A clearly retrograde step

In his speech, the FM made a statement that reminded me of the draconian license raj. He said that he would incentivise the Cement companies that held on to the priceline of Rs.190 per bag by reducing the excise duty from Rs.400 to Rs.350 per metric tonne and penalise those who didn’t by increasing it to Rs.600 per MT. While the intention might appear laudable, it sets a very dangerous precedent.

This move by the FM pre-supposes that those who held the price-line of cement were patriots and others were greedy profiteers. Can somebody vouch for the uniformity of quality across manufacturers of cement?

When we are talking about market-led economy (of which the PM and FM are ardent advocates), it is expected that the customers would vote with their feet and with their wallets. Why would the government intervene and that too using a fiscal instrument like taxation (in the guise of consumer interest) to regulate and rein in the ‘so-called erring companies’?

And if this should be done, then why only Cement? How about steel? How about any of the essential commodities like rice, wheat, pulses? How about pharmaceutical goods? FMCG goods? The list is endless.

And then, what about the next year? If the governmet decides that the right price for a bag of cement is Rs.250 (for argument sake) by Feb 2008, what will be the state of those companies which sold their products above the rate (without knowing what it would be 9 months from now)? Who can perform in such environment of fear, uncertainty & doubt?


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