THE industry in Punjab has expressed its unhappiness over the high cost of power which is crippling the it. Although the bulk of the steel demand of local industry is met by induction furnaces, the electric power is the main expenditure in converting iron and steel scrap into steel.
Over and above the high power tariffs, the Punjab government is charging electricity duty of 10%. The present burden of 40 paisa a unit is already beyond the capacity of the manufacturers to bear, laments Induction Furnace Association of North India president Mr KK Garg. He, therefore, urged the Badal-BJP government in Punjab to withdraw this duty. He also urged the government to withdraw the 66 KV scheme imposed by Punjab State Electricity Board (PSEB) mainly on furnaces.
According to Focal Point Industrial Sheds Association of Ludhiana president Mr Rajnish Ahuja, the other area of concern is the appreciation of rupee against the US dollar. Most of Punjab’s small units depend upon exports. He also maintained that the electricity duty is crippling the industry.
For many years, the electricity duty had remained 11 paisa a unit. Now with 10% advalorem, the amount becomes unbearable. In addition to the duty, the octroi of 4 paisa is also unjustified.
Talking on behalf of nearly three dozen associations of industry and trade in Punjab, Apex Chamber of Commerce and Industry (Punjab) president Mr P D Sharma, while referring to the recent address of the Union minister of state for industry in Ludhiana who had asked the industry to close shop if they found the going tough, said that this had disheartened the already discouraged industry. This, he lamented, had drastically led to a decrease in bank credit to small scale industries in Punjab. The credit to small scale industry in Punjab in the year 2005 and 2006 remained almost stagnant, when such a credit jumped by 50% in many states including Haryana.
He said the small scale sector in India may be the only set of borrowers in the world to get bank credit at the highest rate of interest. Large borrowers were getting credit at Sub PLR and as low as about 5% in some cases. All other borrowers are getting bank credit at softer rate. The NDA government, in 2002, had pegged the rate of interest of bank at ± 2% of PLR but banks have raised the level of PLR. Except entry fee into the bank building there is service charge as any thing the bank does, he added.
He said while the previous NDA government had reduced the Custom duty on imported iron and steel scrap to lower the prices, the UPA government has again raised it to 5% along with a countervailing duty of 4%. This was done to benefit the sponge iron manufacturers who are raising the prices unchecked. The secondary producers who supply bulk of steel to small scale industry in Punjab are forced to raise the rates of steel, damaging the industry.
Mr Sharma said the ruling SAD-BJP government in Punjab should also understand that the plight of industry in the state is perhaps the worst in the country. Power tariff has an indirect role in addition to direct burden. Steel and other intermediate which are produced in Punjab are adversely effected by power cost. Therefore,
undue burden on electricity should