In a puzzling paradox of demand and supply theory, cement prices in Telangana have gone up significantly, despite a lull in the construction business for the past few months.
Builders in the State vouch that the rise in the prices has nothing to do with the off-take quantities, and that the production, in fact, had been cut down by manufacturers owing to lack of demand.
The price per bag of cement, which was about Rs.220 two weeks ago, is being quoted anywhere between Rs.300 and Rs.320 now in the market, with dealers speculating that it would go further up to Rs.340 per bag. In any case, the cement price is looking north by at least 30 per cent, which, builders fear, is not good for the sector which is already in doldrums.
Further, it could adversely affect the middle class housing aspirations too. As a precursor to the price rise, the manufacturers have stopped supplies to the dealers for the past one week or so, allegedly for creation of artificial demand.
“Supply has been stopped during the last five to six days, and reopened only today, with an increase of price by 30 per cent. There is no hike in the manufacturing costs to justify the increase. In fact, the manufacturers have cut down the production to save on labour and material overheads,” says K. Sridhar Reddy from the Telangana Real Estate Developers Association (TREDA).
Allegations of cartelisation of the cement manufacturers surface time and again whenever there is spurt in the price of cement. There are no conditions in the market to warrant a price rise, say builders. “In summer, we have received strict instructions from the government to stop all the construction activity, in view of water scarcity. Large projects have come to a grinding halt. This month, there is no activity because this is the season labourers and masons take a vacation to visit their native places in Andhra Pradesh and Bihar,” says Nagesh Gupta, a small-time builder from Ranga Reddy district.
The builders are already reeling under the skyrocketing sand price, which has gone up from Rs.850 per tonne to Rs.2100 per tonne in one year, which is one more reason for the lull in construction. “We are holding a meeting on Monday. This kind of cartelisation is bad for development of the newborn State,” says spokesperson of the Telangana Builders Association S. N. Reddy.
