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Govt will curb cement prices from Monday: Kamal Nath
May 12, 2006
The government is looking concerned over the rising cement prices. On Friday, Union Commerce Minister Kamal Nath met the members of the Cement Association, where he asked them to address the issue by taking effective steps.
Kamal Nath says that the government will not allow excessive profiteering, as it is impacting other aspects of the economy. He however dismissed the notion that the government is against the industry making profits.
The government, he says, has many options to address the issue, but it will be prudent to let the industry take corrective steps on its own.
He says that prices should move up in tandem with the increase in the input cost.
Excerpts from CNBC-TV18's exclusive interview with Kamal Nath:
We would like to know the details of the meeting you have had with the CMA and what steps the government is going to take now to cut or correct prices?
We had a meeting with cement manufacturers this morning in the light of this exorbitant price increase, which has taken place in the last seven months and especially in the months where construction activity is in a boom.
Though we do not mind industry making profits, this excessive profiteering is impacting other aspects of the economy. The government just cannot be a spectator. So we had a meeting today. I have asked the industry to come up with a response in the next three days on what steps they propose to take to address the situation.
We understand that you are mulling a new cess, could you put that in a figure form?
We should wait for the industry to respond. Obviously, the government will look at what steps can be taken whether it is in terms of exports or cess. There are other powers, which the government has, but I would like the cement industry to respond.
Will you also look at increasing duties on cement manufacturers?
There are various options. We will consider these options only when we find that the cement industry is not adequately responding.
What is the price, the government will be more comfortable with?
We do not want prices to go up beyond the input price increase. If the input price increase has gone up by 5% then we cannot have selling price going up by 25%.
So would you be advocating the comfortable price cut around 20%?
I am not advocating anything. I am just saying that input price increase has not gone up to the extent where selling price increases have gone up.
The cement industry has defended themselves by saying that they have been struggling with prices and after a long time they have seen an uptake in demand. In fact, even in terms of a percentage of total construction cost, cement is perhaps a lot lesser than steel. Is it justified to be controlling the prices at a time when the industry is finally seeing an uptake?
We want the cement industry to be healthy. We do want them to make a profit. But at the same time we don't want them to profiteer than what is necessary. I have urged them to tell me what steps they will take.
Would you be comfortable with prices at status quo from now on until the monsoons?
I don't want to pre-empt what they are going to say, let them say it.
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