Is India’s Prime Minister Narendra Modi reading up on Margaret Thatcher?
The late former prime minister of the U.K. had one of her defining and controversial confrontations in a protracted fight with striking coal miners in the 1980s. Different time, another country, but Modi has angry unions threatening to stop work at the world’s biggest coal miner, Coal India Ltd. (COAL)
Coal-fired power plants generate 60 percent of India’s electricity, except for when shortages lead to repeated blackouts. Outages shaved $68 billion or almost 4 percent off annual gross domestic product in the year ended March 2013, says the Federation of Indian Chambers of Commerce and Industry.
Last week, Modi made a move toward ending shortages, winning partial passage of a bill that will allow him to end a 40-year government coal monopoly. The plan is to bring in more efficient private companies. The coal unions say that will mean job losses, and that they will fight the legislation.
“Let them open up the sector, there will be strikes all across and large-scale violence,” S.Q. Zama, secretary general at the Indian National Mineworkers Federation, a unit of the opposition’s Congress party-backed Indian National Trade Union Congress, said in a Dec. 5 interview.
The five leading unions, including one backed by Modi’s Bharatiya Janata Party, today said coal workers will strike nationwide for five days starting Jan. 6. One day of lost work at the state miner may potentially cause a loss of 1.3 million metric tons in output, valued at about 2 billion rupees ($31.4 million).
Different Thatcher
Coal India fell as much as 2.1 percent before recovering and closing 0.1 percent higher at 367.25 rupees in Mumbai today. The stock has advanced 27 percent this year, compared with a 26 percent gain in the benchmark S&P BSE Sensex.
Thatcher’s clash with the U.K. coal unions in 1984-85 was over plans to close mines, which led to strikes, protests and violence. Modi, so far, is being less confrontational.
Modi faces similar challenges as Thatcher, “but he’s strategically handling them, without seeming to take them head on,” said Debasish Mishra, senior director of Deloitte Touche Tohmatsu India Pvt.’s energy and resources practice.
India has the world’s fifth-biggest coal reserves yet is now importing record amounts because Kolkata-based Coal India, which controls 80 percent of the nation’s supply, isn’t meeting production and delivery targets.
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