Date:10/01/2007 URL: http://www.thehindu.com/2007/01/10/stories/2007011004071700.htm

Business

Industry asked not to jack up product prices

Special Correspondent

Finance Minister cautions on the boomerang effect

NEW DELHI: Finance Minister P. Chidambaram on Tuesday asked a section of industry to refrain from artificially raising their product prices as such a myopic strategy in a booming economy would only boomerang on them by way of a hike in interest rates.

Addressing a special session of the Federation of Indian Chambers of Commerce and Industry (FICCI) annual general meeting here, Mr. Chidambaram pointed out that it was the rise in prices of certain manufactured items that was leading to higher inflation even as the effect of primary articles and fuel items had of late declined.

Mr. Chidambaram said that if such short-term profit motives continued, core inflation would get entrenched at a certain rate and eventually push up interest rates and costs to the disadvantage of industry in the long run.

Turning to the infrastructure sector and the time and cost-overrun in projects, Mr. Chidambaram declared that a mechanism would be put in place "within a few weeks'' for speedier execution of projects of the likes of POSCO's steel venture, GMR's airport infrastructure in Delhi and Hyderabad and the Delhi Metro.

Infrastructure projects, the Finance Minister said, had to be implemented in time irrespective of whether they were in the public, private or public-private sector partnership.

Expressing concern over the non-completion of projects in time, he said the malady was not confined to the public sector alone as private projects were also suffering from time and cost-overruns. "It is this area, where China scores over India,'' he said.

Mr. Chidambaram also asked the captains of industry to find out the reasons for the poor performance of certain sectors such as food products, paper, leather, chemical, basic metals and machinery and advised apex chambers to set up a knowledge cell of outstanding experts for developing innovative ideas for industry.

P. K. Bhardwaj writes:

Khorakiwala new FICCI President

Habil Khorakiwala, Chairman, Wockhardt Ltd, on Tuesday took over as President of FICCI. N. Srinivasan, Vice Chairman and Managing Director of India Cements, has become Senior Vice President of the federation.

Rajya Sabha member Rajeev Chandrasekhar, who is Chairman and Chief Executive Officer of Jupiter Capital, has been elected Vice-President.