Construction Industry in India at A Glance – Article by Debanjan Chakrabarti
(General Secretary – Construction Workers Federation of India CWFI, member of UITBB)
Construction is the 6th largest economic sector in India, amounting to 7.8% of country’s GDP in Fiscal Year 2016, the 2nd biggest employer (after agriculture) with approximately 45 million people employed, and the 2nd largest recipient of FDI (Foreign Direct Investment) after the service sector.
India’s Construction industry will continue to expand over the forecast period (2016-2020) with investment in residential, infrastructure, and energy projects. The Government of India’s programme of developing 100 smart cities and housing for all, will lead to more and more construction work. Obviously such programmes must be supported by required budgetary allocation. It will only be then, that construction workers can be employed.
The global crisis and its impact on Indian Construction Industry
In the last fiscal year, all of a sudden the Indian Construction Industry lost stream, largely due to global financial turmoil. What is more, the turmoil tremors multiplied the impact across sectors of the economy, including steel, cement, energy, petroleum, aluminium, IT and ports, badly bruising the Indian economy.
Currently, the global economy is in severe slowdown mode, amidst deepening credit crunch and upsetting developmental targets of economies across the world. To overcome this crisis the GOI has taken some decisions to gear up the construction industry, such as more allocation of Fund for Infrastructural Developmental work in the Construction Equipment Industry.
The ancillary industries, including the 3.1 billion Construction equipment industry has also witnessed a slowdown. This ancillary industry can be revamped only through more allocation of funds for developmental work. Now which is mostly depended on FDI Road & High Ways.
The Road network in India is not up to the mark. The network spans about 3.3 million K.M. but has road densities of 2.75 km per 1000 people as compared to the world average of 6.7 km. per 1000 people. The G.O.I. needs to pay attention to this section.
Some examples are:
(1) ‘Abertis Infrastructures SA’ , a Spanish infrastructure firm has agreed to buy & toll road assets in operation in South India from Macquarie Group for Rs. 1000 crores (1 core=10 million rupees).
(2) GVK Power & Infrastructure Ltd. won the bid to develop Mumbai’s second airport in Navi Mumbai for Rs. 16,000 crores.
(3) UAE based Gamma Group, outlined plans of investing around Rs. 3000 crores in the infrastructure, health and education sector in Kerala.
The GOI is depending on FDI rather than its own recourse to revamp the Construction Industry in India. In addition to this international and national financial crisis’ the GST also will affect the Construction Industry as a whole. There are other factors which are also responsible for Construction industry slowdown, such as the ban on sand, earth cutting, stone quarries digging, due to green bench decision for environment protection.
This has to change