Fears of ‘economic slavery’
Walmart among targets as one million shops close to protest reforms of foreign investment rules
NEW DELHI— For years, critics frustrated at the slow pace of economic reform in India heaped criticism on the government for its muddled policies and inability to stare down vested interests.
On Thursday, days after officials finally announced decisive reforms, those “vested interests” made eminently clear their displeasure over the cabinet’s decision to cut fuel subsidies and allow foreign investment in the retail, aviation and broadcasting industries.
In a show of force, the main opposition Bharatiya Janata Party, backed by left-wing parties, called a nationwide general strike. Trains, buses and rickshaws stopped rolling in several of India’s 35 states and union territories, more than one million shops were shuttered and effigies of the prime minister were burned as thousands of workers and owners of small stores marched, waved flags and blocked traffic.
Some kiosks were attacked and tires were burned to block traffic, while shops that remained open, including a Walmart in central Uttar Pradesh state, were forced by angry mobs to close for the day.
But the picture was mixed. Even as activity came to a near-halt in the states of West Bengal, Uttar Pradesh, Bihar and Orissa, the day was relatively normal in New Delhi, Kerala and western Maharashtra state, where the commercial hub of Mumbai is located.
Under the announced reforms, foreign ownership of up to 51 per cent will be allowed in supermarkets and chain stores such as Walmart. Local airlines will be able to sell shares to foreign carriers. And foreigners can take stakes in broadcasting and parts of the electrical power industry. In its bid to jumpstart the flagging economy, the government vowed to sell off stakes in resource companies it runs.
The outcry that has followed highlights the pronounced gap in Indian society between the middle class, which wants better service, presentation and choice in the growing number of air-conditioned malls, and the hundreds of millions of people working and shopping in mom-and-pop stores who fear that added efficiency will kill jobs. “Small shops can’t compete with these big guys,” said Uma Shankar, 48, owner of a pharmacy in New Delhi. “This is a setup between the government and foreign companies. We’re barely scraping by. Where will we go?” The decision also sparked a political shakeup after the second-largest partner in the ruling Congress Party-led coalition, the mercurial Trinamool Congress Party, announced its intention to withdraw from the government by Friday unless reforms are rolled back. Although Trinamool holds only 19 of 541 seats in the lower house of Parliament, its departure would put an end to the government’s parliamentary majority, raising the chances of early elections. Among the most politically sensitive reforms is the 10-cent-per-litre hike in diesel prices and limits on subsidized cooking gas. The government has been pressured to take the unpopular step as the country’s fiscal situation and the global economy have weakened. Fuel subsidies amount to $32 billion a year. Foreign stakes in India’s retail industry, which supports more than 200 million people working in an estimated 50 million stores, are also creating friction. “India is heading toward economic slavery,” said Rajnath Singh, a Bharatiya Janata Party leader.