Tirupati: Spike in steel prices cripples housing sector

Tirupati: Krishna, an employee in a private firm has decided to build a small house with his savings and housing loan and planned his budget meticulously. Now, the huge increase in the prices of steel is shattering his budget plans pushing him into a state of uncertainty over mobilising extra funds.

The sharp rise in the price of steel has raised input costs for the real estate sector which the lower and middle income groups feel unaffordable. Between August to December, steel prices have gone up by around Rs 11,000-12,000 per tonne for which 18 per cent GST is extra. Before August, steel price was Rs 38,000 which is now Rs 40,000 per tonne.

This may impose an extra burden of more than Rs 3 lakh on a medium house. Even the builders are facing an uphill task with this as they need to convince the customers of this additional burden. The dealers could not tell the exact reasons for this huge increase in steel rates except saying that they never came across such a steep hike until now.

According to them, the steel companies are not disclosing any specific reasons but increasing the prices every day.

On many occasions, there was a price difference from morning to evening too. They were of the view that even the prices of the Government of India undertaking Vizag steel have risen abnormally. The Centre should have made an announcement on the exact reasons for this hike.

Meanwhile, the non-availability of sand and huge cement prices are only adding to the burden. The billing price of A-grade cement is Rs 420 per 50 kg bag while the same cement they supply to the government works at Rs 240. By getting it at a lower rate, the government seems to have left the open market price to the mercy of cement companies.

Cement companies, however, ask the dealers to sell the bag at Rs 390 saying that they will give some cash discount later to them on the billing price. The president of Tirupati Chamber of Commerce and Cement and steel dealer, A Manjunath, said that this difference in selling and billing prices has become a cumbersome process in which they were the losers on many occasions.

Manjunath opined that the governments should take initiative in controlling the prices or else the people could not bear this huge burden. Once the construction sector affects, several sectors will follow suit resulting in adverse trends in the economy as a whole, he added.