Click to play videoNew Delhi: Union Finance Minister P Chidambaram had on Tuesday asked Indian companies to cut prices to boost demand and tide over the economic slowdown.
However, many companies have ruled out a cut in price of their goods and services.
"The classic response to a demand slowdown is to cut prices," P Chidambaram told the India Economic Summit in New Delhi on Tuesday.
When Chidambaram asked companies to cut prices, the argument was simple that a cut in prices will spur growth.
But industries staring at one of the biggest global economic slowdowns don't think so and they even see price cuts as damaging
"If price reduction increases your sales then obviously you will not reduce your production. But everybody in the industry (two-wheelers) reduces the price then how does the market share improve," said Bajaj Auto Ltd Chairman and Managing Director Rahul Bajaj.
In fact major automobile manufacturers have reported an average drop in sales of over 30 per cent in the last month alone.
But hotels are doing well with projected occupancy of over 80 per cent for the coming months. Even they are unwilling to cut rates despite a request by Tourism Secretary Sujit Banerjee to cut tariffs.
"I don't think we are going to be cutting any rates at the moment unless it comes down upon us as a mandate," Jyotsna Suri, Chairperson and Managing Director of Bharat Hotels, said.
The industry is nervous right now and their prime concern is to tide over the current financial crisis. So the larger picture painted by the Finance Minister does not suit their individual needs.
In fact there is friction on either side. On one hand the industry is unwilling to cut prices and on the other hand bankers are unwilling to cut interest rates.
So in all this, its the aam aadmi (common person) who will have to bear the impact for some time to come.
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