Date:19/11/2008 URL: http://www.thehindu.com/2008/11/19/stories/2008111956941600.htm

Business

Industry says ‘no’ to FM’s plea to cut prices

Special Correspondent

Auto makers, real estate players want cheaper credit

NEW DELHI: Ruling out the proposition of any kind of price cut in the near future in response to Union Finance Minister P. Chidambaram’s plea, individual companies, including auto markers and real estate players, instead asked the government to make credit available at a cheaper rate.

However, the apex chambers were quite forthcoming and promised lower prices of manufactured goods in response to the Finance Minister’s call.

“The two-wheeler industry has a margin of about 4-5 per cent only and in the near future we do not see any price cuts,” leading auto company Chairman Rahul Bajaj told reporters here after the Finance Ministers interactive session at the Indian Economic Summit being held in the Capital.

Hero Honda Motors Chairman Brij Mohan Munjalechoed the sentiment of Mr. Bajaj, stating that minimum wages were rising, fuel price had increased and electricity prices had also increased, so it was not possible to bring down the prices of their products.

At the same time, both accused public and private sector banks of not lending to potential buyers of two-wheelers. Real estate leader DLF said there were no takers for the housing sector as the rate of interest was very high. Ideally, the interest rate should be around 7 percent,” DLP Chairman K. P. Singh said.

But there were saner voices also who promised to keep the balance and undertake adjustments.

“I am sure you will find newer set of prices in most product categories,” CII President K. V. Kamath said after his meeting with Mr. Chidambaram.

Assocham Secretary General D. S. Rawat said corporates would positively respond to the call given by the Finance Minister.

Mr. Chidambaram had stated that hotels must cut tariffs; airlines must cut prices; real estate must cut rates of apartments and homes they sell; car makers and two-wheeler makers must cut prices. Mr. Kamath further said that industry would take the initiative of price cut. “I think this is going to happen” the ICICI Bank Managing Director said.

Asked if the company would cut prices of its products as suggested by Mr. Chidambaram, Godrej Group Chairman Adi Godrej said that in some of our businesses price cuts had already been implemented. The price cuts were across many segments in different ranges.