As many as five million Indian truckers plan to go on strike tomorrow to protest against a surge in fuel prices and a claim for trillions of rupees in tax arrears.

The action threatens to cripple the subcontinent's transport network at a time when India is struggling to maintain the stellar economic growth achieved in recent years. The often chronically overloaded trucks that travel the pot-holed highways carry more than half the country's freight.

The truckers' protests come as a further blow to India's beleaguered government, which is already facing a chorus of discontent from the rural poor and the newly prosperous urban middle class, both of which are being hit hard by fuel and food price rises.

Last month, the government admitted defeat in its battle to shield the public from record high oil markets when it raised subsidised petrol and cooking gas prices by about 10 per cent. The move, which was bitterly criticised by the All India Motor Transport Congress, the body behind tomorrow's planned action, is expected to increase inflation levels that are already running at 13-year highs.

At the same time, the AIMTC has been at loggerheads with the finance ministry over the alleged evasion of service tax by goods transport agents. In recent months, the tax authorities have issued tax recovery notices for 5 trillion rupees (£60 million) on several agents hauliers, dating back to 2001.

The economic situation worsened this week when it emerged that the country's current account deficit nearly doubled last year, on the back of oil prices. The nation's fragile finances are set to be stretched further in coming months by a multi-billion-pound loan waver scheme being offered to small farmers and large pay increases for India's army of civil servants.

There are also suggestions that overseas investors' appetite for Indian equities has sharply diminished. Foreign institutional investors, who dominate the Indian stock markets, have made net sales of shares of nearly $6.5 billion in the first six months of 2008, according to data from Bloomberg, the largest sell-off since the market was opened up to them in 1993.

The rupee has fallen more than 8 per cent against the dollar this year, partly on concerns over the widening deficit. The central bank lifted its key lending rate by half a percentage point last week in an effort to rein in price rises.

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