Activists threaten industry shutdown in Hyderabad

Commuters are seen through a broken window pane of a passenger bus damaged by protesters during a strike demanding statehood for Telangana, in Hyderabad September 16, 2011.

NEW DELHI (Reuters) - Protesters leading a massive public sector strike that has caused power cuts, delayed trains and shut schools threatened on Monday to shut down business in Hyderabad for a day later this week.

The two-week-long strike involving an estimated 800,000 workers is a growing headache for the government of Prime Minister Manmohan Singh, already on the defensive over high inflation and graft scandals stalling economic reforms.

The strikers, including miners at 50 coal pits, want the government to carry out a promise to divide the state of Andhra Pradesh in two, giving statehood to the region of Telangana.

"This movement is not going to relent. I am appealing to people to fight till we achieve Telangana state," said K. Chandrasekhara Rao, who heads the movement that revived the movement for a separate state a decade ago.

Whatever the government's decision, it will likely make enemies over the Telangana issue, since many in Andhra Pradesh do not want the state to be split.

If the strikers' demands are met, Hyderabad, home to the Indian headquarters of global firms such as Microsoft and Google, would fall within the new state.

The protests are expected to intensify over the next few days, with activists calling for a total shutdown of industry in the city on Sept. 30. Train workers joined the strike for three days, but returned to work on Sunday.

On Monday, a group of protesters tried to stop buses from carrying workers to a business park popular with technology firms.

The head of Andhra Pradesh's association of IT companies told Reuters the strike was already increasing costs for medium and smaller size businesses in the sector.

"It is a serious issue. The central government should do something immediately to clear the uncertainty as it is not good for future growth and investment," said L. Suresh.

As one of the country's most populous and economically powerful regions, Andhra Pradesh is an important vote bank for Singh's government, which risks angering many supporters in the rest of the southern state who oppose its break-up.

Telangana members of parliament for the Congress party joined the protesters on Monday. They are furious at Singh's government for dragging its feet on the issue and some have threatened to resign.

The Bharatiya Janata Party's national spokesman said the party backed the movement.

Shortages of coal because of the strike forced daily power rationing of up to six hours, with officials warning more severe cuts were to come. Technology companies relied on back-up generators to power operations.

"The costs for the companies have gone up because of backup and expensive generators they have to arrange."

The Telangana region merged with Andhra Pradesh in 1956, against the wishes of many locals.