The ongoing global pandemic has ushered in a period of uncertainty for the construction sector. As nations strive to regain stability post-lockdown, concerted efforts are required from governmental bodies, developers, and contractors to navigate the intricate challenges facing the industry. The path to recovery appears gradual, with short-term revitalization efforts and enduring strategies playing pivotal roles.
In the Indian context, the construction sector stands as the second-largest employer after agriculture. Contributing significantly to the nation’s GDP, amounting to around 8 percent, and engaging nearly 57.5 million individuals, its impact on economic stability cannot be understated. The industry, valued at INR 10.5 trillion, serves as the backbone for various sectors, such as construction equipment manufacturing, which encompasses approximately 500 companies, anticipating a size of INR 375 billion by 2020.
The enforced pause on real estate and infrastructure projects, including vital ventures like irrigation, bridges, flyovers, metro systems, and expressways, has severely affected the construction equipment segment. Although signs of revival are discernible in areas with minimal COVID-19 impact, a simultaneous decline in both supply and demand looms large over the sector.
Given the sector’s interdependence with infrastructure projects, the construction industry anticipates a reduction in both consumer demand and government funding. The prevailing uncertainties, coupled with altered consumer sentiments and business dynamics, are expected to cascade across related industries. This downturn in output could trigger a domino effect, causing a contraction in overall economic activity.
The labor-intensive nature of the construction industry, exacerbated by the presence of migrant workers residing at construction sites, has further complicated the scenario. The fear of coronavirus infection has led to a substantial workforce reduction, impacting ongoing projects, which involved a staggering 8.5 million workers across approximately 20,000 projects.
Unlike the 2008 economic crisis, the government faces limited options for corrective measures due to pre-existing financial stress. While funds are allocated for relief measures, the ability to sustain infrastructure projects in the coming years may be compromised.
A comprehensive report by KPMG sheds light on several key aspects of the crisis:
In response to these challenges, the construction industry is turning towards technology for solutions. Remote monitoring and telematics are emerging as integral components, allowing for safer equipment management and project execution.
In these unprecedented times, the construction industry urges comprehensive policy support from the government. Relaxations on various fronts and strategic interventions are vital to fortify the industry and enable its players to weather the adversities ahead.
In conclusion, the construction sector’s journey to recovery hinges on collaborative efforts, innovative solutions, and steadfast support from all stakeholders, particularly governmental bodies, in charting a course through these challenging times.