High iron prices threaten Telangana’s housing scheme

HYDERABAD: The state government’s pet 2-BHK low-cost housing project could get affected if the basic minimum price of iron and steel on all existing projects are not fixed. The Builders Association of India (BAI) says the project’s future hangs in the balance as an unprecedented hike in input costs has added additional financial burden to the existing contract works thus making the 2-BHK project unviable. BAI after a meeting with its members on Wednesday, demanded the rollback of iron and steel price hike. In recent times the prices of iron and steel have increased by over 60 per cent in the recent times making all projects and construction unviable. 

“This will have the worst impact on the 2 BHK scheme being implemented by some of our members at a rate of `800 per square feet as against a cost of Rs 1100 per square feet just to support the government in the mission to provide housing for all,” said SN Reddy, Vice President (National), BAI. “All the members of the association who are executing the government and private projects are facing a lot of difficulties as the projects are becoming un-executable due to the huge surge of 60 per cent in the price of iron and steel.

This hike will force us to stop work on the projects unless the government intervenes to fix the steel costs provided to the contractors,” he added. The contractors say, even other infrastructure projects like road, dams, irrigation are becoming unviable as they do not factor such price hikes and that construction activity will come to a stand-still if the government does not intervene to effect a rollback of prices. “The payments to the government projects should be released on time as delay in payments for projects under execution or recently completed is adding to our problems.

If this is not taken into account the work on the projects like low-cost housing projects will have to be stopped. We urge the government to take immediate appropriate action to save the construction sector else lot of the contractors will face severe financial problems.”  B Sugunakar Rao, BAI State Chairman, Telangana State.

Apart from Real estate sector which is worst hit, related industries which use steel as raw material are also affected. Fixing prices of the finished products has become a tough task for the industries. Frequently changing the price of end products is difficult and the change in the price of raw material is giving a tough time to the industry.  The industry is demanding from the government to set up a committee to regulate the prices of steel.  Prices need to be regulated; otherwise frequent rise in the prices will create havoc for sector resulting in a negative viral effect on the economy, they added.