Is India’s economy at a standstill?

A nationwide two-day strike called by trade unions in India has brought the country’s transport system to a standstill.
 
Many government offices, schools and public utility services are closed in what has been dubbed a ‘hundred million man strike’.

“It’s important to take a step back and look at the big picture. The government is introducing reforms that one would argue are long overdue in several areas. One is to do with restriction on foreign direct investment in some important sectors where investment is crucial in order to improve the productivity.” – Jaideep Prabhu, a professor of Indian business and enterprise

Unions are demanding that the government take urgent steps to control rising prices, raise the minimum wage and halt the privatisation of public resources.

Workers in a New Delhi suburb set fire to vehicles and vandalised businesses. While elsewhere, banks are closed and normally packed streets empty as auto-rickshaws, buses and taxis stay off the roads.

Tempers are running high among the drivers who are protesting against high fuel prices and government reforms. These reforms include plans to open the country’s retail sector to global supermarket chains – something the strikers call anti-labour.

The government reforms are an attempt to jump-start India’s faltering economy. It is Asia’s third-largest but faces the threat of a downgrade in its global credit rating.

After embracing the free market in the 1990s, India established itself as one of the world’s fastest growing economies. But after a decade of rapid growth, which peaked at a rate of ten percent, the country’s economy was hit hard by the global downturn in 2008.

“Our demands are not only about money; it involves the rights of the workers, where money matters very little. Therefore we had repeatedly asked the government to at least guarantee minimum job, wages and implementation of labour laws and [to] follow the International Labour Organization’s conventions.” – Amitava Guha, a member of the Centre of Indian Trade Unions

The growth rate this fiscal year is estimated to be five percent, the lowest in a decade. And as the global economy has slowed, the fault lines of endemic corruption, poor infrastructure and stalled reform in India have been exposed.

Manmohan Singh, the country’s prime minister, is trying to reverse that trend by giving greater freedoms to the markets. But that has ignited a huge backlash.

Talks between the government and trade unions broke down on Monday, and with no solution in sight the anger on India’s streets is still simmering.

India’s Chamber of Commerce estimates that the two-day strike could cost businesses nearly $4bn. And this latest stand-off between the government and trade unions is leaving travellers stranded.

“The passengers are facing the brunt of the auto-rickshaw strike,” one man told Al Jazeera’s Hazem Sika. “If we get the auto-rickshaws then they are asking double what they used to charge earlier. How will the passengers commute?”

So, are government reforms pushing India’s unions over the edge? Or is India being held hostage by the trade unions? And does the answer to India’s economic problems rest in further liberalising the economy as the government is attempting?

Inside Story, with presenter Mike Hanna, discusses with guests: Santosh Mehrotra, the director general of the Institute of Applied Manpower Research, which is part of India’s Planning Commission; Amitava Guha, a member of the Centre of Indian Trade Unions; and Jaideep Prabhu, a professor of Indian business and enterprise and director of Cambridge University’s Centre for India and Global Business.

“They are asking for adequate social security for workers who are not under the umbrella of the organised sector …. Unfortunately, the timing of this demand is not good because clearly there is going to be a fiscal requirement. In other words, in regards to the government, they will have to spend more money and now is not the time to spend more money because the government is facing a huge fiscal deficit.” Santosh Mehrotra, the director general of the Institute of Applied Manpower Research