Government may intervene to stabilise steel prices

18 Jul 2006

The government is prepared for market intervention to check rising prices of steel, Ram Vilas Paswan, union minister for chemicals, fertilisers and steel, said. He warned private steel producers to rein in rising prices to avert government intervention — a move back to the regulated market of the past.

"We do not have a steel price control as of now but we have asked the department to devise ways to check it by talking to the private players," Paswan told reporters in New Delhi.

He said the private sector controls almost two-thirds of the steel market while the public sector producers have a one-third of market share. Obviously, Paswan said, the private players have a greater say in deciding prices. "Even if the PSUs lower the steel prices, it would not affect the overall market prices unless the private players lower it,'' he said, adding, "Middlemen are making profit from the price differentials between the PSUs and private players."

"It is in the interest of the consumers. We keep talking to the private player and last time we had a meeting they agreed to cut steel prices by Rs2,000 per tonne," he pointed out.

Paswan's statement comes amidst a general rise in prices and a surge in global oil prices, posing risk to the economy.

The government has undertaken several fiscal and monetary measures in recent months like easing import rules for food products to keep inflation in check.

The inflation rate based on wholesale prices also continued to rise, although at a slower pace. The Reserve Bank of India is due to meet on July 25 and is widely expected to announce a hike in interest rates to curb inflationary tendencies in the economy.