"There is no subject so
old that something new cannot be said about it."
-
Feodor Dostoevsky(Russian, 1821-1881)
Word for the day
Definiens (n)
Something that defines,
especially the defining part of a dictionary entry.
(Source: Dictionary.com)
Malice towards
none
Government is considering
tax rebate for encouraging use of credit card.
Does promoting the use of
debt not violate the "Indian Culture"?
Why no champion of
"Hindu Rashtra" is seen protesting?
Last week, the government raised the import duties on flat steel
products to 10.0% from 7.5% and on long products to 7.5% from 5.0%. Higher
import duties on steel products are intended to ease some of the downward
pressure on domestic steel prices from cheaper Chinese steel imports.
As per Moody's, Indian steel prices have dropped 27% over the past
12 months owing to a 70% increase in cheaper imports, one third of which came
from China. As of the quarter ended 31 March 2015, cheaper imports led to a 6%
decline in realized per tonne prices at Tata Steel, versus a year earlier, and
a 10% decline at JSW Steel during the same period.
(Via Moody's)
Kotak Research believes that the 2.5% hike in import duties on steel products
to 7.5% on long and 10% on flat steel products is too modest to cheer domestic
steelmakers in view of the sharp decline in global steel prices. Benefits will
be limited given the large imports under free-trade-agreements and high
domestic premiums over import offers.
What I would like to understand is that:
(a) If the global commodity
deflation due to demand slowdown in China, Europe, and many emerging markets is
a realty and it is likely to persist for many more years, how long and how far
the government of India is going to protect Indian producers?
I appreciate all the arguments that would be offered in support of
this action - but I fail to understand that when the domestic consumer will get
the full advantage of global correction in commodity prices.
(b) Would it not be a
better strategy to support the consumers of commodities by subsidizing imports
so that they could optimize their capacity utilization, begin a virtuous cycle
of lower prices in the economy, may be at the expense of few producers who are
not globally competitive in the current environment.