FM asks states to join forces in war on inflation, warns cartels

NEW DELHI: Warning steel and cement makers against forming a cartel, finance minister P Chidambaram on Wednesday made it clear the government was ready to take tough measures. While emphasising that the Centre will not hesitate to take more fiscal and administrative measures to tackle rising inflation, he asked the state governments to join the war against inflation and take stern measures against hoarders and black marketers.

���Cement and steel manufacturers are behaving like a cartel. There is cartelisation in cement and there are similar signs for steel. There are monopolistic, oligopolistic tendencies... If their behaviour does not change, the government will not hesitate to take tough measures,��� he said, intervening in the short duration discussion on inflation in Parliament. Sending a signal to RBI, he said the central bank would assess the situation and take appropriate monetary steps to beat inflationary pressures. ���I am sure RBI will take appropriate measures to address issues of money supply. We cannot rely on fiscal measures alone.���

Under fire both from opposition and allies for ���failing��� to control surging prices, Mr Chidambaram said the states should take drastic steps against hoarding and the Centre would even sacrifice revenue to control inflation that has surged to over 7%. He later told reporters the Cabinet Committee on Prices (CCP) will take some more measures. The finance minister���s statement came close on the heels of agriculture minister Sharad Pawar���s announcement of a Rs 15-per-litre subsidy on edible oil to be supplied through PDS besides import of one million tonnes of cooking medium to improve supply situation as part of efforts to fight inflation.

Amid a walkout by the Opposition and Left parties, he said inflation has gone up because of rise in international prices of commodities such as wheat, rice, edible oil and metals, apart from speculative activities in the market. ���We are big importers of inflation like countries from China to Venezuela. However, we cannot panic at this stage despite relentless rise in prices. As a result of various fiscal, monetary and administrative steps, I am confident we can beat inflationary expectations,��� he said.

Expressing regret that states were not taking enough measures under the Essential Commodities Act against hoarders, whose activities were leading to artificial shortage and higher prices, he said some state governments had imposed only licensing requirements and showed reluctance when it came to taking action against hoarders. The states, he said, should impose severe stock limits and conduct raids to check hoarding and ensure prosecution of traders guilty of storing grain beyond permissible limits. Prime minister Manmohan Singh has written to the states to invoke power under Essential Commodities Act and take action.

���I can say it with full responsibility that state governments are not doing enough. They have powers under Essential Commodities Act to pass control orders. The list of actions taken by state governments is very small. There have been only 356 cases of convictions. They must carry out raids and searches, and act on hoarders if they are found to be piling stock above prescribed limits. Unless the state government cooperate, we cannot tide over this. I respectfully and politely ask state governments to act on hoarders.���

Asserting that the government and RBI had taken several measures, he said, ���I cut cenvat from 16% to 14%. I cut excise duties.��� He also pointed that efforts were on to enhance productivity, which was the only long-term solution to the problem, and added the UPA government had set up the National Food Security Mission with an outlay of Rs 25,000 crore. The government has also increased outlays for several irrigation projects. ���The efforts will take time,��� he said.