Slowdown looms over infra sector in Tamil Nadu

Rise in raw material prices, shortage of blue metal and m-sand hit the industry badly

Published: 22nd October 2021 05:39 AM  |   Last Updated: 22nd October 2021 05:39 AM   |  A+A-

Express News Service

CHENNAI: Construction activity in Tamil Nadu has slowed down with prices of raw materials doubling over past one week. Steel prices hover around Rs 60,000 a tonne, up from Rs 50,000 on Monday. So have cement prices, that have sneaked past Rs 500 for a 50kg bag. The price of m-sand which was around `48 per cubic feet is now at Rs 60 to 70 per cubic feet while blue metal that was selling at `40 per cubic feet is now at Rs 60 per cubic feet.

Apart from the rising prices, shortage of blue metal and m-sand have also hit the industry badly. Not only the residential projects but major infrastructure projects, including the work on second phase of modernisation of Chennai Airport, have seen a sudden slowdown. “We don’t know how long will the government take to resolve it. The rates have gone up and supplies are not there,” said airport sources, adding it could also impact the multi-level car parking project scheduled to open on December 15.

Even the National Highways projects have not been spared. “The impact is being felt by contractors who have signed the concessionaire agreement,” said a national highway official. K Venkatesan, a railway contractor and zonal secretary of Builders Association of India (BAI), says cement prices are not reflected on the RBI index rate, and that contractors are unable to get compensated for the escalated cement price.

Meanwhile, investment advisor and research analyst, Sandip Sabharwal, quoting Asian Paints has termed the inflation as the highest in the last 40 years with 15 to 18 per cent rise in the last six months itself.

Almost 90 per cent of construction activity has been hit, says S Sridharan, chairman, Confederation of Real Estate Developers’ Associations of India National. The availability of m-sand and blue metals was hit after the mines department brought in changes in the rules allowing permit to operate quarries for every three days.

“The permits have to be renewed after every three days. It took one day to renew the permit itself and as such, we had two days to operate quarries. Now during the meeting, the officials assured us the quarries will be permitted to open for every 15 days after which the permit has to be renewed. This would resolve the shortage of m-sand and blue metal,” says K Chinnaswamy, president of TN Stone Quarry, Crushers and Lorry Owners’ Association.

Interestingly, of the 3,000 stone quarries in TN, only 1,500 are operating currently. “The demand for m-sand and blue metal is not much in the rest of TN than in Chennai. The second phase of Chennai Metro, Outer Ring Road, and other projects are happening only here,” says Chinnaswamy. He says if the government opens the remaining quarries, the prices may come down and could generate a revenue of Rs 200 crore as seigniorage fee.


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