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<i><u>Construction and cement sectors clash over rising prices</i></u><br> It's war!
By Manojit Saha
The war of words between the construction and cement industries has intensified with the recent increase in prices of construction inputs, mainly cement and steel. Several construction associations have criticised cement and steel manufacturers for derailing the construction industry where cement and steel constitutes 33 per cent of the total cost of construction.
A recent study released by the Confederation of Real Estate Developers' Association of India (CREDAI) claimed that the price of cement had risen from Rs 95 to Rs 160 per bag within the last three-four months and that of steel had gone up from Rs 19,500 to Rs 28,500 per tonne during the last two months, reflecting an overall rise of more than 50 per cent in both cement and steel. The report also predicted a 100 per cent price rise for both the inputs from their original levels in a very short period of time.
Terming the price increase as "unjustifiable" and demanding the government's immediate intervention, Niranjan Hiranandani, President, Maharashtra Chamber of Housing Industry, said, "Today, when we are talking of 'India Shining', this unjustifiable increase only leads to heartburns for common men and Indians at large. This increase will impact the industry at large across all sections right from housing complexes, townships, malls, highways and even concretisation of roads. We feel the government should look into this price hike and curtail it immediately."
Rubbishing all these arguments and accusing the construction industry for crying foul, the cement industry feels that the price hike is purely an economic phenomenon where demand-supply forces drag the prices up. "It is generally after the monsoons the cement price picks up. But, this year it was delayed. However, Indian prices are still cheaper than international prices. Moreover, cement only contributes 10 per cent of the total cost," a cement industry spokesman said on condition of anonymity.
Substantiating the above argument, a cement industry analyst cited the example of Gujarat where domestic demand has nearly doubled in the October-December period. "In October 2003, the demand was 5.5 lakh tonnes which increased to 1 million tonnes in December," he pointed out.
The cement industry emphasises that there is no need for the government to worry. "In India, capacity growth is faster than demand growth. As long as this situation takes place, there is automatic market pressure for price correction which trims the temporary price increase. Policy planners only need to worry when the reverse happen."
<i><u>Construction and cement sectors clash over rising prices</i></u><br> It's war!
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