India : Modi's reform drive faces challenge as India goes on strike
A key demand of the public sector workers is higher wages, although the government's own fiscal deficit targets meant New Delhi was constrained in how much it could do, according
In late June, India approved a more than 14 percent increase in salaries and pensions for about 10 million government employees and pensioners, which is expected to cost nearly $17 billion in the financial year through March 2017, according to Reuters.
More recently, the government announced on Tuesday the minimum wages for unskilled non-agricultural workers to be 350 rupees ($5.24) a day.
Trade unions, however, are demanding minimum wages of no less than 18,000 rupees a month as well as enhanced pensions of no less than 3,000 rupees a month.
Last year, in September, trade unions went on a similar strike where nearly 150 million workers stayed away from work in protest over the government's plans to introduce labor reform bills in parliament. Following the strike, the government shifted its focus to other areas of the economy.
"The government emphatically took land acquisition liberalization off the table last year, and intense union opposition always depressed the outlook for major labor law liberalization at the central level," Sasha Riser-Kositsky, an analyst at Eurasia Group told CNBC by email. "The demands expressed by the Unions this week are nothing new."
"GST was the last major economic reform likely to pass at the central government level before the 2019 general election," said Riser-Kositsky, adding the upcoming 15 state elections in 2017 and 2018 meant the government was "pivoting from reform to electioneering and project implementation."