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Coronavirus impact | Credai seeks government’s intervention to control cement, steel prices

With construction activities having stopped due to the nationwide lockdown, there has been a steep increase in prices of essential raw materials such as cement and steel.

Claiming there was a cartelization by cement and steel manufacturers due to which prices increased abruptly, real estate developers’ body, Confederation of Real Estate Developers' Association of India (Credai) has said that the practice is ‘highly unethical’ and amounts to ‘unfair and restrictive trade practices’.

“Controlling prices is essential for construction to get started in full swing and get the country’s economy back on growth path,” Credai said in a letter to Housing and Urban Affairs Minister Hardeep Singh Puri.

“We shall be grateful if the issue of price rise of cement, steel and other raw materials can be taken up by you with the relevant ministries at the earliest,” Credai said.

“We would like to bring your attention to the cartelization by the Cement and the Steel manufacturers by imposing a sudden increase in their selling price. Across various states, there has been an increase of Rs 100-250 per bag of cement and about Rs 2,000-Rs 2,500 per metric tonne of steel,” Credai added.

Given the current crisis faced by the real estate sector due to the novel coronavirus pandemic, or even otherwise, "such an abrupt increase in prices will be a bolt on the blue for the developers and will lead to increase in the construction costs and overall project cost. With wafer thin margins, many developers may be constrained to stop construction work, there by impacting the delivery of the projects, leading to penalties under RERA, other authorities and so on. Needless to say, this will have a cascading effect on the home buyers also,” it said.

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Also read: Construction sector facing daily loss of Rs 30,000 crore; investments in projects to fall 13-30%: KPMG

During the past few weeks, with construction activities having stopped as part of the nationwide lockdown to help curb the spread of COVID-19 outbreak, there has been a sudden and steep increase in prices of essential raw materials such as cement and steel by 40 percent to 50 percent.

During a webinar in April with the union minister, the developers’ body had apprised him of the price hike by cement manufacturers. The minister had assured realtors that he would take up the issue with the concerned ministries.

Click here for Moneycontrol’s full coverage of the novel coronavirus pandemic
Moneycontrol News
first published: May 10, 2020 07:19 am

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