India Inc on Wednesday said there was no evidence to prove finance minister P Chidambaram?s views that companies artificially jacked up prices leading to higher inflation. In fact, it wanted the government to stay away from micro-management, which it felt, was a retrograde step.
?In case prices go up due to a supply-demand gap, there are many ways to tackle it. Let the market decide it. In an economy that is seeing such growth, minor spike in prices is fine,? Habil Khorakiwala, president, Ficci told FE in an interview.
Chidambaram had on Tuesday blamed a section of industry, largely the manufacturing sector, for the rising inflation, despite a fall in fuel prices. Terming the rising inflation as the ?only dark cloud? in an otherwise ?good? economy, he said, in the long-run, it would raise interest rates and work to India Inc?s disadvantage.
When contacted, CII president R Seshasayee too said, competition, by and large, took care of prices. ?In some sectors, for instance, coal, where there are not enough players, there is a case for the government to intervene,? he said.
According to Seshasayee, if commodity prices had gone up, companies making finished products should not be blamed for the general price increase. Further, he said, there should be a proper mechanism to check cartelisation, if any, in sectors where there is no or little competition. ?Statutory backing should be given to the Competition Commission of India to check this,? he said.
At the Ficci annual general meeting, Chidambaram had said, ?I have a nagging feeling that there are sectors that have smelt an opportunity to make profit because of high demand. There is nothing wrong in making profits, but beware of entrenched core inflation. Cut costs to stabilise prices.?
Inflation for the week-ended December 23, 2006 stood at 5.48%, almost touching the outer band of the RBI?s 5-5.5% target for the full year.