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Investor fears over India strike

Thursday, September 20, 2012 - 01:55

European investors watch with concern as shops, businesses and transport grinds to a halt across India as part of a one-day nationwide strike against sweeping economic reforms announced by the government last week. Matt Cowan reports

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All worked up and making sure there's nowhere to go. A nationwide strike has brought transport, business and public services to a standstill in many parts of India. The strike was called by the country's main opposition party along with smaller parties on both sides of the political spectrum to protest economic reforms announced by the government last week. They include a 14 percent increase in heavily subsidised diesel prices, and a move to open the door to foreign supermarket chains investing in India. Protestors such as Arun Kumar Misra say there is insufficient public support for such sweeping measures. SOUNDBITE: ARUN KUMAR MISHRA, PROTESTER, SAYING (Hindi) : "The government took the decision on its own by passing an executive order, the parliament was not functioning. It is an insult of the democratic system that they took such an important decision without discussion in the parliament. This government is anti-people." However, some outside observers say the government is doing exactly what's necessary. Arnab Banerji is the Chief Investment Officer at Collabrium Capital in London SOUNDBITE: Arnab Banerji, Collabrium Capital Chief Investment Officer saying (English) "If the government sticks to what it says it's going to do and doesn't reverse itself as it has in the past, then it's very positive." If the opposite happens, he says the repercussions could be severe. SOUNDBITE: Arnab Banerji, Collabrium Capital Chief Investment Officer saying (English) "That's a real risk. If, for whatever reason, these proposals are watered down, thrown out or reversed. Then I think investors will throw up their hands and I think a ratings downgrade is entirely possible because the country is running a large current account deficits and needs capital flows in order to be able to finance them." The Confederation of Indian Industry is urging the government not to give in to the pressure to soften the reforms, saying they're necessary for economic growth. It says the one-day strike has cost the economy $2.3 billion in lost production and trade. Matt Cowan, Reuters

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Investor fears over India strike

Thursday, September 20, 2012 - 01:55