The Hindu Business Line : ‘Hold the price line to help weather inflation storm’

Making a point: The Finance Minister, Mr P. Chidambaram, flanked by the Assocham President, Mr Venugopal Dhoot, and the Secretary General, Mr. D. S. Rawat, at a interactive session with businessmen in the Capital on Friday. —

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New Delhi, May 30 The Finance Minister, Mr P. Chidambaram, on Friday asked captains of industry to resist the temptation to exploit short term supply-demand mismatches or short term price opportunities and appealed to them to hold the price line to help “weather the storm (inflation)” and ensure inclusive growth.

“You cannot talk about inclusive growth when each industry is looking at exclusive growth. Industry can try and hold the price line to the extent possible. When input costs rise, yes there is a compulsion to raise output prices. Even so, there is considerable room for industry to try and hold the price line. True leadership lies in resisting temptations to take advantage of price opportunities,” Mr Chidambaram said at an Assocham (Associated Chambers of Commerce and Industry) meeting here.

He expressed hope that Mr Sajjan Jindal, the incoming President of Assocham and head of an integrated steel company, would show that kind of leadership when he assumes office on June 3.

The Finance Minister’s appeal to industry to hold price line comes on a day when the wholesale price index (WPI) based inflation touched 8.1 per cent for the week ended May 17 and the country’s GDP growth for 2007-08 was revised upwards to 9 per cent.

Mr Chidambaram said that the country’s goal would be to continue to grow at 8 per cent and more, averaging 9 per cent a year for the next twenty years or so.

“We need to continue to work hard, continue to follow sound economic policies, continue to keep faith in open economy, open polity and open society. Never yield to the temptation that we shall go back to the era of controls and constraints. We must be an open economy. In the short term it may be necessary to take few steps that may appear restrictive. These are short term, but they are temporary,” he said.

A case in point was the restrictions placed on external commercial borrowings (ECB) in August 2007.

“I said then and I say now, those restrictions are temporary. Because we think the time has come we lifted some of the restrictions yesterday. Some more restrictions remain. But I am sure the Government and RBI, working together, will find ways to remove those restrictions also,” Mr Chidambaram said.

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