Financial Daily
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Friday, December 28, 2001



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Meet on APM dismantling deadlocked

Balaji C. Mouli

NEW DELHI, Dec. 27

DESPITE the public stance of a consensus on the issue of dismantling of the Administered Price Mechanism (APM), the Finance and Petroleum Ministries continued to remain deadlocked over basic issues at the end of the eighth round of meeting held on Thursd ay.

According to sources, the issues of discord ranged from the taxation structure in the post-APM era, to the need for a fund to manage consumer product price volatility.

The Cabinet note, which will be shortly prepared, would reflect the contrasting view points of both Ministries, according to sources here.

With regard to the taxation structure, the Petroleum Ministry has held that there is need to replace the present ad valorem duties with specific rates of taxation as is practised in the United States and Japan. Specific rates would avert a cascading effe ct on the consumer price in the event of fluctuations in the world market since there are several significant cost layers between the crude and product price such as transportation.

The Finance Ministry has argued in favour of ad valorem rates since they point out that ``transportation costs are a insignificant proportion of the final selling price of fast-moving consumer goods".

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