Millions of Indian shopkeepers, traders and lorry drivers protest against retail reforms and hike in fuel prices.

Schools, shops and government offices were shut in some Indian states as protesters blocked road and rail traffic as part of a one-day nationwide strike against sweeping economic reforms announced by the government last week.

The main opposition Bharatiya Janata Party (BJP), joined by smaller parties from both the political left and right, had called for the strike on Thursday to protest against a 14 per cent hike in diesel prices, which are heavily subsidised.

The strike also was to protest a government decision that opens the door to foreign supermarket chains to invest in India.

The measures, part of a package of big-bang economic reforms aimed at boosting a sharply slowing economy, have triggered a political firestorm.

Prime Minister Manmohan Singh’s biggest ally pulled out of his shaky coalition on Tuesday, raising the risk of an early election.

Bangalore, India’s IT and outsourcing hub, was hard hit by the strike, but in Mumbai, the country’s financial capital, banks and offices were open as usual. In New Delhi, shops were shut in BJP constituencies and there were fewer cars on the road, but the central business district was untouched.

The Confederation of All India Traders (CAIT) had forecasted that 50 million people would participate in the protest, with large demonstrations planned in the capital New Delhi and scores of other cities.

Many small business owners and workers fear that the arrival of largescale supermarket chains will lead to drastic job losses as India’s supply chains and shopping habits are transformed.

‘People are angry’

“Multinational companies will destroy the economic and social fabric of the country and will adversely impact traders, transporters, farmers and other sections of retail trade,” CAIT secretary-general Praveen Khandelwal said.

“My business will suffer very much. People are going to go to big stores because they can get everything in one place“ – Surinder Kumar Arora, grocery owner

Indian PM Singh has been buffeted by reaction to the retail reforms and a sharp rise in diesel prices, with a key coalition party quitting the government and demanding the policies are reversed.

“People are supporting us in this strike because they are angry at the recent decisions of the government,” said Prakash Javedkar, a spokesperson of the BJP.

“The prime minister must resign and we are pressing for this.”

The arrival in India of international chains such as Walmart, Carrefour and Tesco is expected to herald a consumer revolution with shoppers moving from small, neighbourhood stores to large, out-of-town supermarkets.

“My business will suffer very much. People are going to go to big stores because they can get everything in one place,” Surinder Kumar Arora, who operates a family-run grocer in south Delhi’s Bhogal market, told the AFP news agency.

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“We want to go on strike because shopkeepers in India are going to lose business,” said fellow trader Deepak Sethi, 35, whose store opened 45 years ago.

“These big companies can attract customers by selling at cost prices. That means people here are going to lose jobs. Shops like ours will be hit the most.”

Singh and many industry leaders argue that a modern retail system would improve value and choice for Indian consumers, create new jobs and enable farmers to reduce wastage.

But the government, weakened by the worst quarterly GDP figures in three years and a series of corruption scandals, faces a major challenge to push through the reforms and boost the economy before elections due in 2014.

Millions of lorry and bus drivers also went on strike on Thursday over a 14 per cent hike in subsidised diesel prices as the government tries to tackle its widening fiscal deficit.

“We want to let people know what this government has done to us by raising prices,” Gurinder Pal Singh, a senior member of the All-India Motor Transport Congress (AIMTC), told AFP.