India Ends Fuel Subsidies

NEW DELHI — Protests against a recent increase in fuel prices shut down markets, schools, airports and businesses across India on Monday, and thousands of people were arrested as violence flared in some cities.
The effect of the demonstrations — led by political parties that oppose the governing coalition led by the Indian National Congress — far exceeded expectations, although no official estimates of crowds were available. Some people affected by the one-day strike said the sizable opposition would force the government to address protesters’ concerns.

“This will create some sense of fear in the government,” said Vikas Sharma, 35, the owner of a cloth shop in Old Delhi, who was sitting idly outside his store.

As it moved to eliminate subsidies on petroleum products, the Congress government said late last month that it would raise the price of gasoline by 3.5 rupees a liter, or almost 30 cents a gallon. Diesel and kerosene prices are also being increased.

India’s state-run fuel companies will lose more than $11 billion this fiscal year, the Ministry of Petroleum and Natural Gas said last month. Finance Minister Pranab Mukherjee said Sunday that the fuel price increases would not be rolled back, regardless of the scope of Monday’s protests.

The Congress government is paring market controls that keep prices of some goods artificially low in India. At the same time, it is investing in employment programs.

“The main thing they are trying to do is move away from subsidies to spend on development,” said Nikhilesh Bhattacharyya, an economist for Moody’s Economy.com. “It is a slow process, a very slow process.”

Opposition parties say the changes are misguided. Prime Minister Manmohan Singh is “more worried about the financial condition of oil companies than the condition of poor people,” said Nitin Gadkari, president of the Bharatiya Janata Party, the Congress party’s main rival.

Fear of violence and traffic jams kept some of India’s largest companies closed on Monday. Airports in Calcutta and Chennai were paralyzed, and taxis stayed off the streets in major cities.

About 1,000 people gathered at Chandni Chowk, Old Delhi’s main commercial hub, to protest the price increases, denounce political leaders and set fire to effigies with the heads of demons.

“The poor man’s plate is empty and the government is clapping,” read one sign at the protest.

Many Indians are not feeling the benefits of the country’s economic growth, which is expected to top 8 percent this year.

Inflation is driving up food prices, but salaries of low- and middle-income workers have not risen significantly.

“It is a very poor country, and that growth isn’t really broad-based,” said Mr. Bhattacharyya, the economist.

In Mumbai, the country’s financial capital, normally chockablock main roads were empty because most stores and offices were closed. Buses and commuter trains were running much less frequently than usual after protesters attacked some buses and blocked train tracks. Taxi drivers kept their cars off the road, making it hard for people without vehicles to move around the city.

Vikas Bajaj contributed reporting from Mumbai, India.

NYT