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By Abhijit Neogy & Smita Nair, Network 18
Serious differences within the government on how to tame steel prices have led to the postponement of the meeting of the Cabinet Committee on prices today. The Finance Minister, Steel Minister and the Mines are expected to meet on Wednesday to sort out these differences.
The much talked about meeting of the Cabinet Committee on Prices did not take place on Tuesday. Blame it on differences between key economic ministries on how to curb runaway steel prices.
The differences really centre around how to curb runaway steel prices. That was supposed to be the focus of the Cabinet Committee on Prices, if it had happened today. I think the Finance Ministry has shot down the principle of doing away with the import duty on steel, which is at 5%. Their contention really is that with international prices of steel ruling pretty high, this kind of an import duty cut would really be pretty much ineffective. They are also not willing to cut excise duty on steel from 14% to 8% because of revenue implications.
The Finance Ministry is opposed to import duty cuts on steel because it says high international prices will render such cuts ineffective. The ministry is also opposed to excise cuts on steel for fear of losing revenue.
On the other hand the mines ministry has ruled out any ban on iron ore exports and the imposition of 15% ad valorem duty
And though Commerce Minister Kamal Nath tried to play down the differences, it was apparent that there is no consensus
Kamal Nath said, ”There are no differences within the government - just that there are various viewpoints of different ministries which have to be factored in'.”
in a bid to iron out these differences Steel Minister Ram Vilas Paswan, Mines Minister, Sis Ram Ola and Finance Minister Chidambaram will meet on Wednesday
P Chidambaram, Finance Minister said,” I have two proposals in front of the Finance Ministry which we will work on. But since Parliament is on, I cannot discuss them.”
Ironically the postponement of the CCP comes on a day when Parliament was adjourned on the issue of inflation. But don’t blame the center alone, states have to tame inflation too says the government.
Kamal Nath, said, ”It’s the responsibility of the states to check anti-hoarding practices; much of the price rise is at the state level.
While the blame game goes on, sources say inflation will rise marginally before it moderates in two-three weeks.
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