More pain for Andhra Pradesh construction sector as sand shortage persists

Amid several disruptions since a new government took office in Andhra Pradesh, recent suicides by construction workers seem to reflect a growing distress in in the state’s construction sector. A major cause for concern this time is a shortage of sand that started as early as in July, when the Y S Jagan Mohan Reddy-led state government tried to regulate mining and supply by replacing the earlier regime’s 'free sand' policy.

With flooding of major rivers extending the shortage, despite the government's ad-hoc measures to manage supply, the price of a truck-load of sand (10-12 tonnes) rose to over Rs 50,000 in the black market, forcing many people to postpone construction work at their houses and residential projects.

"People engaged in sand mining were used to piling up sand in dump yards before rivers and rivulets would become inaccessible due to rains and flooding. However, the new government clamped down on this informal mining as soon as it came to power in June. Rivers were already in spate by the time alternative steps for making river sand available were announced," said V Uma Maheshwar Rao, president of the AP Building and Construction Workers Union.

Last week, Rao led a protest rally of construction workers in Vijayawada, blaming the state government for jobs losses, citing sand shortage as the main reason for a decline in construction activity in the past four months. So far, six construction workers are reported to have committed suicide after failing to find work for weeks. Four of these suicides were reported in Guntur alone, according to Rao.

Andhra Pradesh has 3.5 million construction workers, many of whom have been rendered jobless by the ongoing crisis, he claimed.

Criticising the state government for its inept handling of the sand issue, Telugu Desam Party (TDP) President and former chief minister N Chandrababu Naidu recently demanded that the government pay Rs 10,000 per month per construction worker till they got their jobs back.

Not far from the upcoming Andhra capital Amaravati, Guntur, besides Mangalagiri and Vijayawada, had become a new centre for construction activities. As the new government stopped all ongoing construction in Amaravati in July to review previous contracts, real estate sector sentiment in these cities took a beating.

Making the matters worse, the sand shortage issue began to further hurt the private construction activity in these cities, besides others like Vizag, according to private builders. However, the government claims it has already made available 5-6 million tonnes of sand through alternative measures. The yearly requirement of sand in the state is 20 million tonnes.

In August, the state government had announced an alternative plan under which Andhra Pradesh Mineral Development Corporation (APMDC) would set up and maintain stock points and sell sand at Rs 375 per tonne on a first-come-first-served basis. However, trucks and tractors waited in queue for their turn for days together at stock points while authorities struggled to meet the demand. To ease the situation, the government last week announced another ad-hoc plan by authorising every Gram Panchayat to sell sand available under its jurisdiction.

The ground situation remained more or less the same, even as the state government tried to take control of sand mining from the private players, which were making hay during the 'free sand' policy days.

"You will get 10 truck-loads of sand delivered at once if you are willing to pay Rs 50,000 for a truck-load; they are just a phone call away. Despite the local shortage, 60-70 trucks-loads of sand is being transported to Hyderabad from places like Nandigama near Vijjayawada. This is the real situation," a Vijayawada-based builder told Business Standard requesting not to be named.

R V Swamy, president of the Vijayawada chapter of the Confederation of real Estate Developers Association of India (Credai), said the government should open sand mining to private players, as in the past, till availability in the state improves. "For builders in Vijayawada, this is just one more disruption. Earlier, local bank branches were willing to give loans of up to Rs 25 crore for local construction projects without authorisation. Once the government stopped the construction activity in Amaravati, it became hard to get even Rs 1 crore in loan from the same banks," he said.