The Hindu Business Line : Govt warns of stern steps to break cement, steel cartels

We have to take measures that restrain the proclivity of producers to increase prices simply because the situation allows them to exploit – Mr P. Chidambaram

Our Bureau

New Delhi, April 16 Under severe criticism in Parliament for its failure to tackle rising prices in the economy, the Government today accused the domestic steel industry and cement manufacturers of operating in a cartel-like fashion.

The Centre cautioned that “tough administrative measures” would be taken if the behaviour of economic players in some sectors does not change.

Simultaneously, it announced supply side measures like importing one million tonnes of edible oil and subsidising it at the rate of Rs 15 a litre for sale through the public distribution system. Also, 15 lakh tonnes of pulses would be imported for which orders have already been placed before March 31 for importing 11.86 lakh tonnes.

Hitting out at the cement and steel manufacturers, the Union Finance Minister, Mr P. Chidambaram, said in the Lok Sabha that “I have no hesitation in repeating that cement manufacturers are behaving like a cartel. There are signs that even steel manufacturers are behaving like a cartel…If they do not understand the gravity of the situation and behave responsibly, Government will not hesitate to take tough administrative measures.”

Mr Chidambaram said that the steel makers’ contention that steel prices rise due to increase in prices of gas and iron ore was creating a “logjam” and that somewhere this “logjam” had to be broken.

“While many commodities will indeed reflect international prices, the capacity to exploit excess demand in the economy must indeed be addressed by fiscal, monetary and administrative measures. We have taken fiscal (reduction in excise duty, removal of customs duties) and monetary measures. But we cannot rely entirely on fiscal and monetary measures. We have to take such administrative measures that restrain the proclivity of producers to increase prices simply because the situation allows them to exploit”, he said.

On monetary measures, the Finance Minister also said that the Reserve Bank of India will soon take “appropriate” monetary steps to help tide over inflation. He also said that the RBI Governor will address the issues of liquidity and money supply also shortly.

On essential commodities, Mr Chidambaram appealed to the States to use the powers vested with them under the Essential Commodities Act (ECA) to check hoarding and sternly deal with those who exceed prescribed stock limits for commodities.

“Unless the State governments also co-operate, it will not be possible to tide over this difficult period of inflation. This inflation is largely triggered by international prices rising relentlessly in food, fuel and commodity”, he said.

The Finance Minister pointed out that the Prime Minister, Dr Manmohan Singh, had on Tuesday written to all State Governments to exercise the powers of ECA, impose strictest stock limits and raid the people who hold stocks above these limits.