The lockdown across the country due to pandemic has caused serious economic disaster — impacting all sectors. However, the construction industry is currently facing a survival issue. Thus, quality of construction, cost competitiveness, timely delivery of projects and Government support needed for recovery is going to be the key to success in future, said Ajit Gulabchand, chairman and managing director (CMD) of Hindustan Construction Company.
Speaking at a webinar ‘Indian construction industry scenario - present and future’ organised by The Builders’ Association of India (BAI), the past president of BAI, said, “Many existing projects got delayed due to paucity of funds as working capitals as banks have categorised infrastructure, construction and housing as non - performing sectors. As a consequence, many projects are facing cost overrun. Also, there is no announcement of new projects. With the job cuts taking place all across the country in all sectors including manufacturing and services, individuals are facing huge problems.”
The keynote speaker at the webinar, Gulabchand, spoke extensively about the problems faced by the Indian infrastructure and construction industry including the lack of funding from the government, challenges faced for working capital raising from banks and financial institutions, lack of skilled workforce due to reverse migration of migrant workers and most importantly worryingly poor sales since COVID-19 pandemic surfaced in India in February 2020.
He added that the economy was weakening even before the pandemic as GDP figure was around 7 per cent about six-seven quarter ago, which has fallen to over 3 per cent. Now, it has witnessed a massive 24 per cent contraction in the quarter ended June 2020. COVID-19 pandemic has just compounded the problems, stated Gulabchand.
Speaking at the occasion, BAI, president, Mu. Mohan said India's construction industry is an important growth driver of India’s economy, thus, it is one of the integral industries in India. The construction industry has around an 8 per cent contribution to India’s GDP.
Gulabchand further stressed that banks seek collateral before sanctioning loans. Considering 30 per cent of the planned expenditure as collateral, it will be impossible for the infrastructure, housing and construction industry to deliver. Given the current scenario becoming critical by the day, private investment in the infrastructure, housing and construction sector is set to dry. The industry, therefore, requires to depend upon the government expenditure which would drive growth.