The real elixir for the demand-starved industry was not in the finance minister's passing reference to a tariff protection for cold rolled steel producers and duty reliefs on raw materials for electric arc furnaces (EAF) and refractories. The panacea for the steel industry's malaise is in the intended increase in government spending on projects that consume steel.

The eight per cent special import duty he imposed on all imports (with exceptions) more than meets industry expectations of a tariff barrier against cheap imports. A five per cent import duty on cold rolled (CR) steel, will in addition, restore the duty differential between the product and its prime input, hot rolled (HR) coils, that disappeared in the last Budget.

The duty differential between hot rolled and cold rolled steel existed till last year. The uniform 25 percent import duty on CR coils and its prime input HR coils, made the home produced variety distinctly less attractive to consuming industries. Mega steel producer, the Steel Authority of India Limited (SAIL) was saddled with a CR coils inventory of three lakh tonne in March this year.

The 81 electric arc furnaces, that together produce seven million tonne of steel, have been given a duty relief for raw material imports in the five per cent customs duty cut in steel melting scrap. The duty cut will hurt the sponge iron industry, however, that produces a substitute for scrap.

Refractories have been given a duty relief for refractory ceramic goods. The customs duty for refractory grade ceramics has been slashed to 30 per cent from 40 per cent.

In addition to the direct fiscal sops, the Budget also baits demand for the industry. Not only has the Plan allocations for three key infrastructure-building industries, energy, transport and communications, been raised by 35 per cent, the overall Plan expenditure forthe fiscal has also gone up by a whopping 18 per cent.

The enhanced kitty of the Housing and Urban Development Corporation, the tax incentives for housing, the Rs 3000 crore allocated for rural infrastructure development and an active Infrastructure Development Finance Company, should all, spur the demand for steel.

``One of the major planks of the Budget,'' Sinha said, ``is to provide strong stimulus to the infrastructure sector through large public and private investment. This will also help boost industrial growth and overall economic development.''