India welcomes multinational retailers to uproar

Diesel price rise adds to backlash against the prime minister.

NEW DELHI // Angry Indian opposition parties protested yesterday against the government's decision to open the country's huge retail market to foreign retailers.

In a surprise announcement on Friday, the government said it would allow foreign investment in retail and aviation, along with the sale of minority stakes in four state-run companies.

It sparked sharp criticism from opposition parties and some of the ruling Congress party's coalition allies. A day earlier, the government had announced a hike in the price of diesel fuel.

Hundreds of supporters of the Hindu nationalist Bharatiya Janata Party held a rally in New Delhi demanding that the government reverse its decisions, saying they would hurt the poor.

Shouting "Down with Manmohan Singh's government" and "Roll back the diesel hikes", the angry protesters climbed over barricades erected by police on the road.

They also burnt an effigy symbolising what they called the "corrupt government" before dispersing.

In Kolkata, the capital of West Bengal state, Mamata Banerjee, the chief minister, led a large rally protesting against the government's economic reform policy.

Mr Banerjee, a key coalition partner, gave the government 72 hours to reverse its decision to open up the supermarket sector.

In Kerala state in the south, shops were closed and public transport was halted after opposition Communist parties and the BJP called a general strike.

The prime minister, Manmohan Singh, defended the rise in diesel prices, saying it was "vital" for the country's energy security.

"Our energy prices are out of line with world prices," he said.

The government hiked the price of diesel after coming under intense pressure to reduce its fiscal deficit by cutting spending on subsidies, particularly fuel.

But critics said the move would hit farmers who are dependent on diesel to power irrigation pumps and tractors.

The decision to open up the supermarket sector is aimed at attracting foreign investment to jump-start the country's sputtering economy.

But opposition parties said the decision would hurt millions of small-store owners and traders who would not be able to compete with multinational retailers.

The BJP and Communist parties said they would hold a series of protests against the government in the coming weeks.