FM on why 'Mera Bharat Mahan'; Ind must hold prices

New Delhi, Mar 1: Finance Minister P Chidambaram today asked the industry to hold the price line, chiding the cement industry for faltering on their commitment in this regard, and dwelt at length on how the Budget 2007-08 was in the long term interests of growth and industrial development.

In a post-Budget interactive session with the captains of industry here, Mr Chidambaram was at pains to explain to them how his huge allocations to agriculture and social sectors would ultimately work for the benefit of industry and why it was necessary to do so.

Appealing to the industry leaders to ensure that prices are not jacked up, Mr Chidambaram said most sections of the industry have not done so and urged that they should not do so in future too.

''Please cooperate with the government,'' he said.

However, he expressed annoyance that cement manufacturers had gone back on their commitment to the government of not increasing the prices.

He said there were virtual regional markets in cement as it was not profitable to transport the commodity from one region to another. In short, cement manufacturers operated in a near oligopolistic market.

Mr Chidambaram appealed to the industry leaders to see reason in his wisdom and sought to explain that the additional burden on industry was only minimal. A myopic view of his Budget could spell doom and disaster.

The event, held at the sprawling convention hall of Ashoka Hotel, was organised by the Finance Ministry. The hall was packed to capacity.

The thrust of the Finance Minister's argument was that if agriculture were to grow annually at four per cent from the low 2.3 per cent at present, then it would create a huge market for industrial goods. The present consumer market was largely confined to the urban middle classes and rich, which had led to a growth spiral by virtue of a consumerist boom generated by it, benefitting the industry.

''What if the next phase of the growth spreads now to rural areas, where nearly 55 per cent of the population resides. What a huge market it will make and the prosperity it will bring to all, including industry?'' Besides, the best form of "compassion and charity" was to distribute wealth to the needy and poor. And above all the prime responsibility of the government is to make effective intervention in favour of those who are weak and left behind in the race of development.

''Imagine in a garden where there is an oak tree and a small plant. Who will need support? Obviously the plant,'' he said.

Mr Chidambaram said industry was akin to an oak tree and the poor in the rural and urban areas were the plant.

''Indian industry has matured and best be left to itself, Infact, the less the interference by the government, the better it is,'' Mr Chidambaram said.

UNI