‘Blaming steel price rise for inflation is unfair’

April 12th, 2008 - 7:08 pm ICT by admin  


New Delhi, April 12 (IANS) The Indian Steel Alliance (ISA) and Associated Chambers of Commerce and Industry of India (Assocham) have criticised the central government for blaming the steel industry for the high rate of inflation. According to a statement issued Friday, the industry bodies said the government was putting the entire blame for inflation on rising steel prices, ignoring the basic problems of the industry.

Steel prices had been rising mainly due to the unhindered rise of input costs, said Moosa Raza, president of ISA.

Global events coupled with rising input costs have forced the steel producers to raise prices as most of the primary domestic steel producers are dependent on National Mineral Development Corp (NMDC) for iron ore supplies, on Coal India for coal and on the railways for transport.

“The galloping exports of iron ore are threatening the future of the steel industry. The ISA has been pleading for two years to curb this both through fiscal and financial means. But exports continue to enrich China at the cost of Indian steel,” Raza added.

Similarly, rising contract prices of coking coal that has increased from $95 per tonne in March 2007 to $305 per tonne in April 2008 is affecting steel prices. Also, the recent change in slab for transport of iron ore by the Railway Board has also contributed to increasing the costs by another Rs.300 per tonne of steel.

Bharat Coking Coal Ltd (BCCL) is demanding a 40 percent price rise for supplying coking coal to Steel Authority of India Ltd.

Withdrawal of incentives for steel export was only a short-term solution. Unless the basic causes are addressed, long-term prospects for the investment in steel industry would be jeopardised, the statement said.

Inflation of over seven percent is certainly a challenge to the economy and the ISA and Assocham believes that all the sectors, the government, industry and service sector, should jointly address the issue.

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