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Chidambaram calls for patience on prices

Chidambaram had introduced dual excise duty on cement depending on the sale price, a move that prompted the cement industry to raise cement prices to absorb the additional burden, reports Aloke Tikku.

business Updated: Mar 15, 2007 03:14 IST

Finance Minister P Chidambaram on Wednesday asked the Opposition not to come to hasty conclusions on the effectiveness of measures taken to rein in cement prices.

In his budget proposals, Chidambaram had introduced dual excise duty on cement depending on the sale price, a move that prompted the cement industry to raise cement prices to absorb the additional burden.

On Wednesday, BJP leader and former finance minister Yashwant Sinha criticised Chidambaram for the move.

Sinha had opened the debate on the Budget proposals in the Rajya Sabha, severely criticising the finance minister for the government's inept handling of inflation and promised to withdraw the fringe benefit tax and the banking transaction tax when the BJP returned to power.

Should the government be silent when manufacturers raise cement price by 40 per cent in eight months, Chidambaram asked, pointing that he had indeed used fiscal measures to moderate prices.

"I may succeed, I may not succeed. Don't come to any conclusions now," the finance minister emphasised. Sinha had earlier lauded efforts by commerce minister Kamal Nath to get the manufacturers to freeze prices in future; Chidambaram, however, hinted that he would like to see lowering of prices, not just a freeze and renewed his appeal to cement manufacturers to moderate prices.

Initiating the discussion, Sinha had earlier described inflation as the central issue that should have guided the Budget as it has the potential to hurt growth. He also rejected the impression that the UPA government had inherited an inflationary situation from the NDA. Attacking the government for its failure to check inflation, the former finance minister recalled 10 per cent plus inflation during the early nineties when Manmohan Singh was the prime minister.

Sinha suggested that the government was relying too much on good monsoon to check inflation but wondered what would be done in case the production does not rise.