The government is considering fresh fiscal measures, including a possible reduction in import duty of steel and suspension of futures trading in iron, to rein in inflation that has surged to a worrisome 7 per cent.
Cabinet Secretary KM Chandrashekhar on Wednesday held a meeting of secretaries of key economic ministries to discuss the issue of price rise and remedial action.
The steel ministry has proposed a slew of proposals including complete elimination of customs duty on finished steel and an increase in the export duty of iron ore, said an official following the development.
A proposal to suspend futures trading in iron and steel is also being examined, said the official, who didn’t want to be named.
The government is also looking to cut excise duty on steel from the existing 14 per cent and reducing duties on inputs such as refractories, zinc and met coke.
Some steel producers have said it has become difficult on their part to keep prices under check because raw material costs have shot up sharply.
Besides steel and other metal prices, a spike in food prices have pushed up the inflation rate to a three-year high of 7 per cent.
High inflation will likely force the Reserve Bank of India to continue with its tight money policy, which has already contributed to slowing the broader economy. The RBI is scheduled to announce its slack-season monetary policy later this month and some experts say it could further increase lending rates.
Record prices of food articles rice and sky-high oil price have stirred up inflation worldwide prompting many governments to impose price controls and curb exports of essential goods.
In India, the government has already cut duties on import of edible oils and banned export of non-basmati rice.