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Inflated cement prices pose challenges to housing industry, ongoing works

The middle-class’ dream of building a dream home has dissolved a little more with the construction costs going through the roof during the pandemic.

Published: 06th November 2020 04:55 AM  |   Last Updated: 06th November 2020 04:55 AM   |  A+A-

real estate, apartments, buildings

Apartment building used for representational purposes.

Express News Service

CHENNAI: The middle-class’ dream of building a dream home has dissolved a little more with the construction costs going through the roof during the pandemic. Cement manufacturers have increased the prices by Rs 100 per bag (50 kg), sparking widespread anguish among developers who are demanding the Union government to set up a Cement Regulatory Authority to curb cartelisation in the industry. 

The price of a bag of cement was around Rs 320 and now it has shot up to nearly Rs 420, resulting in an overall increase in construction cost. The price hike has caught the developers unaware as they could not demand the money from their customers, to whom they had already sold the flats. Government contractors also feel the pinch, said Muthuswami Mohan, national president of Builders Association of India. 

Cement is one of the predominant construction materials used in all stages of construction, namely, housing (55-65 per cent), infrastructure (15-25 per cent), commercial and industrial construction (10-15 per cent), and industry (5-15 per cent). What irks the developers more is the failure to check the cement cartel. The Builders Association of India and Confederation of Real Estate Developers ’ Association of India (CREDAI) has urged the Prime Minister for the formation of a Cement Regulatory Authority.

They have urged the government to comply with the recommendation of Parliament Standing Committee for setting up the regulatory authority similar to other authorities constituted by union government. S Sridharan, chairman, CREDAI-TN chapter, told Express that CREDAI has urged the PM, CM and also the Union Finance and Industries Ministers to curb the cartelisation of cement. 

Mohan also said that Builders has drafted a letter to the PM stating that cement manufacturers are deliberately not utilising the installed capacity of cement production with the purpose of creating an artificial shortage of cement in the market to control the price. Interestingly, it is not only cement, the prices of m-sand, steel, bricks, blue metal have also gone up significantly. Even the labour cost has increased by 25 per cent, said Mohan. 

An official from the cement industry, on condition of anonymity, said that during the pandemic, the volume of sales have come down drastically as such the prices of cement has gone up. “The cement industry is struggling through the pandemic while paying the workers as well as transporters it has hired,” he said.

But, Sridharan said that can’t be an excuse to hike the price by Rs 100. On November 2006, Monopolies and Restrictive Trade Practices (MRTP) commission observed that, “Cement companies are guilty of forming cartels and issued cease-and-desist order. The MRTP commission also directed them to file an affidavit with effect that, they don’t cartelise again”. The appeals filed by cement manufacturers are pending before Supreme Court.

PSC ’s direction
Parliamentary Standing Committee of Ministry of Commerce recommended that the Government should establish a statutory regulatory authority to regulate the price of cement to curb market dominance, artificial scarcity



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