Trade unions call for strike to protest inflation, fuel prices

NEW DELHI (Reuters) - Major trade unions have called for a two-day strike starting on Wednesday, as the beleaguered government prepares to present an austerity budget to parliament and weather a corruption scandal in a big arms deal.

Financial services, mining and transport are likely to be affected by the strike, called by all major trade unions to protest high inflation, a fuel price increase and what they say are violations of labour laws.

Prime Minister Manmohan Singh, grappling with the country's worst economic slowdown in a decade, asked the unions to call off the strike, but talks between a ministerial panel and union leaders broke down on Monday.

"As far as we have seen, the government has nothing to offer to labourers," said Atridev Tiwari, general secretary of Bharatiya Mazdoor Sangh (Indian Workers Union), one of the main unions leading the strike.

"It doesn't matter what the prime minister says now because we cannot rely on his word. He says something and does something else."

The Associated Chambers of Commerce and Industry said the two-day strike was expected to cause an estimated loss of 150 billion-200 billion rupees, hurting sectors such as banking, insurance and transport.

Narsing Rao, the head of state-owned Coal India Limited which accounts for about 80 percent of India's coal, said output losses this week could touch 4 million tonnes pushing the company further away from its production target of 464 million tonnes in this fiscal year through March.

"The strike is totally uncalled for and will be destructive," said Chandrajit Banerjee, director general of the Confederation of Indian industries.

Parliament's budget session begins on Thursday.

The finance minister plans to cut the public spending target for fiscal 2013/14 by up to 10 percent from this year's original target, in what would be the most austere budget in recent history as he tries to avert a sovereign credit downgrade.

The session is also likely to be disrupted by opposition protests over a $750 million deal for AgustaWestland helicopters that the defence ministry is threatening to cancel over allegations of kickbacks.

The opposition Bharatiya Janata Party has said the prime minister's offer of a debate on the deal is not sufficient, but has not specified how it will respond.

The last two sessions of parliament were badly disrupted by opposition protests and little business was conducted.

(Reporting by Manoj Kumar, Annie Banerji, Malini Menon; Editing by Raju Gopalakrishnan)