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Union minister Nitin Gadkari has alleged the existence of “a cartel in the cement and steel industry", as reported on Sunday. He pointed to the rising prices of these construction inputs, and said that this could jeopardize the country’s infrastructure plans. He levelled this charge at an interaction with representatives of builders who were said to be pressing for a regulator for these sectors. The minister called cement prices exploitative, and said he didn’t see why steel should be dearer if steelmakers had their own iron ore mines and costs of labour and power had not gone up.

Price buoyancy in itself could be a market phenomenon and is not evidence of price rigging, which requires active collusion on squeezing supplies. Also, as demand and supply determine prices, rather than costs, profit-maximizing firms cannot be asked to justify hikes. Both steel and cement are on an upturn, and so long as sufficient rivalry exists, there should be no problem. Not that cartelization can’t happen, unlikely though it is in the steel market, which has a major state-run supplier. This is a matter for the Competition Commission of India to look into. Both sectors have been under its scanner off and on.

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