The Planning Commission, on Tuesday, warned that the Competition Commission could take action against steel producers in case they do not lower prices, echoing Finance Minister P Chidambaram’s assertion that cement and steel firms were behaving in a cartel-like manner.
“It would be in the interest of steel manufacturers if they reduce prices...otherwise Competition Commission could take action against them,” Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters on the sidelines of a seminar.
Pointing out that steel prices have gone up substantially this year, he said steel manufacturers were exploiting the market by raising the rates to encash the rise in demand. There is a usual tendency among manufacturers to raise prices whenever there is rise in demand and shortage of supply, but steel manufacturers have raised prices beyond all limits, he said. The steel prices have gone up by about 50 per cent in the past one year, and contributing to about one-fourth to the wholesale price index based inflation, now hovering over 7 per cent.
Cement prices, however, have not been raised as much as they were last year, he added.
When asked how could a “non-functional” Competition Commission could take action against the cartel of steel producers, he said it could be made functional through government support and could take action against any ‘alleged cartel.’
Tax review
Further, favouring a review of Commodity Transaction Tax (CTT), the Planning Commission said the levy may push futures market away from India. “CTT will increase the cost of those transactions and may push the market abroad,” Mr Ahluwalia told reporters on sidelines of a seminar.
Pointing out that the “CTT has been a bad idea”, he said even though it is a small levy it can increase the cost and urged industries to suggest revenue neutral measures so that finance ministry could look into alternatives without losing the tax. As India becomes integrated with the world economy, it needs to be recognised that such taxes could have consequences for the growth of commodity markets, he observed.
