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Inflation Rat to be in Cage (1) 16-May-08 07:34

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Posted by: stox & more on ( 16-May-08 07:34 )

Finance minister P Chidambaram has ruled out any cut in import duty on crude oil, arguing the move would not have a direct impact on retail prices of petrol and diesel. Indicating that the war on inflation would be a top priority, he also said on Thursday there was no proposal to withdraw the export cess on steel. The minister�s comments have to be seen in the backdrop of steel secretary R S Pandey�s claim that a proposal to rollback steel export cess was under consideration. The finance minister also asked the cement industry to cut prices further for pulling inflation down. There was ample scope to reduce cement prices further and the cut announced on Wednesday was only a small bit, he emphasised. On the recent weakening of the rupee, Mr Chidambaram said the recent movement of the rupee indicated the demand for the currency. �The rupee will move both ways,� he said. �It is a function of inflows and outflows, demand and supply,� he added. �Just reduction of import duty of crude oil has no impact on the administered price,� Mr Chidambaram said in reply to queries on cut in import duty on crude oil. Cut in import duty on crude would help PSU refiners who have been complaining about under-recoveries. As the government has capped domestic prices, oil PSUs are suffering losses and the finance ministry has provided only partial compensation through oil bonds. Record crude prices, hovering over $120 per barrel, have led to huge increase in oil import bill of India, which imports three-fourths of its crude oil needs. The comments on steel export cess indicate divergence of views within the government. While the steel ministry has been claiming the cess would be reconsidered, Mr Chidambaram hinted otherwise. �I have not received any formal proposal from the Ministry of Steel,� he said. �If there is rethinking, I suppose the Ministry of Steel will send me a proposal,� the minister added. Steel industry representatives had met Prime Minister Manmohan Singh recently and announced price cuts to keep the export cess at bay. While the industry was under the belief that the cess would not be imposed, the revenue department decided to go ahead with it and notified it on Saturday. courtesy ET

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