Despite communist influence on the new government, the future of India's economic reforms looks safe in the hands of a progressive Cabinet, which will rely on the need for growth to push through investor-friendly measures.

Analysts say Asia's third-largest economy will need more of the sort of radical reforms that pulled it from the brink of bankruptcy 14 years ago if it wants to remain one of the world's fastest-growing economies.

The new communist-backed government sent shockwaves through financial markets within days of taking charge in May by scrapping plans to sell profitable state firms.

The market's nervousness grew more intense following a cut in the foreign investment ceiling for airports and a promise to increase credit to the default-prone farm sector.

Despite this bumpy start, analysts say reforms will continue because of the composition of the cabinet and its focus on economic growth and development.

"It is a dream team as far as talent is concerned, but it has been given a very bad field to play on," said Saumitra Chaudhuri, economic adviser at domestic credit rating agency ICRA Ltd., referring to the diverse opinions of the parliament allies.

Prime Minister Manmohan Singh has worked as an academic, a UN civil servant and a central bank governor while current Finance Minister Palaniappan Chidambaram is a former lawyer.

Mr Singh, who was finance minister from 1991 to 1996, is considered the father of Indian reforms, which were taken forward by Mr Chidambaram when he was finance minister between 1996 and 1998.

But this time round their Congress party-led coalition is in a minority in the 545-member parliament and depends for a majority on the communists, which control more than 60 seats.

Still, the leftists, who initially rattled investors with their opposition to privatisation and demands for more farm subsidies, may not prove a major cause for worry, analysts say.

"Most key ministries are headed by reformist ministers who are likely to ensure that economic reforms stay on track," said Prasenjit Basu, head of Singapore-based Robust Economic Analysis, who felt the left's bargaining power was more apparent than real.

"The Left Front cannot credibly act on any threat to bring the government down as the ultimate outcome of such action would be the return of the NDA (National Democratic Alliance) - which the Left finds even more unpalatable," he added.

The previous right-wing NDA government was thrown out of power by the rural masses, about two-thirds of India's billion people, who felt reforms had only benefited urban folk.

Others analysts noted that political compulsion alone would not keep reforms on track anyway. The need to further strengthen the economy, especially in poor rural India, which contributes only 25 per cent to the GDP, simply necessitated policies that would lead to more investments and jobs.

"The government has to push ahead with reforms, otherwise GDP growth can slide to four per cent or less with a single bad monsoon," said V. Anantha Nageswaran, regional head of investment consulting at Credit Suisse Financial Services in Singapore.

"The first test of this new government will be the budget," he said, adding that there was an urgent need for reforms in the farm, infrastructure and power sectors and amendment of the archaic labour laws.

The federal budget will be presented in parliament on July 8, when the government is expected to raise the flag for reforms.

A planned value-added tax, for one, would boost government revenue, allowing it to pour money into the social infrastructure of health and education and also attempt to balance the books.

India has one of the world's highest ratios of fiscal deficit to GDP. It was 9.5 per cent in the latest fiscal year.

The government has set a goal of annual economic growth of seven to eight percent, and wants to boost health and education spending to as much as nine percent of gross domestic product (GDP) from less than one per cent.

Analysts say such objectives will be hard to achieve if the burden is borne entirely by the public sector and that innovative public-private sector partnerships will help solve the problem.