Bloomberg News

Strike in India Shuts Banks as Unions Protest State Asset Sales

February 28, 2012

Banks closed and bus services were canceled as millions of Indian government employees joined a nationwide strike to protest the cost of living and plans to sell stakes in state companies.

While the stoppage shuttered businesses in some states, including Kerala and Punjab, its impact was limited. In West Bengal, where trade unions linked to communist political parties are powerful, normally congested roads were quiet yet government offices and schools remained open.

The one-day stoppage was called by 11 unions from across the political spectrum, including the Indian National Trade Union Congress that’s affiliated to the ruling Congress party.

Vishwas Utagi, secretary of the All India Bank Employees Association, said there had been a “total closure” of state- run banking services with about 70,000 branches shut.

Prime Minister Manmohan Singh’s government has faced at least five earlier nationwide strikes since returning to power in May 2009. His administration is bidding to curb the fiscal deficit through selling stakes in state-owned companies, asset sales that unions say will lead to job losses.

Staff at state-run phone companies, bus drivers and postal workers are also on strike.

In New Delhi and Mumbai, transport services ran largely as normal. G.S. Bawa, a spokesman for the Airports Authority of India, said flights were unaffected.

Inflation (INFINFY) above 9 percent during the first 11 months of last year reduced the purchasing power of India’s poor, where the World Bank estimates about 800 million people live on less than $2 a day. Inflation fell to 6.55 percent in January.

Job Security

Previous strikes protested fuel prices increases and called for the rollback of now-stalled plans to allow retailers such as Wal-Mart Stores Inc. (WMT) to set up supermarkets in India.

Labor Minister Mallikarjun Kharge said Feb. 24 that the government had taken measures to curb rising prices and improve the lives of lower-paid employees. The unions are also demanding adherence to laws on job security and extending social security programs to daily-wage workers.

India has run a deficit every year since at least 1973 to support growth in its economy, now Asia’s third-biggest. The gap widened to 4.7 percent of gross domestic product last year after narrowing to a record-low 2.7 percent in the year ended March 31, 2008, according to central bank data.

The shortfall this financial year could be as much 6.6 percent, according to Morgan Stanley. CLSA Asia-Pacific Markets estimates the deficit will be 5.5 percent.

To contact the reporters on this story: Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net; Andrew Macaskill in New Delhi at amacaskill@bloomberg.net

To contact the editor responsible for this story: Hari Govind at hgovind@bloomberg.net


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