The Finance Minister, Mr P. Chidambaram, on Wednesday asked the manufacturing industry to hold the price line, highlighting that its products and not the food prices alone that were contributing in a big way to inflation in the economy.
“You have to improve your competitiveness and hold the price line. You gain from volumes what you lose from not increasing the prices and then meet the growing demand. Demand will rise in 2008-09. The challenge is for the industry to produce goods and services to meet the rising demand,” Mr Chidambaram told FICCI members at a post-Budget meeting here.He was responding to the FICCI President, Mr Rajeev Chandrasekhar’s observation that it was primary products and food shortages that are driving inflation predominantly.
The Finance Minister said that the weightage and contribution of the manufacturing sector in the wholesale price index (WPI) was significantly high than the primary articles weightage and contribution.
Mr Chidambaram also asked industry sectors that have benefited from deep fiscal cuts in the budget —pharmaceuticals, two wheelers, buses and paper — to not only hold price line, but lower prices if possible.
He said that the manufacturing sector would hurt itself in the long run if it tried to exploit short term supply-demand mismatch. “In fact, I alluded to this in my Budget speech by pointing out oligopolistic tendencies in some sectors. A year ago when I tried to persuade the cement industry, they put on air of injustice. Two judgments have come from MRTPC, one in the last four days, pointing out that cement industry is acting like a cartel,” he said.
Source:http://www.thehindubusinessline.com/2008/03/06/stories/2008030651971000.htm
“You have to improve your competitiveness and hold the price line. You gain from volumes what you lose from not increasing the prices and then meet the growing demand. Demand will rise in 2008-09. The challenge is for the industry to produce goods and services to meet the rising demand,” Mr Chidambaram told FICCI members at a post-Budget meeting here.He was responding to the FICCI President, Mr Rajeev Chandrasekhar’s observation that it was primary products and food shortages that are driving inflation predominantly.
The Finance Minister said that the weightage and contribution of the manufacturing sector in the wholesale price index (WPI) was significantly high than the primary articles weightage and contribution.
Mr Chidambaram also asked industry sectors that have benefited from deep fiscal cuts in the budget —pharmaceuticals, two wheelers, buses and paper — to not only hold price line, but lower prices if possible.
He said that the manufacturing sector would hurt itself in the long run if it tried to exploit short term supply-demand mismatch. “In fact, I alluded to this in my Budget speech by pointing out oligopolistic tendencies in some sectors. A year ago when I tried to persuade the cement industry, they put on air of injustice. Two judgments have come from MRTPC, one in the last four days, pointing out that cement industry is acting like a cartel,” he said.
Source:http://www.thehindubusinessline.com/2008/03/06/stories/2008030651971000.htm
