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The Indian construction
industry is expected to
grow at 22.4 per cent in
2009-10 compared to just
7.1 per cent growth in 2008-09,
Sudhir K. Nair, Head of Research,
Credit Rating and Information
Services of India Ltd, said.
Growth of the construction industry
declined substantially in the
previous year due to the global
economic slowdown and the liquidity
crunch faced by contractors
and developers.
"We expect the construction
industry to bounce back after
increased spending under the
stimulus packages, budgetary
support and an improving economy,"
Nair said.
Sudhir Nair's bullish outlook for
the Indian construction sector is
reflected in a recent global report.
In about just a decade India will
move on from ninth-largest to
third-largest construction market
in the world, a new 10-year forecast
titled Global Construction
2020 published by Global Construction
Perspectives and Oxford
Economics has said. The report
has predicted that, by 2020, India's
construction market will be worth
almost $650 million—making up
5 per cent of the world's total construction
output. Only construction
giants China and USA will be
doing better than India.
The Indian economy is expected
to record 8 per cent GDP growth
for the next three years up to 2012.
With the expected average annual
compounded growth rate of 8.5
per cent, GDP is expected to be
$1.4 trillion by 2017 and $2.8 trillion
by 2027. Construction
accounts for nearly 7 per cent of
GDP and is the second biggest
contributor (to GDP) after agriculture.
It is estimated that there are
$860 billion worth of construction
opportunities in India.
Business Monitor International's
Q409 India Infrastructure
Report has pointed out that the
construction sector was growing,
in real terms, at a rate of 2.6 per
cent y-o-y in 2009. This still
remains, historically, a low figure
for India. With the strong recovery,
it is forecasted that the sector
will grow by 9.4 per cent in 2010.
Indeed, infrastructure was the
focal point of the 2009-10 budget.
Investment in construction
accounts for nearly 65 per cent
of the total investment in infrastructure
and it is expected to be
the biggest beneficiary of
inflows in the core sector in the
next five to six years. In transport
sector, funding earmarked
for the national highways development
project increased by 23
per cent compared with the previous
year's budget, while funding
for railways increased by
close to 45 per cent. In power
sector, allocation for power
development programmes
increased by 160 per cent.
Crisil Research has estimated
construction expenditure to
almost double from Rs 6,217 billion
from 2003-04 through 2007-
08 to Rs 12,189 billion from 2008-
09 through 2012-13. Currently,
the size of the construction industry
is Rs 1,866 billion.
According to a Crisil official, the
roads sector will be the primary
growth driver in the infrastructure
sector. Roads, irrigation and
urban infrastructure will together
constitute 72 per cent of total
construction expenditure on
infrastructure over the next five
years (2008-09 through 2012-13).
The report by BMI also pointed
out that transport would contribute
the vast majority of infrastructure
industry value, 73 per
cent, in 2009-10, equal to Rs 1.69
trillion ($35.53 billion).
The roads and ports sectors
have seen most activity over the
past quarter, with a number of
contracts awarded as both EPC
and concessions. Increased
focus by the central and state
governments and urban local
bodies on development of infrastructure
in urban areas will support
investments. A combination
of higher government funding
and public-private partnerships
will also drive new investments
into infrastructure projects.
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