Flaying the United Planters Association of South India (Upasi) suggestion to reduce stock norms equivalent to the monthly consumption of the industry, the all Indian Rubber Industries Association (Airia) said stock norm had direct relevance to prices of rubber.

As per the norm set by government, natural rubber stocks should be equivalent to two months requirement of the domestic industry.

Airia official and natural rubber committee convener Suresh Elwadhi said in a statement here that Upasi which had earlier, too, demanded reduction in stock limit was silent about the demand.

Pointing out that earlier revision of stock norms from three months requirement to two months, Elwadhi said the prices had then witnessed a steep rise.

"Prices ranging between Rs 2,128 and Rs 2,546 a quintal between 1991and 1993 shot up to Rs 3,107 in 1994, Rs 5,059 in 1996 and Rs 5,122 per quintal in 1996," he said.

The present fall in rubber prices had little relevance with the stocks and the decline was only due to general recession in the economy, he added.

Criticising Upasi for pressurising government with a motive to raise prices of natural rubber, Elawadhi said market forces should be given a free hand to determine the prices.

Pointing out that the ban on imports of natural rubber did not have any impact on the prices, he said it had harmed the interest of the rubber-consuming industries.

"Four months have passed so far (after the ban) but government and State Trading Corporation (STC) have not been able to finalise norms for supply of different grades of rubber other than RSS IV," Elawadhi said.

Stating consuming industries were finding it difficult to procure rubber of their choice for manufacturing purposes, he said government should immediately consider revoking the import ban.

Now that supply hadbegun exceeding demand, he said the only way to reduce surplus stock was to enhance the stock norms.

Government should take a balanced view and not take any precipitate action which would jeopardise stability and growth of the vital rubber goods industry, he added.

Upasi had proposed reduction in stock norms to boost sagging prices of rubber, which have been hovering below the benchmark price of Rs 3,405 a quintal set by government in October last.

Rubber prices have been ruling low since the second quarter of 1997 on excess supply and reduced consumption. Rubber production is expected to exceed consumption for the third straight year this fiscal.