Note: 10-8-2008

Now that he has prepared the grave for the Congress Party in the next election, whenever it may come, as a damage control measure, he may be replaced by Rangarajan or someone else. The damages due to inflation, industrial growth, interference with Commerce Ministry, RBI and whimsical / inconsistent policies with reference to Steel, Cement, Sugar and Daily consumption products are unlikely to heal in less than a year

Chidamabaram, by his unwanted interference with Cement Prices, has succeeded in making the Cement Industry, nearly sick. In April 2008, he reduces the tax rate for Steel used in Construction - and gives manufactured reasons. Is that Steel / 16% of India's production, going to be used without Cements ? For Cement makers, there is no solace - pray for early election ! [extra comment on 5-6-2008]

Till Cement becomes an edible item with some extra ordinary research , Chidambaram's attempts to link Inflation and increased prices of Cement is a sickening joke on the Press and the Public.

The Government's notification today [ 3-4-2007] of the withdrawal of nearly 20% duty on imported Cement to make them cheaper than the present prevailing market prices in India is a categorical proof that it is an unwanted act of a demented, unbalanced, short sighted, egomaniac    [ April 2007 ]

If this was done to improve the supply position of Cement / balance the mismatch if any, between Demand and Supply, which can lead to dealers and manufacturers making extra money undeservedly or disproportionately, then the above step is should have been taken much earlier.

Does not India have Commerce or Industries Minister ?

Kamal Nath looked into the practices of Cement Industry before May 2006 Crash and also before Chidambaram's autocratic diktat - he informed the Public that everything, including the Price rise is above board.

Or, despite public interest,  is he guilty of hiding some vital information ? Did Kamal Nath fail ? Yes says the FM's action

Here is a Finance Minister encroaching upon another's domain and also usurping power / undermining others. It is very bad. CNBC - 3rd August, 2007: Chidambaram says that the 65 acres land will get alloted !  He sets the growth rate for Industry one day. On another day, he tells them to buy companies abroad. In between, he suggests lowering of interest rates on Bank deposits so that the borrowers pay less interest. Are lenders / depositors more or the borrowers ?

What all the Finance Minister has said or attempted to portray in the recent months is that the Cement Industry is the sacrificial goat for the Governmental lapses and

he has the power to lash it any arbitrary fashion of his choice

Chidambaram must be the first and only individual in the World who spotted a direct and damaging link between inflation and Cement Prices. For that, he deserves an award. Why not VIP treatment in a mental asylum ?

In the whole sale Price Index, manufactured goods have 60% weightage. Food gets 20% or less weightage. Nothing can be more absurd and skewed than this. In a poor country like India, over 50% still go for food. As Shri Venu Srinivasan  jocularly remarked in 1993 or so, a person earning over 3000 Dollars gets into the high tax bracket in India whereas in States, they will be considered poor.

In 1968, when I did a term paper for Industrial Relations course, I found the WPI index, the method /  reliability of the data collection and reliability to be shabby. Montek Aluwalia makes some such remarks in 2008. What were they doing till now is the question ? Answer - release data once a month

In an agrarian Economy, where over 60% live in villages, where the per capita income is less than Rs 2000 per month, does not Food account for over 40% of income for the vast majority of people, the common man ?

When Milk Prices went up 2 or 3 times in the last one year, Wheat prices went up, vegetable prices went up, the Government in its wisdom paid more attention to Sugar than Milk, Wheat and Rice. Only the rich take these !

The blunder could be due to the Measuring Scale - undue over weightage to manufactured goods. If the scale / parameters are wrong, the intrepretations and decisions can lead to judgemental errors or misused like now.

1]  It is anti National in my view.

The Government should have established beyond all reasonable doubt that there is a supply shortage. If there was, the above action should have been taken earlier. To castigate the Cement Industry for excess pricing is theatrical - the industry was operating below capacity and many at losses, in 2005. Or, do they control the demand also ?
If Cement Industry turns sick, who will bear the cost ? The Public. The Government has already made the Sugar Industry sick in the last 9 months. More than hurting the Cement Industry and the investors, who are not party to the fight, it damages business sentiments across the board.

[ If you wish, at the end of this page, you can read the Commerce Ministry's details and Pakistan Cement manufacturer's stand in 2005 ? ]

Chidambaram said in end April 2007 that the Government does not have a policy on Exchange Rates. Rupee appreciation or depreciation against the Dollar is left to the Market Forces of Supply and Demand, so long as it is a two way traffic.

When SAIL and others raised the prices in May 2007, the Government said that it is not going to intervene - even though Steel accounts much more to cost than Cement. Hence singling out, Cement sector is malafide in intention
 

If Cement Industry cannot pass on taxes, raise the prices to take advantage of the shortage and or reserve a part of it of excess profits to finance their expansion, it has to be a uniform stand across the board applicable to all sectors. Different yardstick was adopted for the Steel Industry

Steel prices have gone up because International prices have gone up. So they can take the benefit - what logic is that ?India is one of the cheapest producers of Cement in the World.

Ore mines are leased for a pittance - Rs 25 per ton. Lime Stone mines leases are about Rs 50 / ton.My contention is both should have been treated equally.

The cement prices got freezed for one year after discussion with Kamal Nath. He left it to the Finance Ministry to finalise Excise Relief, if any, in return.

And for that, Chidambaram has hit them with a bull dozer today - making imported Cement cheaper. What about investors, who had / have their money in Cement stocks ? 40% has already gone with the wind in 40 days.

Excise Duty was raised from 4.5% to 6.0% of bags sold over Rs 190. The base of 190 itself was questionable, when the market prices were around 200 plus. Is there any common sense ? Why not ask them to adhere to the price of 150 per bag ? Why 190 ?

Chidambaram could not abolish [4.5%]  or reduce [ 1.5%] the duty to bring down prices. What was within his / government's power, they failed

Today they shout that the import duty has been reduced 20% !!!! and demand applause ?

The normal net profit margin of SAIL is 25% - a public sector undertaking. They have captive mines. 1.6 kgs of Iron Ore is needed for making one kg of Steel. Companies like Sesa Goa pay Rs 25 per ton [ 1000 kgs ] as mining charges to the Government. Neither SAIL or other iron ore exporting companies absorbed the Rs 300 / ton export duty and want to pass that on to customers / China. Steel Ore prices went up by 75% in the last 2 years [ 54% plus 19% last year ]

Cement Companies, pay Rs 45 / ton as mining charges for their lime stone quarry allotted to them. They pay more for a cheaper product.

Steel Makers can raise the prices but not Cement. Cement will fuel inflation but Steel will not. It just not add up.

[ Both these sectors mint money from the mines leased at throwaway prices. They are National properties.  Why ?  Hope the Communists wake up to this 'gift' ]

Sugar Industry has turned sick. Banks are in uncertain zone. Real Estate has gone bust due to improper valuations and disclosures. Textile continues to be in the doldrums.

Cement, which was rising, now seems to be in ICU, if one judges by the share prices

The Business Sentiment is going down steeply. That is a high price for the antics of Chidambaram

Advisory Note:

If by any chance any Political Party / big wigs in them chance to know this page or contents, they should not take this page seriously. Chidambaram in office is more helpful to them today than anyone else

in aiding them to throw Congress out of Power in the next election, due within 12 months

Indian cement a threat to Pakistan cement

Shashank Rao:   [19 September 2005]A Pakistan daily recently quoted Tariq Saigol, Chairman of the All Pakistan Cement Manufacturers' Association as saying that the cement offered by India and China did not conform to Pakistani standards and was of substandard quality. Saigol reportedly made the remark at a general body meeting of APCMA. In fact, he is also believed to have said in the past that Indian cement would destroy the Pakistan cement industry.
 

.... According to the Department of Commerce statistics on Export-Import, India exported cement worth $0.45 million to Pakistan as at the end of 2003-2004.
 

Current cement prices in Islamabad stand at Rs 290-300 per sack, up from Rs 250 per sack prior to the budget. The point of significance is that there has been neither any change in tax structure nor increase in input costs allowing local cement sellers to rake in the moolah, especially in the absence of imported cement. Prices in India and China are reportedly half the price.

[ Did Indian Companies get the chance then ? Do relations improve if companies from here or there, reach out to spoil another's party ? ]
 
 

end of the contents of this page

 

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