New Delhi: In view of declining inflation and recessionary conditions, the Planning Commission expects industry to cut prices in the normal course to battle economic slowdown.
“Let me assure you that inflation is coming down and in recessionary circumstances, industry will automatically soften prices,” Planning Commission Deputy Chairman Montek Singh Ahluwalia said.
Inflation, measured by movement in wholesale prices, after a gap of five months came to a single digit of 8.98% for the week ending 1 November.
Pointing out that prices rise significantly when demand is very strong, he said: “I don’t expect prices to be a problem in the next six months.”
Finance Minister P. Chidambaram yesterday asked automobile manufacturers, realty firms and airlines to cut prices to deal with the slowdown.
“Hotels must cut tariffs, airlines, car makers and two-wheeler makers must cut prices and real estate (realtors) must cut rates of apartments and homes they sell,” Chidambaram had said.
However, the finance minister’s request did not evoke a very positive response from companies with Rahul Bajaj, chairman Bajaj Auto, saying that the two-wheeler industry has a margin of about 4-5% only and in the near future they do not see any price cuts.
Realtors were also not far behind in saying no to price cuts. Realty leader DLF’s complained: “There are no takers for housing. Ideally, the interest rate should be around 7%.”
Although industry leaders were cautious, industry chambers backed the views of Chidambaram for price cuts.
CII President K.V. Kamath had said: “I am sure you will find a newer set of prices in most product categories,” while Assocham Secretary General D S Rawat opined Industry leaders will positively respond to the call given by the Finance Minister.