Pass on the benefits of tax and duty cuts to consumers: PM

The reverberation of skyrocketing price rise seems to be slowing down as the measures adopted by the UPA government have been started bearing fruit. A number of measures ranging from slackening import duty on certain items to discouraging export of certain items by implementing completely ban over it have gradually taking the inflation in control. Now it is not actually food items but the steel and cement prices that have affecting the price rise badly.

To maintain the price line the Prime Minister Manmohan Singh has appealed the trade and industry to take steps for absorbing the rise in input costs.

“Industry must send off the benefits of tax and duty cuts to consumers,” said Dr. Singh while addressing the Annual General Body meeting of the Confederation of Indian Industries (CII) in New Delhi on Tuesday.

Dr. Singh speech at the dais of CII signalled that government is deeply concerned of the price rise and taking every possible measure to curbing it even at the immense loss of revenue.

The government is fully alive to the challenge, has taken several steps to reverse the recent spurt in price rise, and is confident to moderate the price rise, he reiterated.

“The prospects for domestic growth remain good if we can ensure price stability that will help sustain the growth momentum,” the veteran economist opined.

The recent price rise however is not solely caused by the failure of domestic policies rather the external factors are contributing to inflation over which the government has not much control. So to maintain balance and keep the price rise on an even plane, the government has adopted certain compensatory measures at home.

The Reserve Bank of India also in its attempt to lowering down the price rise has adopted some monetary policy like it decided in April to increase Cash Reserve Ratio (CRR) by 0.50 % to the existing 7.75 % and announced on April 29 that hike in CRR by 8.25 % would be effective from May 24. The move is aimed at fighting inflation, which is ruling at an intolerable 7.33 per cent.

The spiralling price of petroleum in the global market has worsened the situation. India at present buys 70 percent gas and petroleum products to fulfil its need for energy consumption.

After Russia, Iran is the second largest producer of gas and petroleum products. The IPI gas pipeline hopefully will meet the energy demand of the country.

Many developing countries today are deeply concerned about increasing global commodity prices, especially the price of food and petroleum products.

Blaming world’s developed countries for not addressing this challenge, he said the diversion of land from food crops to bio-fuel, an increasing use of available food grains and vegetable oils for the production of bio-fuels have greatly contributed to a rise in food prices in the last two years. The USA uses land for producing maize and oil seeds for the purpose of manufacturing bio fuels instead of using as food grain.

This steep rise of petroleum products globally has created the uneven balance of extracting incomes away from the oil importing developing countries to oil exporting countries.

“Global response to this Third Energy Crisis has fallen short of our expectations and compares poorly with the response to the First and Second oil crisis,” said Dr Singh.

The country has the challenge in front of it, which we have to face boldly. Not only we have to sustain the growth process at home but also to make it more socially and regionally inclusive.

The CPI (M) on the other hand has warned the government that it might take some drastic steps if the UPA government do not take some constructive steps in controlling the price rise.