The Hindu Business Line : Chidambaram unveils fiscal measures to tame steel, food prices

New Delhi, April 29 Faced with a huge challenge of riding out the unbridled rise in prices of food as well as industrial items like steel and cement, the Union Finance Minister, Mr P. Chidambaram, on Tuesday announced a slew of fiscal measures as part of the Government’s anti-inflationary strategy.

The net revenue loss to the exchequer on account of the anti-inflationary measures announced is about Rs 1,500 crore, Mr Chidambaram told reporters.

The earlier two rounds of fiscal measures had a revenue impact of Rs 4,840 crore, he said.

A large part of the fiscal measures unveiled on Tuesday were focused on augmenting domestic availability of steel products as well as softening their prices.

The Finance Minister pointed out that steel played an important part in the economy. Currently, steel and steel products contributed about 21.3 per cent of the current inflation.

Mr Chidambaram announced the removal of basic customs duty (BCD) on pig iron and mild steel products viz. sponge iron, granules and powders; ingots, billets, semi-finished products, hot rolled coils, cold rolled coils, coated coils/sheets, bars and rods, angle shapes and sections, and wires. Hitherto, these items attracted BCD of 5 per cent.

To rein in prices of TMT bars and structurals, which are commonly used for construction of houses, the Government fully exempted the import of this item from countervailing duty, which is currently 14 per cent.

Also, the Government has done away with BCD on three critical inputs for manufacture of steel — metallurgical coke, ferro alloys and zinc.

To disincentivise export of steel, the Finance Minister announced the imposition of 15 per cent export duty on specified primary forms and semi-finished products, and hot rolled coils/sheet; 10 per cent on specified rolled products including cold-rolled coils/sheets and pipes and tubes and 5 per cent on galvanized steel in coil/sheet form.

However, no new fiscal measures were proposed on iron ore exports.

In the run up to the passage of Finance Bill, there was hectic lobbying from the industry that iron ore exports should not be banned.

Food duty

To ensure adequate availability of milk in lean summer months, the BCD on skimmed milk powder has been slashed from 15 per cent to 5 per cent for a tariff rate quota of 10,000 tonnes per annum. Similarly, on butter oil, which is used for reconstituting liquid milk, he announced reduction in BCD from 40 per cent to 30 per cent.

On basmati rice, the Finance Minister announced an export duty of Rs 8,000 a tonne along with a commensurate reduction in its minimum export price from $1,200 a tonne to $1,000.

More Stories on : Economy | Policy | Steel | Foodgrains

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page