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FM asks businesses to hold price line

Finance Minister P Chidambaram asked businesses to refrain from exploiting any mismatches in demand and supply of goods and raising prices, reports Gaurav Choudhury and Arun Kumar.

business Updated: Mar 05, 2008 23:18 IST

Finance Minister P Chidambaram on Wednesday asked businesses to refrain from exploiting any mismatches in demand and supply of goods and raising prices, saying they should instead hold the price line, or even lower it, if possible.

“At a time when agriculture is not growing at the required rate, consumption is flagging, exports are hit by rupee appreciation and there is pressure on oil prices, industry must rise to the occasion and ensure that prices are kept in check,” Chidambaram told a post-budget gathering of business leaders. "Expand volume of production and gain in volume what you might lose by not increasing prices."

The minister’s comments come at a time when inflation is inching upward. According to government data, the wholesale price-based inflation rate rose to nine-month high of 4.89 per cent for the week ended February 16 from 4.35 per cent in the previous week.

While much the recent spike in inflation has been attributed to rising food prices and a revision of petrol and diesel prices by the government, Chidambaram said the contribution of the manufacturing sector is not insignificant.

Chidambaram cited the example of the cement industry that has been rapped by the Monopolies and Restrictive Trade Practices Commission(MRTPC) for acting in a cartel-like situation.

Meanwhile, Steel Minister Ram Vilas Paswan also expressed similar concerns over a demand-supply mismatch in the steel sector. Addressing an industry conference he stressed on the need for augmenting steel production, failing which the country would become dependent on imports.

Private steel makers have increased steel prices by 6 to 7 per cent in the last couple of days. As a result the public sector giant Steel Authority of India (SAIL) is also contemplating to increase the price proportionately.

Talking to Hindustan Times , SAIL Chairman C K Rungta sail that the company is reviewing the market and would take a decision shortly. “In some segment, where SAIL’s market share is very small, the prices will be market driven,” he added.