Millions strike in India over Modi's labor reforms

The prime minister plans to launch the biggest overhaul of labor laws in decades, giving companies greater flexibility in hiring and firing workers.

Protesters wielding Communist flags clashed with police in Kolkata on Wednesday as millions of workers across India went on strike, the latest display of opposition to Prime Minister Narendra Modi's economic reform package.

Modi's plan for reviving India's slowing economy has met with fierce protest and Wednesday's strike came days after the premier abandoned a pro-industry land reform which the opposition had said would hurt India's farmers.

Unions called the one-day action against Modi's plans to loosen rigid labor laws, which they say will put jobs at risk.

Nearly 150 million workers in banking, manufacturing and construction, backed by 10 major unions, stayed away from work. Taxi and rickshaw drivers stayed off the streets in Delhi, and shops and banks closed in left-wing stronghold Kerala in the south.

In Modi's home state of Gujarat, banking services were hit. Industry group ASSOCHAM estimated the strike cost the economy $3.7 billion.

OVERHAUL

Modi plans to launch the biggest overhaul of labor laws in decades, giving companies greater flexibility in hiring and firing workers - reforms that economists and businesses say will help job creation and unleash more economic growth.

These changes would make it tougher for employees to form unions or to go on strike, but include measures to expand the social security net to the huge unorganized sector, which refers to India's millions of small, privately-owned businesses with uncertain legal status.

In Kolkata, a city with a strong socialist tradition, protesters said they were attacked by police, but police officials said 30 arrests were made after the strike threatened to turn violent.

TV images showed union members using the poles of hammer and sickle Communist flags as weapons in clashes with other political parties. Shops and schools were closed, and trains services disrupted.

Economists say India urgently needs to liberalize land and labor markets to speed up economic growth that slipped to 7 percent in the June quarter, raising worries that the full-year figure could undershoot the official target of 8 to 8.5 percent.

The proposed labor revamp did not reach parliament in the session that ended last month due to fears it would cause a political backlash, and unless unions back down, may not do so in the winter session.

Opposition parties already blocked Modi's reform agenda in parliament, delaying the introduction of a uniform goods-and-services tax aimed at making it easier to do business in India.

"We are determined to go ahead with reforms," said a senior government official. "But politics will determine the timing."