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Coalition government is formed when there is no absolute majority of any single party in the parliament. There is cooperation of different political parties which come forward to form the government. Therefore all the parties have equal power and equal say in the policies of the government. In this way, they put forward their regional demands representing the demands of their own people and want the decisions to be taken in their favor only.
Hence in order to reach a certain agreement, the demands of all parties under coalition have to be taken care of. All their suggestions are considered before reaching the final decision. The central government becomes more sensible to the demands put forward which many times led to "policy paralysis" as the coalition cannot implement the agendas of the single party in the coalition as other parties threaten to withdraw its support from the government leading to instability.
One such example of regional parties emphasizing their demand in the era of coalition government is in the time of UPA government when national interest was kept aside for accomplishing the regional demands. When UPA government was at the Centre, it didn't reach an agreement with Bangladesh because West Bengal regional party believe that it would hamper the development of their state.
One example of policy moderation due to coalition government is that of the reservation bill. During the rule of Janta government, the report of Mandal commission recommended the reservation for OBC in educational and employment field. Most of the political parties were not in favor of the bill but accepted it because they did not want to become unpopular among the masses and had accepted the assertion of the OBCs in politics.
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