World

Modi passes 'Thatcher test' as coal union strike crumbles

Bloomberg

Prime Minister Narendra Modi faced down the first major opposition to his economic agenda as coal unions called off a 2-day-old strike that threatened to paralyze the nation.

The unions at the world’s biggest coal miner, Coal India Ltd., agreed to end the planned five-day action late Wednesday after a seven-hour meeting with Coal and Power Minister Piyush Goyal in New Delhi.

The government will establish a committee with labor representatives on it to look into the unions’ demands, Goyal said. Concerns about a potential privatization of Coal India were “unfounded,” he said.

Modi’s Cabinet in October issued an executive order that included a provision to allow private companies to enter into the mining and selling of coal. Analysts consider the move crucial to boosting India’s coal output.

“We have explained to them the rationale behind the ordinance and have assured them that Coal India’s and its employees’ interests will always be protected,” Goyal said at a joint press briefing. “The unions have vowed to help the company make up for the output loss in the past two days.”

The end of the strike with the ordinance unchanged means that Modi’s government has stood its ground, said Debasish Mishra, a senior director at Deloitte Touche Tohmatsu India Pvt. in Mumbai.

The labor action was the biggest in four decades, and unions said it involved most of the company’s about 300,000 workers.

The strike, by all of the company’s five major unions, had entered its second day Wednesday after talks between Coal Secretary Anil Swarup and the unions Tuesday in New Delhi failed. The unions were protesting the government’s plan to end the state’s monopoly on selling coal, fearing job losses and cuts in benefits.

The labor action halved production and shipments Tuesday at Coal India, which produces 80 percent of the nation’s supply of coal.

“There is no agreement yet on plans to open up commercial mining of coal,” Ramendra Kumar, president of the All-India Trade Union Congress, said at the press conference. “We will wait for the committee’s views before deciding our next move.”

Goyal didn’t give any time-line for the committee to give its report.

The unions came under “intense pressure” from the government and some believed sustaining the strike would be difficult, Jibon Roy, secretary-general at the All-India Coal Workers Federation, a unit of the left-wing Center of Indian Trade Unions, said earlier Wednesday.

The government’s victory is reminiscent of the former British Prime Minister Margaret Thatcher’s confrontation with striking coal unions in the 1980s.

Police prevented union members from stopping workers who wanted to do their jobs, said Niladri Roy, a spokesman at the Eastern Coalfields Ltd., a unit of Coal India.

Coal India declined 1.4 percent to 374.70 rupees in Mumbai on Wednesday. The company produced 463 million tons of coal in the year to March 31, 2014, and dispatched 472 million tons. It is the nation’s second-biggest employer after the Indian railways.

The company has repeatedly failed to meet output targets, forcing customers — including power plants, steel mills and cement factories — to seek record amounts of the fuel from overseas. Coal fires about 60 percent of India’s electricity generation capacity.

Of the 100 power plants that run on local coal, 42 had supplies of less than seven days as of Jan. 1, according to the Power Ministry’s Central Electricity Authority. Twenty of these had less than four days of stock.

Parts of India already suffer from regular blackouts because of fuel shortages. The outages can last as long as 10 hours a day, especially during the summer, when both domestic and industrial demand peak.

A five-day strike would have been the largest industrial action since a railways workers’ strike in 1974.

That 20-day shutdown crippled supplies of food grains, cement and petroleum. It ended after the government took on the unions, sending several union leaders to jail for violating a law that protects internal security.

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