“We will have to take difficult decisions in the coming days”, warned one of the operators in the sector after he was informed of the cabinet decision. With the rising price of cement on the international market – from US$60-67 - the depreciation of the rupee and the increasing cost of freight, local cement suppliers consider that the 20% rise was a necessity.
Hence, the question of their survival in such conditions is raised. The more so as the government has not only decided on a lower increase than expected; it has also made it clear that the increase of cement prices would be done under certain conditions only. It is said that the price of cement will be reviewed every four years only – except in the case of a price change on the international market. No other criterion – such as the value of the rupee, the cost of freight or operation costs – will be taken into account for possible price increases.
In view of such a situation, the operators have not supplied cement during the weekend and may not pass new orders. They expect a meeting with the minister of Trade during the week to try and find a solution or take a final – even if difficult – decision.
As for consumers, they may be equally dissatisfied. A price increase is never welcome and paying from Rs 22 to Rs 25 more for their bag of cement may not make them very happy. “Building a house or a small flat costs 20% more today than in January 2006,” commented one of the specialists of the sector, Bushan Ramloll, recently.
Cement, the raw and essential material for building, is not the only one affected by a price increase. Wood is becoming increasingly expensive – to such an extent that it has become a luxury product – and iron bars have not been spared either.
