CIDC would be making a representation to the Hon’ble Minister of Steel on 29th Aug 2003, on the occasion of 17th Meeting of the National Steel Consumers’ Council to be held at Ludhiana. CIDC views the escalation as inexplicable because of the following reasons:

1. The consumption of steel has not changed appreciably.

2. The component of Capital Costs in the manufacturing of steel has in fact going down, in view of little or no modernization initiatives taken by the steel manufacturers in the recent years.

3. The cost of borrowings have in fact gone down drastically, with commercial Banks and Financial Institutions ever lowering their lending rates.

4. The labour relations, at best can be described as placid, with no down time in manufacturing due to labour unrest etc.

The cost of end-product is increasing phenomenally which is detrimental to the interest of National Economy. Construction Cost Indices (CCI) being computed by CIDC indicate that the cost of construction would go up by 8 % in the period and the rise in cost is primarily due to this rise in steel price. The annual consumption of steel products such as bars, flats and rolled sections is in the vicinity of 10 million tones being 40% of the total steel consumption in the country. The Construction Industry is therefore the single largest consumer of steel. The detrimental effects of this abnormal are detailed below:

1. The ultimate costs of all public utilities, Physical infrastructure would experience an abnormal upward price movement, thereby requiring an upward revision of all budgeted sums and a pressure on public exchequer.

2. Lowering of the bottom line of businesses adversely affecting the economy of operation, acting as an inhibitor on the multiplier effect specially on employment generation.

CIDC, therefore proposes to the Ministry for the formation of a Working Group, to look into the matter and suggest measure to counter this situation.

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