Graft allegations stall parliament, and economic reforms

NEW DELHI (Reuters) - Parliament was adjourned on the first day of a new session after opposition lawmakers demanded the resignation of leaders tainted by corruption allegations, deepening an impasse that has stalled the government's reform agenda.

Members of the opposition Congress party on Tuesday stormed the well of the chamber in the Rajya Sabha, shouting slogans and forcing the speaker to halt proceedings. The house was adjourned for the day after repeated protests.

Prime Minister Narendra Modi appealed for the opposition to work with the government.

"We want to take the country forward," Modi said on his way into parliament. "I hope parliament will respect the country's aspirations." In the monsoon sitting of parliament, the government's main goal is to ease the passage of the biggest overhaul of taxes since independence in 1947. All eyes are on the Rajya Sabha, where the government and its allies are a minority.

Passing the measure would be a victory for Modi and go some way to reassuring investors who are growing jittery that economic modernisation is happening too slowly.

Modi is under pressure from the opposition to fire his foreign minister and a state leader amid claims they gave favours to a sports tycoon living in London who faces allegations of tax evasion.

Separately, the chief minister of Madhya Pradesh governed by Modi's party is on the defensive over the deaths of witnesses involved in a massive fraud in entrance exams for college and government jobs.

Modi has made tentative progress on economic transformation since he swept to office a year ago, and in his first year parliament was a third more productive than the first year of the last government, data by PRS Legislative Research shows.

But the pace of change has been slower than many expected from the man some supporters cast in the mould of reformers such as Britain's Margaret Thatcher or China's Deng Xiaoping, and private companies are slow to invest in economic revival.

Plans to pass a business-friendly land purchase law are on the backburner after Congress and other parties dubbed it "anti-farmer" and refused to let parliament vote on it.

The tax bill has been passed in the Lok Sabha and got the support of a Rajya Sabha panel on Monday. But the government needs a two-thirds majority to make it law, which it will struggle to reach without Congress support.

Congress wants the bill to be amended before backing it.

(Reporting by Andrew MacAskill; Editing by Frank Jack Daniel and Clarence Fernandez)