Gadkari bats for a steel and cement regulator
The Union Minister of Roads, Highways and Shipping, Nitin Gadkari, is considering the appointment of a regulatory authority to rein in the spike in steel and cement prices. Speaking at a webinar organised by Builders Association of India (BAI), he said he was worried about the rise in prices.
“I have discussed this issue with the Prime Minister. The principal secretary for Prime Minister and I have discussed in length. Actually, I feel that this is a cartel by some big people are doing in cement and steel. Actually, every steel company they have got their own iron ore mines, there is no increase in labour rates, no increase in power rates. But still they are increasing their rates. It is difficult for to understand. At the same time regarding cement factory also, they are always taking advantage of the situation and I feel that it is a, they are exploiting the situation, it’s not good for the national interest."
Elaborating on the need for an escalation clause, expressed by the contractors, to help protect them from this abnormal price increase, he clarified, “We have an escalation formula in the contract document and escalation is paid accordingly and it may not be practicable to link this kind of escalation with the proposed system currently.”
He elaborated, “Given that we are planning to implement the infrastructure pipeline expenditure of Rs 111 lakh crores in the next five years, and it being the dream of our Prime Minister to make our economy equalling $5 trillion, these prices as reflected in cement and steel will be detrimental. We are in the process of finding out a solution. I think your suggestion of appointing a regulatory authority for steel and cement is a good suggestion. I will look into it but ultimately, all decisions are not in my hands. I must take it to the Finance Ministry and the Prime Minister.”
Gadkari has been known to be blunt. He has been critical of cartelisation in the past as well. It is high time a solution is found as contractors work on thin margins and such price spikes expose them to financial risk.
As we have previously reported,
Gadkari had sought Prime Minister Narendra Modi's intervention in curbing a 55% rise in steel prices.
Several sectors, including real estate, are on the brink of facing a margins shrink from the sudden spurt in steel prices.
Recently, the government issued revised guidelines to procure iron and steel products domestically.
And after rallying until recently, steel products are already expected to be in short supply.
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