ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Repressed Escalation

Repressed Escalation

Repressed Escalation Hansavivek TATA IRON AND STEEL has asked for an increase of Rs 116 per tonne in steel prices due to increases in wages, prices of coal and other raw materials, freight charges and various Government imposts since 1964. It has pointed out that the "small" increases allowed in 1967 and 1968 have left these costs uncompensated to a "substantial extent". J R D Tata, chairman, says that the price structure imposed year after year on the steel industry has failed to meet the requirements in respect of either works costs or overheads. As against increases in works costs since 1964 totalling Rs 130 per tonne, he says Government has allowed increases of only Rs 88 upto August 1968. In regard to overheads, the Tariff Commission in its inquiry in 1962 had recommended that the steel prices should include Rs 172 per tonne for depreciation and return on a "notional standard gross block'' of Rs 1,300 capacity-tonne. Government "arbitrarily" cut the provision to Rs 156 by reducing the standard block to Rs 1,176 while, according to him, the average capital cost of the Jamshedpur plant is about Rs 1,640 per tonne and the average of the three Hindustan Steel plants is about Rs 2,500 per tonne. Similarly, Tata says, Government cut down the figure of Rs 9 per tonne at 5 per cent on working capital recommended by the Commission by Rs 3, although not only has the quantam of working capital increased but the rate of interest has "n-carly doubled". He contends that, excluding excise duty, the Indian ex-works price of steel in a representative product- mix is about Rs 655 against Rs 835 in the UK, Rs 1,070 in the USA, Rs 790 in Japan, Rs 795 in West Germany and Rs 785 in Australia. Referring to the "oppressive" excise duty, he recollects that starting with a levy of Rs 5 per tonne of finished steel in 1935, it has increased to Rs 150 per tonne on the company's product- mix.

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