Inflated prices of cement and steel discourage the construction of roads, highways and real estate projects. According to industry reports, the price of steel approximately has gone up to ₹65,600 per tonne from ₹35,000 last year while on the other hand, the cement price has escalated to ₹420 a bag from ₹280.
As per reports, domestic flat steel prices escalated due to strong end-user demand and ever-evolving bullish trends in the global HRC market. The driving factors like low risk of imports and high export realisation are likely to keep prices exorbitant in the foreseeable future. Though, there is a possibility that prices will fluctuate due to the second wave of the COVID-19.
An official at the National Highways Authority of India in reference to the inflated prices and their impact on the real estate sector said, when it explicitly comes to constructing roads, then the hike in price won’t affect the development much as the majority of roads are made on bitumen. But when it comes to bridges there will be a substantial impact as they are constructed with raw materials like cement and steel.
The hike in prices of cement and steel does not only impact the construction of road and bridges, but creates havoc in the real estate sector as well. According to the managing director of Hiranandani Communities, construction cost rose to 4% to 5% due to the hike in cement and steel prices.
Some of the top-tier real estate companies believe that there would not be much impact on construction as their selling price is ₹15,000- ₹18,000 per square feet so an escalation of ₹100- ₹150 in construction cost due to the hike in prices of cement and steel is not a big deal and an issue for them.
However, real estate developers and construction firms are directly blaming the government for not safeguarding the interests of the general public and industry. Moreover, they are speculating that maybe cement and steel firms have formed a cartel and together they are planning to manipulate the prices.