India Construction Industry to Make Strong Recover: GlobalData

India’s construction industry to make strong recovery following 14.9% contraction in 2020, says GlobalData, a leading data and analytics company. Despite the prevailing gloomy situation, the industry is expected to post a sharp rebound and grow by 11.6% in 2021, owing to lower base and pent up demand. Growth will also be driven by investments in the National Infrastructure Plan, the newly-announced Affordable Rental Housing Complex (ARHC) scheme and investments in the industrial segment due to Indian government’s push towards ‘Atmanirbhar Bharat’, which aims to reduce imports and make the country self-reliant. The industrial construction sector would also likely benefit from the global shifting of supply lines from China, with the Indian market offering benefits such as large captive market and low cost labour. Construction activities continue to remain disrupted with labour shortage at project sites exacerbating the situation for the private sector which are already grappling with multiple problems such as liquidity crisis, rising project costs and lower demands. The federal fiscal deficit in the first four months of the current financial year has already reached 103% of the budgeted target for financial year 2021 (Apr-March), with the full year fiscal deficit now expected to cross 7.5% of the GDP from the earlier 3.5% of GDP. Moreover, due to the lower revenue generation and higher expenditure, the debt to GDP ratio is expected to rise from 70% in FY 2020 to more than 80% in 2021 as per market consensus.