990. ``A loss is going to set back the government's reform agenda.''

Increase Generation

The accord will give India access to nuclear technology and fuel without joining the 1970 Nuclear Non-Proliferation Treaty. Singh says India needs the deal to increase nuclear generation almost 10-fold and end blackouts in the world's second-most populous country after China.

The agreement must have the nod from the International Atomic Energy Agency and the 45-nation Nuclear Suppliers Group before it reaches the U.S. Congress for approval.

``This exercise was wholly avoidable,'' Singh told parliament while moving the confidence motion in parliament. ``If the government had been allowed to complete negotiations with the IAEA and NSG, I would myself have come to parliament to seek its guidance before operationalizing the nuclear agreement.''

Besides securing India's energy needs, the prime minister also wants to increase the foreign investment limit in insurance to 49 percent from 26 percent, remove a 10 percent cap on the voting rights of foreign investors in non-state banks and open pensions business to overseas companies -- plans which have been blocked by the communists since he came to power in May 2004.

Stocks Surged

India's stock market surged more than fourfold in the first 3 1/2 years of Singh's administration as the 75-year-old prime minister presided over an economic expansion that averaged 8.9 percent a year, the fastest since independence in 1947.

This year, foreign investors, who bought a record $17.2 billion of stocks in 2007, have turned sellers as the benchmark equity index has lost a third of its value. The central bank expects growth in Asia's third-largest economy may slow to 8 percent this year, dragged down by record high oil prices.

The ruling United Progressive Alliance has 225 seats and is counting on 39 lawmakers of the Samajwadi Party, which represents Muslims and lower caste, or social groups, in the nation's largest state, Uttar Pradesh. Samajwadi pledged support on July 9 in place of the communists, who say the nuclear pact weakens India's ability to pursue an independent foreign policy.

``This government has been reduced to a minority,'' Lal Krishna Advani, leader of the opposition Bharatiya Janata Party, told parliament. ``The UPA government is like a patient in the intensive care unit, because in an ICU, the first question that's asked is, will the patient survive or not.''

Toe The Line

Orders from party leaders, known as whips, don't guarantee every member will toe the line.

About seven Samajwadi lawmakers will defy the party whip and vote against the government, legislator Chaudhary Munawwar Hasan told Bloomberg News in a telephone interview July 17.

``I am opposed to the nuclear deal as the whole country is being mortgaged to America through it,'' said Hasan. ``I am ready to face any consequence for defying the party whip.''

Amar Singh, leader of Samajwadi Party, said July 15 the rival Bahujan Samaj Party, which also represents disenfranchised groups in Uttar Pradesh, offered 300 million rupees ($7 million) to one of its members to vote against the Singh administration. Bahujan Samaj called the allegations a ``bundle of lies.''

Bribes, Charges

India's Supreme Court has refused to uphold charges against lawmakers who take bribes in return for their vote in parliament. The court dropped charges in 1998 against lawmakers who received money to vote in a 1993 confidence motion, saying it can't interfere in the proceedings of the house.

The Patna High Court last week granted bail to Mohammed Shahabuddin to attend the special session of parliament, said Ram Kripal Yadav, chief whip of the Rashtriya Janata Dal Party, an ally of the ruling coalition.

The same court, in the capital of Bihar state, also temporarily released Lok Jantantrik Party lawmaker Surajbhan Singh, while a lower court in Allahabad allowed Samajwadi member Atiq Ahmed to attend the vote, the Press Trust of India reported. The Delhi High Court also gave permission to Rajesh Ranjan, alias Pappu Yadav, to attend parliament, Press Trust said.

Shahabuddin has declared in his affidavit to the Election Commission of India that he faces charges of murder and kidnapping. Pappu Yadav in his signed affidavit to the commission declared that he faces 26 criminal charges, including murder and kidnapping with intent to murder.

``While legally they may get the right to attend parliament and vote, there is a question of political morality involved,'' the Communist Party of India (Marxist) said in a statement. ``The Congress party will be seen by the entire country as taking recourse to convicted criminals to sustain their government.''

To contact the reporters on this story: Cherian Thomas in New Delhi at cthomas1@bloomberg.net; Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net

Last Updated: July 21, 2008 02:34 EDT