Construction costs go up as cement, steel prices rise again

Kerala adopts new software to fast-track building permit applications

Kannur: Much to the chagrin of people seeking to build, renovate or extend homes and shops, prices of construction materials, including cement, steel and iron material, have gone up again.

The rise in the price of coal and petroleum products are said to be the main reason for such a hike. A clear picture of the price hike can be gauged from the fact that 'A' grade cement now costs Rs 525 per sack, almost Rs 35 to 40 more than its selling price until recently. The price of an ordinary grade cement sack has now touched Rs 460 from the earlier cost of Rs 410.

But in order to offset the effects of the price hike to an extent, the cement manufacturing companies have asked the dealers to reactivate the discount system. A discount of Rs 65 will be given per sack.

Late last year too the prices of building materials had become dearer after construction activity resumed after the major COVID-19 lockdowns. Shortage of raw material owing to production cuts in factories or mines in the wake of non-availability of labourers and transport was blamed for the price rise.

Short supply behind spike

All Kerala Steel Traders' Association president K M Muhammed Sageer said that most of the iron ore production centres were not working up to the full capacity. He further pointed out that the price rise of construction material was not due to higher consumption of products by the public, but due to the reduced availability of material.

Now, the price hike is common for all categories of products of cement and steel. The price of the TMT steel is now double that of the price charged last year. The cost of pipes has gone up by 25 per cent. 

Soaring fuel, coal prices 

Coal is a raw material in the production of steel. The country is now facing a severe shortage of coal, adversely affecting steel production.

Compared to previous years, the production of coal has come down by 76 per cent, which is devastating.

In another setback to the industry, the import of coal to India has been affected by the soaring prices of the commodity in the international market.

Another factor for the price hike for construction material is the burgeoning fuel prices. The increased fuel prices are leading to a further rise in the transportation of construction materials.

The huge rise in the export of iron ore from India has hit our domestic market, leading to the shortage of iron and allied materials.  

Likely impact on Kerala economy 

The soaring prices of construction raw materials will have a very adverse impact on the Kerala economy at a time when the State is slowly limping back to normalcy after a protracted COVID-19 crisis.

Govt intervention needed

The governments should immediately intervene to control the prices as they are charging huge taxes for cement.  The government takes away 28 per cent of the total price of cement as GST. The Central and State Governments share the tax for cement. The GST towards the transportation of cement is 12 per cent.

It is alleged that the government is reluctant to take steps to control prices for construction material since it gets a huge tax share from the sector.

Though the cement dealers went on strike demanding steps to reduce the huge price for material, the government did not pay much attention. Only government intervention would lead to a reduction in prices for construction materials such as cement and steel.  

The comments posted here/below/in the given space are not on behalf of Onmanorama. The person posting the comment will be in sole ownership of its responsibility. According to the central government's IT rules, obscene or offensive statement made against a person, religion, community or nation is a punishable offense, and legal action would be taken against people who indulge in such activities.