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Crackdown on illegal sand mining to hit real estate industry

Aug 06 2013, 09:00 IST
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SummarySand prices are increasing at the rate of 25 % annually for the last three years.

The biggest impact from a possible crackdown on illegal sand mining — a thriving industry that is estimated to be worth well over Rs 7,000 crore — is likely to be felt by the real estate industry. With the possibility of the supplies of cheaper, illegally-mined sand being constrained, the short-term effect could be an escalation in the prices of sand, especially across states such as Uttar Pradesh, Uttarakhand and Madhya Pradesh where illegal sand mining is rampant. Real estate project developers also warn of delays in project completion if the supply of sand, an integral component in concreting, falls short of demand. There is also the possibility of an increase in import of sand from countries such as Pakistan and Cambodia to bridge the shortfall in supplies, something that has been tried out by trader in recent months.

The National Green Tribunal (NGT) on Monday banned mining or removal of sand from river beds across the country without an environmental clearance. Apart from the real estate sector, sand is a major constituent required in fabricating structures for the metro rail and mass rapid transit systems, as well as core sector projects such as power plants.

Reacting to the NGT order, Pankaj Bajaj, MD of Eldeco and president of CREDAI NCR said, “Illegal mining can not be curbed by reiterating the ban but by awarding enough mining permission to meet the demand for sand in the area. Around 5,00,000 houses are being constructed in the area and that requires sand for concrete and plaster purposes. Sand prices are increasing at the rate of 25 per cent annually for the last three years and will further increase after the crack down.”

The mining operation on riverbeds is encouraged largely by the increased demand for sand for construction by realtors, with most builder scouting for cheap sand to keep project costs low. While a licensed sand operator, after paying royalty to the state, is able to sell sand at a higher price of around Rs 20,000 per dumper, the illegal miner is able to sell the same quantity for less than half that amount to the transporters, who, in turn, is able to sell at Rs 10,000 per dumper to realtors.

The NGT order means the mining activity or removal of sand from river beds anywhere in the country cannot be done without the clearance from the Ministry of Environment and

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