Construction cost up 5% in a year

New Delhi, March 27 | Updated: Mar 28 2005, 05:32am hrs
The cost of construction over the past 12 months has increased by almost 5% according to the Construction Cost Indices (CCI) data released by the Construction Industry Development Council (CIDC).

The council observed in its latest release that on an average, the index across all cities in India rose by 0.30% every month (or 1.8%) between September 2004 and February 2005. The price as on January 1998 has been considered as the base year price (=100) for calculation of the cost index. The national average CCI at the end of February this year stands at 130.90 as against 124.88 in January last year, an increase of 4.82%. The cost of construction has been increasing at annual rate of 4% over the last few of years primarily because of increase in steel and cement prices coupled with increasing labour cost, said Anil Chadha, senior project officer, CIDC.

Interestingly, the cost of construction in Hyderabad and Mumbai during the same period rose less than the national average. Hyderabad and Mumbai recorded CCI rise of 4.61% and 4.71%, respectively. Bangalore recorded the highest rise of 4.98%, followed by Delhi (4.92%).

The construction cost index figures for the last six months also suggest that the rate of increase in construction cost has come down over the last six months, compared to the previous five months.

Another point highlighted in the findings is that while the national average of the overall construction cost index has increased by 2.66% between April 2004 and February 2005, the cost increase for buildings has been the highest among all other construction categories, such as bridges, roads, dams, railways, urban infrastructure, etc. And among all the major cities, Delhi led the pack recording a 2.87% increase, followed by Bangalore registering a 2.85% increase.

This could well be a matter of concern for prospective home buyers because the finance minister has proposed in his budget for 2005-06 to levy a service tax to the extent of construction cost for planned housing developments comprising more than 12 dwelling units. Furthermore, the excise duty on steel has also been increased.