Rising Inflation to Induce Union Protest of Alleged Government Inaction in India

Inflation in India crossed 7% in July, after remaining stable at 4% for over 3 years. Labor unions in India are planning to take on the government on this issue as well as other subjects such as minimum wages, unemployment, corporatization of Public Sector Undertakings, and quashing of labor codes as they feel that these have made conditions worse for workers in the informal sector, which comprises 90% of the Indian workforce. (The “informal sector” is defined by the First Indian National Commission on Labour as “those workers who have not been able to organize themselves in pursuit of their common interest due to certain constraints like casual nature of employment, ignorance and illiteracy, small and scattered size of establishments.”) 

The government responded that inflation is being tackled from various angles, including reducing the excise duty on petrol and diesel, banning wheat exports, allowing the duty-free import of edible oils, and revising downward the duty structure on steel. Unions labeled the government’s efforts as insincere, and look to mobilize on specific issues, though there were no immediate plans to call for a general strike. 

HRPI View: Given the earlier repeal of farm laws due to protests (extensively reported in previous issues), it is very possible that if that government does not act fast, nationwide protests may break out, leading to supply chain issues. Companies would be advised to ensure robust business continuity plans.