Sameer Maithel | রবিবার 5 এপ্রিল 2020
Brick production season in most parts of India is usually of 6-7 months, starting in November/December and ending with the arrival of the monsoon in May/June. The Coronavirus crisis has hit right in the middle of the brick production season and at a time when the brick industry was already struggling with slowing demand, closure due to air pollution during winter months, production loss in northern states due to frequent rains, etc. Information received from Punjab, Haryana, UP, Bihar and West Bengal indicates that most of the brick kilns are operational during the lockdown period. However, many brick kilns are facing problems due to shortage of coal, shortage of cash to pay the wages and buy raw materials. In this article, we would be assessing the potential impact on the demand of bricks during the rest of 2020.
A new report by Anarock Property Consultants Pvt Ltd, titled “Covid 19 Impact on the Indian Real Estate sector”, provides a good assessment of likely impact on organized real estate industry located in urban centers. The report was published a few days ago. We will focus on the assessment for the residential construction which is the largest consumer of bricks in the country. Some of the key observations and conclusions of the report are:
Overall, the report estimates that in the year 2020, the residential sales are likely to register an annual decline of around 25-35%. In addition, the launches of new residential projects during 2020 is set to decline by 25-30 %, thus impacting the demand for bricks in 2021 also.
In India, small towns and rural areas account for more than 50% of the brick sales, so it is important to look at the situation there also. The economy of these areas primarily depends on agriculture. This is the Rabi harvesting season in Northern India. Labour which is essential for harvesting as well as for the operation of mandis is in short supply. Newspaper reports indicate that many mandis are also not working and despite permissions, movement of trucks and combine harvesters is restricted. Delay in harvesting mean a lower yield, exposing the crop to sun and rain, besides leaving a smaller time frame for preparing the field for the kharif crop. Similarly, the revenue of horticulture and vegetable farmers are also hit due to logistics issues. Overall, the farmers throughout the country are expected to incur loss in income, this in turn is likely to delay construction in rural areas, some believe till the end of the rainy season.
Thus, it seems that the Coronavirus will result in significant reduction in brick demand during 2020 in both urban and rural areas and the brick industry should start looking at ways to survive through the crisis and come out stronger from the crisis. Two steps which come to my mind are:
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The writer is the Director of
Greentech Knowledge Solutions Pvt. Ltd. New Delhi