Tax sops on the anvil, full power likely for small steel firms.
A year after it declassified steel and its products from the list of essential commodities, the government is preparing to bring it back under the ambit of the Essential Commodities Act, 1955.
The Act gives power to the government to control production, supply and distribution of essential commodities at a fair price.
The proposal, which was discussed at last week's meeting of the inter-ministerial group on inflation-control measures, is likely to be taken up by the Cabinet Committee of Economic Affairs as early as tomorrow.
Some other inflation control measures that are on the anvil may also be implemented soon, official sources added. These include getting the Power Ministry to make available uninterrupted electricity supplies to small and medium steel producers in order to improve their capacity utilisation and productivity.
Similarly, the Railways will make efforts to supply rakes to small and medium steel producers in accordance with their requirement for transportation of raw materials.
These measures are among several others to control the inflationary spike seen in metals and other industrial commodities over the past three months.
The government has taken a series of steps in recent weeks to dampen inflation, which rose to an over 40-month high of 7.41 per cent last month. The inflationary spike was driven in part by a sharp surge in steel prices as well as several other commodities and food items like edible oil.
The duty cuts on edible oils have already had an impact on prices, while export bans on cement and non-basmati rice, and export restrictions on steel, basmati rice and milk and its products are expected to increase availability in the domestic market and thereby cool prices.
The government has been on the offensive on inflation. As late as Tuesday, Prime Minister Manmohan Singh publicly advised steel companies not to fall prey to the temptation of seeking windfall gains from market manipulation in a period of excess demand.
Separately, Finance Minister P Chidambaram once again said that cement and steel producers were acting like a cartel and the government was looking at legal and administrative measures to deal with them.
Following the government's tough talk, leading steel producers like Tata Steel and state-owned Steel Authority of India Ltd had agreed to hold their prices for two to three months.
Today, other large steel companies like Ispat Industries, Essar Steel and state-owned Rashtriya Ispat Nigam Ltd as well as secondary steelmakers who account for 50 per cent of the country's production have agreed to hold prices.
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