Concerned over the steep hikes at the prices of
steel and cement, both inputs for construction, the minister for Ministry of
micro, small and medium enterprises (MSME) and highways Nitin Gadkari has written a letter to Prime Minister Narendra
Modi seeking his intervention to arrest the trend.
“Steel companies have raised the rates by 55% in
the last six months. I have written to the Prime Minister and have suggested
that the issue should be discussed at the highest level. Some decision has to
be taken. This (the price hike) is not good. (It has to be known) if the hike
is commensurate with the increased cost of labour,
power and raw materials. Lowering the productivity and increasing the rate is
not a good strategy,” Gadkari said at an Assocham event.
The minister also took a jibe at the cement
industry, saying this (relentless price increases) also holds for the cement
sector.
“At a time when we are trying to create so much
infrastructure, this kind of policy approach from their (cement and steel
companies) side would not do any good for them in the long-term. This is also
not good for the country. We need to create a long term-policy for the steel
and cement sectors,” Gadkari said.
The minister said if the prices of steel and cement
companies stick to their present policy of jacking up prices, infrastructure
projects would become economically unviable and might force the government to
change its (procurement/usage) policy.
Just a couple of days back, Gadkari
accused cement units of forming cartels to raise the prices of the building
material, even as the construction industry is struggling to recover after
being hit hard by the pandemic and the lockdown.
“I decided to make all roads concrete. I wanted to
encourage the cement industry. But they are only taking (unfair) advantage of
the situation and making cartels. So, I am now allowing bitumen (for road
construction),” Gadkari had said at a Ficci event.
In a recent report, ICICI Securities said cement’s
industry average operating margin grew 25% Y-o-Y in FY’20 and further rose 20%
Y-o-Y to over Rs 1,250/tonne
in the first half of the current fiscal.
Steel prices also are ruling at least 12-year high.
Cashing in on higher demand amidst subdued production and limited imports,
domestic steelmakers have hiked prices thrice in as many weeks in the current
month, taking the benchmark hot-rolled coil prices in the wholesale market
(ex-Mumbai) to Rs 52,000 per tonne
from just `36,500 a tonne in July, a
43% hike.
Separately, the minister said that the government
has finalised GPS-based (Global Positioning System)
technology toll collection to ensure seamless movement of vehicles across the
country. He said this will ensure India becomes ‘toll-free’ in the next two
years. He expressed hope that the toll collections may reach Rs 34,000 crore by March 2021 and by using the GPS-enabled
technology for toll collection, it would touch Rs
1,34,000 crore in the next five years.