Differences within force Govt to call off meeting on prices

Even as demands by the Left and the Opposition for a debate on rising prices stalled Parliament today, sharp differences...

Even as demands by the Left and the Opposition for a debate on rising prices stalled Parliament today, sharp differences within forced the Government to call off an important meeting of the Cabinet Committee on Prices CCP that was expected to consider another round of measures to keep prices in check.

The CCP was scheduled to meet today and take some decisions especially aimed at curbing steel prices that included reversing the recent rail freight hike, cutting excise duties and abolishing import duties on inputs. But a senior Government official told The Indian Express that the meeting has been postponed and is unlikely to take place this week.

8220;Hectic lobbying by iron ore and steel manufacturers and differences in the Government are the key reasons for the meeting being postponed. There are divergent views from different ministries on the proposals. The Finance Ministry is not in favour of excise duty cuts, the Commerce department is opposing ad valorem duty on iron ore exports, the Steel Ministry has it8217;s own view,8221; the official said.

Union Commerce and Industry Minister Kamal Nath, however, said there were no differences within the government, 8220;only differing opinions8221;.

8220;There are views of one sector versus another sector. There is a view of the Ministry of Mines, there is a view of the Ministry of Finance8230; That does not mean that there are differences. At the end, all these views get harmonised.8221;

Insisting that the Centre has already taken inflation control measures, Nath said, 8220;We have to ensure that the steps that are taken effectively benefit the consumer. Oil seeds and food grain production hasn8217;t gone down. So if there are supply side constraints, they must lie in the supply chain management, which is in the states8217; domain. States must get pro-active now, ensure that supply lines are not clogged and crack down on hoarding and profiteering.8221;

While the differences in opinion between Government departments and the lobbying by iron and steel producers may be the ostensible reason for the CCP meeting being deferred, there may be a simpler logic behind it. With inflation touching 7.41 already, the Government doesn8217;t expect it to rise much further from here and is in fact, expecting it to cool down from current levels in a couple of weeks.

Story continues below this ad

8220;By May, we expect inflation numbers to start dipping. Though it may not touch the desired four per cent level, we don8217;t think it will peak much further than current levels,8221; an official said.

Nath said he expects inflation to come down after a couple of weeks. If inflation has indeed peaked, then the Government may prefer to wait and watch rather than take hasty decisions to cut duties and control prices. This is in line with Prime Minister Manmohan Singh8217;s recent statement that though inflation is a challenge to deal with, 8220;reverting to an era of blind price controls8221; would not be the correct response.