Accusing the cement and steel companies of entering into cartels to exploit consumers, Finance Minister P Chidamabaram has warned of tough measures to check rising prices.
"If their behaviour (steel and cement manufacturers) does not change, the government will not hesitate to take tough measures," Chidambaram said while intervening in the debate on rising prices in the Lok Sabha on Wednesday.
The finance minister said, "The cement and steel manufacturers are behaving like a cartel. And we have to break this logjam."
He assured the House that the government would not hesitate to 'sacrifice revenue to control prices'.
He urged the states to impose stock limits on food items to check hoarding.
Chidambaram's statement comes a day after Reserve Bank Governor Y V Reddy said in New York that the inflation was higher than the bank's "tolerance limit".
In another development, an inter-ministerial group proposed a reduction in the excise on steel from 14 per cent to 8 per cent, in the import duty from 5 per cent to zero, and a reduction in the countervailing duty on steel imports from 14 per cent to zero.
The group is made up of the finance minister, Commerce Minister Kamal Nath, Mines Minister Sis Ram Ola and Steel Minister Ram Vilas Paswan.
The proposed measures, if implemented, will cause a Rs 5,000 crore dent in revenues. Paswan said after the meeting that the finance minister had, in principle, agreed to the measures but wanted the revenue loss to be compensated in some way.
Asked to react to the finance minister's statement in Parliament, Gurbachan Singh, professor of economics at Jawaharlal Nehru University, said: "There is a thin line between intervention and interference. Such action may bring back the era of the Licence Raj."
