The prices of cement, sand, and steel have all gone up. Biju Govind says the rise in excise duty and freight charges and various other factors have landed the construction sector in the State in a tight corner.
The construction sector in the State is going through rough weather this summer on account of the rising prices of materials, such as cement, sand, and steel.
Builders say the prices of cement have rocketed in the past few months. A 50-kg bag costs Rs.360 to 370, depending on the brand. Less than six months ago, the prices were in the range of Rs.300 to 310. In other States, even now the prices are between Rs.280 and Rs.300.
Cement distributors say that prices began to head north in the first week of January. They rose by about 20 per cent after the increase in railway freight charges and the Union Budget, M.V. Sakeer Hussain, general secretary, Kerala Cement Dealers' Association, says.
The freight charges were increased even before the Railway Budget was presented.
The Union Budget, while increasing the excise duty from 10 per cent to 12 per cent, also rationalised the excise duty structure on cement in the Budget.
“The graded retail sales price slabs for the purpose of charging of duty on cement manufactured and cleared in packaged form are being done away with,” Union Finance Minister Pranab Mukherjee had said.
The duty will from now will be calculated on the retail sale price after abatement of 30 per cent.
Kerala heavily depends on manufacturers in other States for cement because of the high demand in the construction sector. Many believe that the increase in prices is more related to markets moving from off-season to seasonal demand during summer. Adding to the confusion is the shortage of cement in many regions, particularly north Kerala. Cement used to be brought to the State from Tamil Nadu by train. At present, loads are brought by road. But less than half the quantity that used to be brought in wagons is reaching north Kerala now. Arrivals from Andhra Pradesh have drastically dropped.
A conflict between the head-load workers and the distributors on the issue of transporting cement to the city has made matters worse. The workers insist that cement be brought to the city only by train.
The shortage of sand is another woe plaguing the construction sector. A reason cited is the long and complex procedures involved in obtaining sand from the water frontages. To get sand, a purchaser has to get a certificate from the local body in whose jurisdiction lies the riverbank. Then, a token has to be taken from the Akshaya centre, a cash slip obtained from the block or taluk office, the amount paid at the branch of a designated bank, and the receipt submitted at the block office. After all these comes the wait in queue on the riverbank.
Five tonnes of sand costs Rs.2,200, excluding the transport cost. The transport cost is between Rs.800 and Rs.1,000 for four km and Rs.60 for every additional km. At the same time, sand is sold in the grey market at Rs.13,500 to 15,000 for four tonnes.
Building a 2,000-sq ft house normally requires at least 125 tonnes of sand. But many choose the illegal method as the government gives sanction for buying only 60 tonnes at a time, that too in instalments.
Property developers increasingly use M-sand (manufactured sand) for construction, but people building their own houses are reluctant to use the material. M-sand is a mixture of quarry powder. It is not good for plastering. However, the mixture is abundantly used in brick-building and concreting. Five tonnes of M-sand costs between Rs.7,000 and Rs.7,500 depending on varying qualities.
Steel prices have increased by Rs.10 to 15 with the rise in prices of raw materials, including iron ore. Steel companies have already announced an increase of Rs.600 a tonne after the excise duty increase of two percentage points announced in the budget.
Fluctuations in the international market have led to an increase. Many fear that the prices are likely to go up further in the coming months. The prices of laterite stones have gone up to Rs.27 to Rs.30 apiece owing to a shortage of clay.