The construction sector, which accounts for nearly 6 per cent of India's GDP, is emerging as one of the key growth segments in the economy. The sector has witnessed the highest employment growth, providing employment to over millions of people. The sector's contribution is likely to increase in the coming years. As on December 31, 2001, there were an estimated 7,000 projects envisaging project investments worth Rs 16.7 trillion.
Besides these infrastructure-related projects, the housing sector also provides a lot of opportunities. A further dimension to the problem of housing shortages has been added by the release of data on slums, by the government recently.
As per the provisional results of Census 2001, 40 million, comprising more than one fifth of India's urban population residing in slums. The proportion of slum population of total population in cities and towns varies from as high as 41 per cent in the case of Meghalaya to 1.8 per cent in the case of Kerala. Maharashtra, the most attractive destination for project investments, also enjoys the dubious distinction of harbouring the largest slum population of 10.64 million persons. Slum development would also provide opportunities in housing, sanitation, provision of water pipelines, electricity and other amenities enjoyed by their urban counterparts. Given the developmental role required to be played by the construction sector and the demands made on its resources it is all the more necessary for existing companies to fortify themselves to meet the emerging challenges.
One of the most important factors for ensuring sustainable growth in this sector is the availability of modern equipment. Equipment which would improve efficiencies and cut costs without sacrificing quality. Public sector companies like BEML, which were earlier entrusted with infrastructure development in the country, have been continuously upgrading their technical prowess by entering into various tie-ups. A few more progressive ones like Telco, Escorts and Marshall groups have been also doing it. L&T, India's largest engineering contracting company, has also adopted a unique strategy. It has entered into tie-ups with the largest equipment manufacturers such as Komatsu, Deere and Case Inc.
However, a lot more investments will be required in the equipment sector to enable equipment companies to participate in a meaningful manner. Small firms with local presence will have to consolidate and unite. Increased investments will be required to be made in providing skilled operators and upgrading managerial stock. Equipment manufacturers will be required to provide integrated solutions and partner contractors in large contracts. Higher implementation of projects would also require quicker replenishment of capital goods.
The construction sector is certainly in for exciting times. However, to effectively participate in the growth the various stakeholders would have to pool their strengths and work in unison.