16 , May , 2020
Hyderabad/Bengaluru: Just as the news float of the construction industries preparing to resume operations after more than 50 days of lockdown, the industry was alarmed by a sharp increase in cement and steel prices. To dig out a solution some southern states have initiated negotiations with producers to curb the prices accordingly.
Prices of cement and steel have gone up by 40%-50% in the past few weeks. Real estate companies blame it on cartelisation by top producers. Realty developers under the banner of Confederation of Real Estate Developers Associations of India (CREDAI) has appealed to central and state governments to intervene in the matter, saying steep hike in input prices will adversely impact realty and construction sectors that contribute significantly to the country’s GDP.
While the Karnataka government has ordered price caps on cement prices by responding to the construction industry pleas, others like Telangana and Andhra Pradesh are engaged in parleys with cement and steel producers to rationalise prices.
Already the lack of labourers have given nightmares to the developers wherein they are pouring out huge amounts to lure the workers to stay back and work. Increase in the essential materials of construction will further deepen the crisis. This will lead to an inevitable increase in the construction and overall project costs, ultimately hurting the buyer.
The Karnataka government, which held talks with cement producers and developers on May 2, ordered the cement firms not to increase prices by more than 5-10% over the prices of February, while warning legal actions for abnormal price increases.
Telangana industries secretary Jayesh Ranjan, who held a round of discussions with the cement companies last week, said, “As per their version, the reason for the price increase is due to an increase in manufacturing cost due to reduced capacities, shortage of labour, high cost of transport, etc. Also, (cement) dealers have demanded higher margins due to loss of sales in the lockdown period.” He said the government is verifying data and “will arrive at a price that is fair to the cement industry and also reasonable for the construction industry”.
Andhra Pradesh too is engaged in talks with cement manufacturers to fix caps on price hikes, said a senior official in the chief minister’s office. Real estate developers in TN have represented the issue of sharp price hikes of cement and steel before a government-appointed high powered committee's meeting on Tuesday. This committee, which includes representatives of Credai and other industry bodies, was set up to advice the state government on the post-Covid-19 measures to revive the economy.
