Mr.Palaniappan Chidambaram, the flamboyant Indian Finance Minister ,has advised the various sections of the industries ,to cut prices, to tide over the global financial crisis.
Well it is as good as saying , if your shoe pinches, cut your foot.
Right , going by his clarion call, cutting prices , increases demand,and the inventories and finished goods would not be piled up.
Exactly. to manufacture a product we require ,raw material, power, labour,and have to account for overhead expenses, wear and tear of machinery .
The cost of product is fixed taking into account the cost of raw materials ,conversion expense and profit margin.
Say ,if the selling price of a product is Rs 100. there will be a profit of 5-7%.
Is it possible to run an industry without profit?
If you sell the same product of RS 100, at Rs 5, then the demand will shoot up.
20 items would have been cleared.
Mr.Palaniappan Chidambaram is stirring the hornet’s nest.
The Harvard educated seasoned politician is mocking trade and business.He is masquerading the disproportionate,unseemly factual and treating the industry with scorn and contempt.
Cutting down prices ,will have reflex and retrograde effect.
It is not an alternative to retrenchment, lay offs.but an ambush to the entrepreneur pushing him into a deep muddle,into a debt pool and a sneaky pandemonium.
He has volunteered to examine reduction in excise duty rates.
It is easy to preach than to practise.
His statement is similar to the Queen Marie Antoinette of France legendary excesses “if not bread ,eat cakes.”
He is advocating from a glass house, talking from a golden castle, sermonising from a diamond studded pedestal.
Meenas Poems 