The ministers have declared that the steel producers should bring down the prices of steel by 10 to 20%. Now I would like to explain to you the sinister overtones that are carried by this one request or threat which apperatly seems to have come from the desire of mitigating the hardships of the people on account of costlier steel but in fact has nothing to do with it.
By this declaration the govt. has bid good buy to the reformist policies and free trade options which have been put in place so painstakingly over the past fifteen years by successive govts. . The ruling party itself takes pride in the fact that PM was the one who first ushered in the reforms. They have been raising their neck high on different fora for the acievement on economic front by India after the reforms were initiated. In a single stoke they have forgotten it all.
By this declaration the govt. has implied that the steel industry is unjustified in raising the prices as a result of cartelisation. Can it be a fact when the one third of steel comes from the government controlled companies? So , such blatant dictates without basis are enough to put off the international groups who have come forward to put plants in India for steel production and there by the govt. has ensured that steel remains in short supply for all time to come.
By this declaration the govt. has shown its desire to control the distribution as how else the distribution can be justifyably controlled by the producers as the demand would rise further at lower prices. This is therefore intended at favouring some and denying some, creat a black market and give oportunity to beaurocrates to take bribes.
By this declaration the govt. has conveyed that it will be happy with lower corporate taxes from the industry for any lower sales price will rsult in lower taxable profits. You may see paradox here , the FM has happily gone on to waive farm loans on the strength of higher tax collection.
By this declaration the govt. conveys that tomorrow it will come down heavily on other items if it perceives the prices is high without going in to the matter of input cost as it has done in case of steel.
By this the govt. has declared that while it is going to raise salaries of its staff by double or so, it will not allow the steel industry to do so as it will make for higher steel production cost , so steel workers fate has been sealed by govt. .
By declaring this govt. has also declared that it will not let the foreign produced steel to come in country as the lower prices here would not let it. The development will suffer, is no concern for govt..
By declaring this the govt. has also conveyed that it will not prefer the import of coal and other raw material required for steel production as by lowering the price of steel the producers will not be in a position to import. The lower steel production is no concern for govt..
By declaring this the govt. has ensured that Indian capital becomes shy again and does not get invested as the govt. will not allow enterprises to make money when opportune but suffer when there is down turn. So, IPOs may now not be successful in getting fully subscribed.
By declaring this the govt. has conveyed that it will not mind if the profits of the builders get increased because it has not put a similar price curb on them so far.
By declaring this the govt. has also conveyed that the producers of steel would not be allowed to get extra profits and would therefore be denied the creation of further capacities. They will not have their own money to invest and the banks would not lend for their profit making capability is at the mercy of govt..
By declaring this the govt. has ensured the bulls in market suffer and bears rejoice. Govt. was happy when the markets were high and was patting itself on its own back. Now the same govt. is happy to see rather create conditions for its fall. So, it has taken upon itself the task of transferring money from one pocket to another, all as per its own whim.
By declaring this the govt. has conveyed that it will be reducing excise duties on all such items that contribute to rising price index. It will fill its coffers by other more damaging means is an other matter.
By declaring this the govt. has also conveyed that it will not let the public pay high prices for the essential items too and being a farmer oriented govt. would not let the agricultural produce suffer on price front to ensure fair profits to farmers. There would therefore be greater element of subsidy in the next budget and hence be ready for higher personal and corporate taxes. There will therefore be strain on savings and the investment will suffer. The foreigners will not pour in money for the irrationalities of govt. will be hard to digest. Govt. would not mind slower rate of GDP growth even if millions have yet to be brought above the poverty line.
By such a declaration the govt. has told the industrialists that park or invest you money abroad as we may go whimsical any time. What wrong one can see if Tatas went out to take over ‘Corus’ rather than invest back here in steel plants to increase the production. What wrong one can see if Kumar Manglam followed suit. What wrong one can see if the lesser ones also taking over companies out of India. Once Indira had dared to plan Tata Steel take over for personal displeasure , vcan you imagin the plight of our country if this had happened. Hillary, the Presidential candidate in USA just said this morning that she see that no American jobs are off-shored , here a poor country political group is just trying to let the Indians loose jobs.
You know while right option is always a single one and wrong options are so many like the truth about any thing can only be one but untruth about it can be innumerable. The govt. has choosen to not opt for the right option. May its fear of loosing the next election that has made it to go this way. Fear takes away rational thinking power is an established fact. The other reason may be that greed is playing its part, if you will not rub some body on the wrong side why would he pay to you to escape. Ransom can be demanded only when you have been threatened enough. I think the industry is passing through such phase , afterall money has to be raised for elections and more than the other parties to have an edge.
Do you agree with what has been said here.