Calcutta, Aug. 16: The government has ordered steelmakers to slash prices or face a rash of fiscal measures as part of its efforts to rein in surging inflation which has already touched 7.61 per cent.

The finance ministry is expected to convene a meeting this week of the officials of SAIL, Tata Steel, Essar, Ispat and other steel companies. The move comes in the wake of last week’s meeting between steel minister Ram Vilas Paswan and P. Chidambaram where they discussed the scenario in the industry which has been stoking inflation.

Sources said the finance ministry had told the chiefs of the steel companies in Delhi to take measures to collar prices immediately. Paswan has also said that the ball is in the court of the companies to suggest ways to cut prices.

Sources said the government had decided to take a tough line after receiving a missive from the Congress (I) president Sonia Gandhi through her emissary Motilal Vora.

The government is prepared to adopt stern fiscal measures to rein in steel prices and appoint a steel regulator if the manufacturers don’t fall in line.

The Indian Steel Alliance has, however, told the government that the industry has been under terrible pressure following the rise in excise duty from 8 per cent to 12 per cent and the reduction in import duty from 15 per cent to 10 per cent in the budget.

“Moreover, there has been no price increase since March this year following an agreement with the government. An insignificant price rise was announced recently by some companies, but most of it has been rolled back,” a senior ISA official said.

ISA, which is five-member body comprising SAIL, Tata Steel, Jindal Iron & Steel Company, Essar and Ispat Industries, met the officials from the finance ministry last week and suggested a quid pro quo deal under which prices could be rationalised without crimping their bottomlines.

The ISA has suggested that the excise duty needs to be rolled back while import duty should not be cut below 10 per cent. Earlier, North Block had threatened to slash the import duty unless steel prices were rationalised. ISA has also submitted a report detailing the increase in the prices of iron ore and coal since March.

“The surge in inflation is the result of the increase in iron ore and coal prices over the past few months. The world markets have been just as badly roiled because of the rising input prices,” said an ISA official, adding that steelmakers had not raised prices during this period.

When the domestic coal prices increased by an average of 17.5 per cent, iron ore prices increased by 15 per cent over the past four months.

“How long can we absorb the increase in input costs and maintain status quo in prices while the international steel prices are surging every day,” he said.