June 6, 2008 / 8:51 AM / 11 years ago

REFILE-Fuel price protests spread in India, hit business

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By Simon Denyer

NEW DELHI, June 6 (Reuters) - Strikes and protests against India’s decision to raise fuel prices spread around the country on Friday, paralysing transport in two key states and hitting businesses including software firms in Hyderabad and Kolkata.

With elections looming, some state governments moved to ease the burden on consumers by cutting local duties by a few percentage points, but at the expense of their own budgets and of efforts to curb demand for fuel.

Opposition parties and the government’s own communist allies have called strikes and protests against this week’s hike in petrol and diesel prices, saying the government should have done more to protect ordinary people from rising global oil prices.

The problems facing the government less than a year before elections were underlined on Friday with news inflation rose to a fresh 3-½ year high of 8.24 percent.

Rising fuel prices, hiked by around 10 percent this week, could push overall inflation above 9 percent, analysts say.

But the strikes and protests have not gone down well with large swathes of the electorate, who say they are only making a difficult situation worse.

India and Malaysia were the latest Asian nations this week to raise fuel prices, putting downward pressure on global oil prices as traders anticipated falling demand.

Businesses, schools and road and rail transport were paralysed for a second day in Kolkata and throughout the eastern state of West Bengal as opposition party protesters stopped trains and buses and forced people out of taxis.

But many middle-class Indians, like young entrepreneur Ishan Ahmed, said they understood prices had to rise and said any party in power would have done the same.

“I am totally against the strikes since it is all about politics and faking concerns for people,” he said.

“The strike is no solution,” agreed Pradip Mukherjee, a 25-year-old IT professional, who said two thirds of the revenue of Kolkata’s software companies comes from the United States.

“Two days of strikes are a big blow to companies with U.S. clients and send the wrong message from West Bengal which is trying to woo industry.”


Protesters from opposition parties also shut down the southern state of Andhra Pradesh, laying siege to bus stations and sitting on railway tracks. Some bus stations were damaged and at least 50 people were arrested.

Several IT companies in Hyderabad, a city competing with Bangalore to be India’s Silicon Valley, shut down on Friday as a taxi strike prevented employees getting to work.

“No-one is bothered about the inconvenience caused to the common man,” said Amarnath Reddy, a software professional.

In New Delhi, a crowd of more than 1,000 supporters of the main opposition Bharatiya Janata Party (BJP) protested near parliament, forcing police to use water cannon when a few dozen broke through two barricades.

And in the financial capital Mumbai, a powerful opposition party, the Hindu-nationalist Shiv Sena, has also threatened protests at various points during the evening rush hour.

Flights out of Kolkata and Hyderabad were unaffected but many arriving passengers were left stranded with no way to get into the cities.

India’s Congress party-led central government has tried to mute the anger by challenging state governments to cut their own duties on fuel.

Many states, whether ruled by Congress, the communists or the opposition, have already done so, shaving a few percentage points off the rise in fuel prices but at the expense of a deteriorating fiscal situation.

The partial roll-back, as the Indian media has described it, will also reduce pressure on consumers to reduce demand.

In New Delhi, the Congress-ruled local government cut taxes on cooking gas, reducing a planned 50 rupee ($1.2) or 17 percent rise in prices down to just 10 rupees.

“The government seems to be worried about next year’s elections,” said autorickshaw driver Asif with a wry smile. (Reporting by Sujoy Dhar in Kolkata, Bappa Majumdar in New Delhi and Jonathan Allen in Mumbai; Editing by Jerry Norton)

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