It will not be possible to implement the mega infrastructure projects envisaged in the 11th Five Year Plan period within the budgeted cost, unless the government takes steps to control the spiralling prices of cement, steel, bitumen and diesel, warned the Builders Association of India.
More than Rs.15 lakh crore infrastructure expenditure is envisaged in the Plan, of which half will go to the construction sector, according to BAI trustee R. Radhakrishnan. “Fifty per cent of that cost will go toward these four items. If they really want to achieve it, the government must contain the rates,” he said. Addressing a press conference in Chennai on Wednesday, the BAI made several suggestions to reduce the prices of these items. “The government needs to ban the export of steel until the needs of the domestic sector have been met,” said Mr. Radhakrishnan, pointing out that 30 per cent of Indian steel was exported, even while Indian steel consumers were faced with a Rs.3,000 per tonne increase in rates over the last week.
Concerning cement, BAI felt that the recent government initiatives such as facilitating import would force domestic manufacturers to cut prices. It also requested the government to exempt imported cement from value added taxes (VAT). This makes up approximately Rs.23 of the price of one 50kg bag of cement, according to BAI state chairman J.R. Sethuramalingam. The existing market rate for cement is about Rs.240 a bag.
The BAI welcomed the Tamil Nadu government’s leadership role in facilitating import and warning cement manufacturers to reduce prices or face the threat of takeover by the State. “It may not be possible to take over production, but they could take over distribution systems…like with sugar,” said a BAI member.
Builders and contractors have already placed their orders through the Tamil Nadu Cement Corporation to import cement in bulk quantities. The first deliveries should arrive in 15 to 20 days, according to Mr. Radhakrishnan.