The Hindu : Business : Steel prices: Paswan for regulatory mechanism

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Sunday, Aug 01, 2004

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Steel prices: Paswan for regulatory mechanism

By R. Gopalakrishnan

SALEM, JULY 31. The Union Minister for Steel, Ram Vilas Paswan, today reiterated the need for a regulatory mechanism to ensure that the demand for steel is not exploited by middlemen to hike the prices that would affect the steel industry and domestic consumers.

``On the budget day, steel prices were up, and the reason cited was the increase in excise duty to 12 per cent from eight per cent. But how come the prices did not come down earlier during the months after the (erstwhile NDA) Government halved the excise duty from 16 per cent to eight per cent keeping the elections in view?'' he asked.

In a chat with The Hindu on his flight by a SAIL plane to Salem, where he visited the Salem Steel Plant (SSP), and in a press conference, Mr. Paswan said the regulatory authority, the proposal for which had been ``unanimously'' adopted at the last meeting of the Steel Consumers Council, including representatives of steel plants, need not be necessarily be part of the government. It could be an outside authority or a self-regulatory authority of the industry.

Declaring that the free market did not mean freedom to exploit consumers, he asked: ``Don't you (the Press) have a Press Council to ensure that the freedom of the press is not abused?''

Public sector's role

During his tenure in the Communications Ministry (in the erstwhile government), he had asked the Bharat Sanchar Nigam Ltd (BSNL) to enter the cellular business, which led to a sharp fall in the tariff charged by private cellular operators. Thus the public sector had an obligation to ensure a fair deal for the consumer; and there was no reason why the public sector steel plants should go the whole hog with the Indian Steel Alliance (ISA) in the matter of price regulation.

Also, he said, as a Minister in charge of the Mines portfolio, he had eliminated the ``coal mafia'' (which acted as an unauthorised middleman), resulting in a sharp rise in the profits of the public sector Coal India Ltd (CIL).

Under examination

The demand of the steel consumers, including small-scale industries (SSIs), for a steel price regulator, was being examined by his Ministry. The Ministry would present an action taken report to the next meeting of the Steel Consumers' Council to be held in August.

Mr. Paswan wanted a long-term plan to meet the shortage of coking coal. Efforts were on to enter into long-term arrangements with Australia, so that the interests of the Indian steel industry, in terms of price, could be safeguarded. At present, India was paying a very high price compared to Japan or China for coking coal because of the failure to ensure long-term supplies.

Mr. Paswan agreed with the view that raw materials such as iron ore, core, and manganese should not be exported for the sake of short-term revenue at the cost of the domestic steel industry. At present, 50 per cent of iron ore production of 110 million tonnes was exported.

A.K. Shahi, executive director, Steel Authority of India Ltd (SAIL), said whatever assistance the steel industry got in the Nineties was from the funds created out of its own contribution and there was no subsidy element. Hence, the move of the OECD (Organisation for Economic Cooperation and Development) to eliminate State subsidies for steel globally would not affect India.

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