NEW DELHI: Finance Minister P. Chidambaram on Thursday asked industry to desist from arbitrary hikes in prices by exploiting the prevailing demand-supply mismatch. Instead, it should help the Government in reining in the high inflation, he said.

In an appeal to corporates, while addressing the captains of industry at the Confederation of Indian Industry (CII) annual session here, Mr. Chidambaram said, "Industry is working with near full capacity utilisation. Pricing power has returned to industry and pricing power is being exercised by industry... We appeal to industry not to exercise pricing power arbitrarily.''

As it is, the global increase in the prices of metals and commodities such as crude oil, the supply-demand mismatch in essential food items such as wheat and pulses, higher public expenditure on social sector programmes and the increase in per capita income had already put pressure on prices, he said. Supplies had not risen as fast to match the rising demand, he said, while noting that there would be a time lag in this regard.

Noting the Government's inability to intervene in the global increase in metal and commodity prices, Mr. Chidambaram said that efforts were being made to increase supply of goods while moderating demand. "Wherever we can augment the supply, we are augmenting the supply, and wherever we can moderate the demand, we are moderating the demand and that is the reason for increase in interest rates,'' he said.

The Finance Minister also sought to blame some States and their administration for poor delivery of social welfare schemes. "Incapacity of the States and administration cannot be a ground to blame growth... if high growth is not inclusive, low growth will be more non-inclusive,'' he said, while admitting that there were fund leakages in Centrally-sponsored schemes.

As to why despite consensus over the need for governance reforms, no major steps were taken, Mr. Chidambaram said, "This [governance] is a pretty stubborn elephant and it does not move very fast. It is because governance structures are still very poor that we have such colossal failures in some parts — in primary education, in PDS and in roads.''

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