India's opposition parties call general strike
Protest over fuel prices clears streets of major cities
Opposition parties in India have called a general strike to protest a steep hike in gas prices, shutting down commerce and daily life in major cities including Mumbai, Calcutta and Lucknow.
Opposition supporters in Mumbai patrolled neighbourhoods to ensure shops stayed shut Thursday and gathered in front of transportation hubs to keep buses off the roads. The city's normally gridlocked streets were eerily quiet.
In the northern city of Lucknow, protesters blocked railways and roads. Many residents stayed home, fearing violence.
In the eastern city of Calcutta, the strike was nearly total, but there was little impact in New Delhi.
Last week, state-run oil firms raised fuel prices more than 11 per cent, the steepest single increase in a decade. The opposition parties are demanding a rollback in the increase.
Economic growth slows
India's economic growth slowed to 5.3 per cent in the January-March quarter, the lowest since 2008, as the malaise in manufacturing and other sectors spread to ordinary Indians, who trimmed spending.
The data, released by the government Thursday, was far worse than expected. Growth for the fiscal year through March was 6.5 per cent — less than the Reserve Bank of India's forecast of 7.0 per cent.
Not so long ago, Indian politicians claimed their economy could rival China's and surge into double digit growth, lifting hundreds of millions out of dire poverty in the process.
Instead, India is mired in a deepening crisis of confidence. Asia's third-largest economy is widely regarded as performing below its potential, but hopes have dimmed that the fractious ruling coalition will be able to push through tough measures that could unlock a rebound.
Thursday's data suggest that Indian consumers, hit by stubborn inflation and a gloomy global outlook, have now fallen prey to the general malaise.
"It's beyond anything that we would have imagined," said Samiran Chakraborty, head of research at Standard Chartered in Mumbai. "It looks to me that the consumption side of the story is now faltering."
Chakraborty blames inflation, which has averaged 9.2 per cent since the beginning of 2010.
"Real wages are falling," he said. "The consumption slowdown along with the investment slowdown has been a double whammy for the GDP number."
Inordinate delays in project approvals, energy supply, labour and land issues, and policy decisions that have frightened foreign investors have all weakened investment. India's rising deficits and plunging currency — the rupee tumbled to a new lifetime low against the dollar Thursday — haven't helped either.
India's combined fiscal deficit has more than doubled from 4.1 per cent of GDP in fiscal year 2008 to around nine per cent now and the current account deficit is about four per cent of GDP, prompting Standard & Poor's to threaten a sovereign downgrade.
Manufacturing, a key source of jobs, fell 0.3 per cent in the March quarter from a year earlier.
"India's growth story has clearly deteriorated," said Citigroup economist Rohini Malkani, before the data came out. "A lot of it has been self-inflicted."
"There's no easy way out," Malkani said. "India clearly needs a fair amount of luck in terms of oil prices and capital flows." The Reserve Bank of India and the International Monetary Fund, among others, have been urging the government to enact long-promised reforms that would kickstart growth and stimulate investment.
The nationwide strike to protest the hike in gasoline prices underlined the difficulty of economic reform.
Economists had cheered the hike as a step toward controlling India's fiscal deficit. The 11 per cent increase was the steepest rise in a decade.
Opposition parties, however, are demanding that the government roll back the increase to check inflation, dimming hopes that New Delhi will be able to trim other subsidies, such as diesel, which would do far more to balance the budget. .