While recognizing that the budget presented for 2004-05 gives priority to agriculture and to the alleviation of poverty, we have some comments to make from the point of view of the steel industry.

The ability to make steel efficiently is one of the major strengths of this country. This is so because of the plentiful supply of high-grade iron ore, the availability of trained technical personnel and the long coastline, which permits the setting of steel plants so as to facilitate efficient import of coal and export of finished products. We feel that, keeping this in view, the budget should have set the direction for India to become one of the major steel producing countries of the world. This is all the more so as the target is to achieve an 8% rate of GDP growth year after year. Without adequate growth of steel capacity, it can be expected that there will be difficulties in attaining this target.

A clear signal in favour of attracting fresh investment in the steel industry could have been provided by reduction of railway freight on raw materials and finished products in the Railway Budget. Logistics has a major contribution to the cost of production of steel. A further thrust would have been given if the excise duties were retained at a reasonable level. These two measures and many other could have been taken to reduce the cost of production and price of steel, promoting faster economic growth. On the contrary we see an increase in excise duty from 8% to 12%, ad valorem.

However, we note that several policies are being implemented or are under consideration to help increase the output from the agricultural sector. It is expected that these projects will result in increase in demand for inputs from the industrial sector, including steel. We also note that efforts are being made to increase plan expenditure and to quicken the pace of infrastructure developments. These will certainly have a beneficial effect on steel demand.