Kerala's construction sector in dire straits

Steep hike in prices of cement & steel hits sector hard

Kerala's construction sector is in doldrums due to the steep hike in the prices of cement and steel recently. The shortage of river sand, which is widely used in the state for concrete works, has aggravated the problem.

Cement producing companies have increased the price of cement by Rs 25- 30 per bag by which the average price of cement at present is Rs 155- 165. All the companies including Malabar Cements, which is a state-owned company, have increased prices by 25 -30 per cent.

A couple of weeks back, cement prices were hovering around Rs 130 -135. The cement dealers here said that every year companies increase the price during this period because of the busy season in the construction field.

Kerala is having the highest sales tax tariff for cement (15 per cent, apart from the additional sales tax), which is one of the important reasons for the higher price in the state.

The price of steel is also on the increase due to increase in steel price the world over. The increase in rail transportation charges for steel has come as a blow to the customers of the state.

The price of steel has increased to the level of Rs 26 per kg, which was Rs 18 a year back. The price of branded steel has increased to the tune of Rs 30-32 per kg and has unsettled the cost of construction.

Contractors said that there might be an increase of 25- 30 per cent in the total cost of construction due to the steep rise in the material cost.

Mining of river sand in Kerala has been banned in some areas and mining is on a controlled basis in the other areas of the state.

The ban is due to uncontrolled mining, which in turn has destroyed rivers like Periyar in the state. The price of a truckload of good quality sand costs Rs 9,000 and the average price is above Rs 5,000.

A couple of years back this was Rs 3,000 and even for a higher rate, sand is not freely available in the market. The cost of other building materials like tiles, paint and sanitary items has also increased and has affected the industry very badly.