Strike called by opposition to protest fuel price hike hits India’s transport, businesses

By Ashok Sharma, AP
Monday, July 5, 2010

Strike over fuel prices hits businesses in India

NEW DELHI — Transportation ground to a halt and businesses were closed in many parts of India on Monday as the main opposition parties led a strike to protest a government-imposed hike in fuel prices.

“Because of the obstruction caused by protesters, train services have been stopped in West Bengal state,” said railroad spokesman Samir Goswami in Calcutta, the state’s capital. Flights were also halted at Calcutta’s airport, which serves domestic and international destinations.

Train and air services were affected in Mumbai, India’s financial and entertainment capital, where taxis went off the roads as protesters belonging to the Hindu nationalist Bharatiya Janata Party and Shiv Sena came out on the streets.

The opposition called the daylong protest after the federal government refused to roll back the 6.7 percent hike in fuel prices announced 10 days ago.

The unpopular hike in fuel prices came as the government struggled to stem losses at state-run oil companies and tame the fiscal deficit while facing double digit inflation.

There was no major violence reported in the country during the strike, although there were some minor scuffles between demonstrators and police.

Demonstrators and police also clashed in Lucknow in northern Uttar Pradesh, where two Hindu nationalist leaders, Arun Jaitley and Mukhtar Abbas Naqvi, were detained by police, said Surendra Srivastava, a police spokesman.

Thousands of people were stranded for hours as protesters stopped trains in West Bengal, Bihar and Andhra Pradesh states by blocking the railroad tracks.

Worst-hit were the states governed by communist groups and the opposition Hindu nationalist Bharatiya Janata Party, which is seen as generally pro-market. Those states included Madhya Pradesh, Gujarat, Karnataka, West Bengal and Kerala states.

There were also some minor disturbances in New Delhi, though businesses and schools remained open.

Top BJP and communist leaders led hundreds of their supporters in street protests in the Indian capital.

“We will continue our protest until the government takes back its decision,” said D. Raja, a Communist Party of India leader.

The government dismissed the strike as opposition posturing.

“Is this strike a constructive solution to the problem? Does it help poor people in any way?” Abhishek Manu Singhvi, a spokesman for the ruling Congress party said at a news conference in New Delhi.

“If the idea was to get some attention there are other ways to get that. The goal of this strike is just sensationalism.”

The government said the hike could save the state $5.2 billion but exacerbate inflation by nearly a percentage point.

The government last month decided to deregulate petrol prices, resulting in a 6.7 percent, or 3.5 rupees ($0.08) per liter price increase.

The price of diesel — important for farmers’ irrigation pumps and tractors, as well as trains and buses — was hiked by 5 percent, or 2 rupees per liter, but will not be deregulated immediately.

The government also raised kerosene prices by 33 percent, or 3 rupees per liter, the first increase since 2002. But the government continued to subsidize kerosene, which is used for cooking by tens of millions of poor Indians.

Liquefied petroleum gas, also used for cooking, now costs 35 rupees, or 11.2 percent, more per cylinder.

Even after the price hikes, state-run oil and gas companies will face a shortfall of 530 billion rupees ($11.4 billion) from below-cost sales, India’s petroleum ministry said.

Price controls have bled profits from state oil companies like Oil and Natural Gas Corporation Ltd. and Oil India Limited. The government has been forced to spend billions through direct subsidies and off-balance sheet oil bonds to help compensate for those losses.

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