A reported cartel of cement industries has turned into a bane for the entire construction industry in Vizianagaram, Srikakulam and other parts of the State.
A cement bag, which was priced at around ₹240 a couple of months ago is now being sold at ₹350, putting a heavy burden on builders as well as homebuyers. The same cartel had reportedly engineered a steep hike in cement prices in 2014 just prior to the elections, with industry experts saying that the same situation is playing itself out once again.
Normally, the government intervenes and makes cement companies reduce their prices after holding discussions with stakeholders. However, sources allege that the cement cartel is taking advantage of the Election Code, as builders are now unable to approach the government to lobby for a reduction in prices.
Normally, summer is considered to be the peak season for the construction industry, but almost all new projects are now stalled with a sudden upward revision of material costs. A tonne of steel, which was earlier available for ₹36,000, now costs ₹53,000 in many places. In the absence of any leverage from the government due to elections, the sand mafia has also jacked up its prices although the administration claims that sand is available free of cost. Each sand unit costs around ₹4,500 in Vizianagaram, with a truck carrying up to three units of sand.
‘Customers the losers’
As many as 150 apartment projects used to be built every year in Vizianagaram. The same is the case in Srikakulam district. However, even major builders have put their upcoming projects on hold. Construction is being done only on those projects that are nearing completion.
Confederation of Real Estate Developers’ Association of India (CREDAI) AP chapter general secretary Katuri Subhash Chandra Bose told The Hindu that customers would bear the brunt of the hike in apartment rates.
“The cement companies should fix prices in accordance with the cost of the end product. Without any proper reason, they enhanced prices by over 50% within one month. It will have a cascading affect on the entire construction industry,” Mr. Bose told The Hindu.
‘Artificial scarcity’
CREDAI Srikakulam district president Gurugubelli Raju alleged that the cement companies were creating an artificial scarcity although there was not much demand in the State. “The cement companies are taking maximum subsidies and benefits from the government. But they are doing a huge injustice to the common people by not allowing them to have their own homes,” he said, adding that thousands of construction workers lost their livelihood with the lack of employment in crucial season.