​​​
  1. Lower steel intensity in investments is a matter of concern

Lower steel intensity in investments is a matter of concern

In a developing economy growing at an annual average rate of 6.5-7%, the steel consumption is to rise at 7% to 8% in the minimum.

By: | Published: April 4, 2017 5:03 AM
steel consumption, steel industry, GDP, infrastructure, logistic and supply chain agencies, CRCP In a developing economy growing at an annual average rate of 6.5-7%, the steel consumption is to rise at 7% to 8% in the minimum.

In a developing economy growing at an annual average rate of 6.5-7%, the steel consumption is to rise at 7% to 8% in the minimum. This is the standard theory that has most of the times empirically proved itself and may have been a strong basis for projecting a rising level of consumption in these group of countries as massive infrastructure deficit requiring steel for construction purposes is to be made up by enhanced investment. But why it is no longer happening in India? First, gross fixed capital formation as a percentage of GDP has been declining from 34.3% in 2011-12 to 29.1% in 2016-17 (adv estimates). While public investment has not been rising at a faster rate, the private corporate investment has been lacking.

Official data indicate that whatever private investment is taking place in the start-ups, financial firms, IT and communication units, logistic and supply chain agencies, not much of steel is required for their development and growth. As a result, the steel intensity of investment over the past few years has been steadily going down. It has got further implication. As investment is a primary driving force behind a rising GDP, this also indicates a declining trend in steel intensity in GDP in the last few years. The lower steel intensity in investment is a matter of concern for steel industry in the country.

All over the globe, safety and health hazards are accorded maximum priority in the policy planning of various sectors of the economy. The relevant policies are promulgated and implemented in full. In India, there are many instances of laudable and appropriate policies failing to achieve the targets for want of adequate steps to implement them. In hilly regions there are wide stretches of roads without Crash Barriers on the gorge side to prevent fatal accidents.

In many occasions the landslides from the hilly top make frequent road blockages with considerable damages to the travellers and drivers. In the plain, although government agencies have brought out mandatory stipulations to provide barriers in concrete and steel on specified stretches of the roads, there is little mention of suitable metal barriers (flexible) in the median of the roads as has been done mandatory in countries like UK to prevent collision of the vehicles (including heavy duty trucks) coming from the opposite side and diverting in the other lane especially when the medians are narrow.

In Indian roadways the use of concrete surface or use of continuously reinforced concrete pavement (CRCP) is much lower compared to many advanced and developing countries. The smooth surface of the roads is maintenance free and offer stability in speed and less damage to the vehicles. The frequent sight of polluting road rollers carrying bitumen and pitches in maintaining tracks of the highways and other regular roads could be avoided by making concrete roads. We must consider that it is a onetime cost and would make immense contributions to make our road journeys safe and less hazardous. Use of steel on a wider scale can make signi ficant changes in the elegance, stability and durability of the structures in total road architecture.

There is a huge scope for construction in steel of roadside petrol pumps with necessary amenities for the travellers, the eateries, the sanitary facilities for gents and ladies, the signatures, the road signals, the first-aid centres, the motels and resting places on the highways. These places with appropriate lighting would make long road journeys brighter, safe and enjoyable. The government is spending substantial funds and also inviting private sectors to participate under the PPP mode for particular stretches of the road. The construction of steel-based structures on either side of the road under the above categories would significantly improve the safety aspects of the NHs and other roads.

You might also want to see this:

There are other sectors like residential building and office complexes (currently given a priority in different states) where use of steel is much lower compared to other countries – most of whom produce less quantity of steel than India. The steel industry must put in more efforts to promote steel use in all areas where investment is taking place, both from government and private sectors. The readiness of the government to make more use of steel-based (steel-concrete composite) structures would prompt the private entrepreneurs to follow suit.

It would be the responsibility of the steel industry to develop adequate good quality fabrication facilities all over the country and ensure timely supply of the required profiles and grades of steel needed by the architects and designers.

(Views expressed are personal)

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Go to Top