Thursday, March 6, 2008

FM tells Industries to Control Prices

by Phillip Horton

The Indian finance minister P. Chidambaram on Wednesday asked businesses to control their price line and stay away from taking undue advantage of the short lived gap in demand and supply so that inflation can be tamed. The FM in particular pointed out the role of the nation’s manufacturing sector in inflation. The businesses which have taken advantage of the great fiscal cuts like pharmaceuticals, auto, paper, buses and others were told by the FM to rein in their prices. The FM seemed quite optimistic about the economic growth and further said that he wanted his term to end with an average economic growth of about 8.8% per year.

During the finance minister’s post-budget meeting with FICCI it was expressed that there was a lesson for the manufacturing sector of the country and that they have to become more competitive and rein in, in the price line. The FM, during his FICCI interaction also warned the industry that it would have to suffer in the long run if they take advantage of the temporary mismatches between supply and demand. The wholesale inflation based on price climbed to its nine month highest to 4.89% for the week that closed on the 16th of February from its earlier 4.35% mostly because of the increasing prices of the petroleum products and other food commodities. The finance minister further elaborated that even though inflation in part is due to growing prices of food, the manufacturing sector’s share in the inflation is quite significant.

Mr. Chidambaram further added that when growth and high commodity, global food and oil prices accompanied with a decrease in consumption bring more pressure it becomes the responsibility of the industry to stand up against the situation and add more competitiveness and efficiency to control the price line. The FM also added that he was very optimistic about the economic growth for the fiscal year 2008-2009. The FM further opined that the industry should stand up to demand by creating goods and services. The finance minister also warned that the industry might lose the expansion of production and sales by hiking prices.

Amit Mitra, the FICCI secretary general responding to the suggestions of the finance minister said that almost all sectors that include pharmaceuticals, auto industry, and the paper industry have the capability to stretch according to prices and hence it is sensible for the manufacturers to let the consumers enjoy the benefits of the reduction in the excise duty. The general secretary further expressed that reducing prices would automatically result in greater sales figures for the industry and the auto industry of India has already reduced their prices and others are quite likely to follow the example. While pointing out at the oligopolistic practices in some sectors at the beginning of his budget speech in the parliament Mr. Chidambaram said that the Monopolies and Restrictive Trade Practices Commission or the MRTPC has given two judgments on the cement industry of the country. These judgments pointed out that the cement companies of the nation are behaving like a lobby.

 

 

 

Stories related to: FM tells Industries to Control Prices

 

 

Visited 503 times, 1 so far today