Business

Expand volume of production, Chidambaram tells industry

NEW DELHI: Finance Minister P. Chidambaram on Wednesday asked India Inc. to hold the price line through higher production, efficiency and keener competition and desist from reaping short-term gains by exploiting the demand-supply mismatches.

At a post-budget conference organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) here, Mr. Chidambaram said: “At a time when agriculture is not growing at the required rate, consumption is flagging, exports are hit by rupee appreciation and there is pressure on oil prices, industry must rise to the occasion and ensure that prices are kept in check.” He was confident of a marked rise in consumer demand during 2008-09 and urged industry to take up the challenge and produce more goods and services.

In particular, he appealed to a number of industries such as cement, pharmaceuticals, automobiles, and paper — sectors which have been provided deeper tax cuts in the budget — to retain the price line or try to lower prices, if possible. “Expand volume of production and gain in volume what you might lose by not increasing prices,” he said, while pointing out that the manufacturing sector would hurt itself in the long run if it exploited the short-term mismatches in supply and demand.

The Finance Minister pointed out that the budget proposals to reduce excise duties, specific customs levies and the Central Sales Tax would render products of India Inc. more competitive while the cuts in income-tax measures and the hike in government expenditure would lead to a spur in demand. .

To provide relief to exporters, Mr. Chidambaram appealed to all Chief Ministers to extend their support to the export sector which had been hit, not by volumes or shrinking markets, but by the appreciation of the rupee.

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