When steel, cement catch a nation unguarded

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Thursday , April 03, 2008 at 2359 hrs last year. According to the government, the cement prices were more or less stable until December 2005, but has been rising significantly since then. The industry is expected to add 100 million tons capacity till 2011-12. As against the installed capacity of 177.83 million tones in 2006-07, the cement production was 161.66 million tones, according to Cement Manufacturers' Association.

Anil Baijal, senior advisor, Infrastructure Development Finance Corporation, said, "This (rise in prices of cement and steel) will have a cascading effect on all the construction activites. Since these are de-regulated commodities, though there could be genuine reasons for rise in prices, there could also be instances where market forces exploit the available opportunities. Therefore, sometimes the government has to intervene and manage the supply side to control inflation."

Vinayak Chatterjee, co chairman of CII National Council on Infrastructure and chairman Feedback Ventures Limited, said due to the rise in prices of cement and steel, contractors would be the sufferers in fixed price contracts, while the developers would be affected in price-linked contracts. "But consumers will be hurt the most as ultimately these price increases and losses would be passed on to them," he said.