India’s construction industry to rebound by 14.5% in 2021, forecasts GlobalData

India’s Union Budget 2021-22 has given a major boost to the country’s beleaguered construction industry with a planned capital expenditure of US$75.8bn, which is an increase of 34.5% from last year’s budget. With the government focusing on infrastructure to drive the economic growth, the construction industry is expected to rebound by 14.5% in 2021, says GlobalData, a leading data and analytics company.

Apart from the planned federal capital expenditure, the government has also committed to provide US$27.4bn to the states and autonomous bodies for capital expenditure in their respective areas. Reflecting how serious the government is in terms of giving the economy a jumpstart to recover from the COVID-19 crisis, capital expenditure will be at a decade high of 15.9% of the overall budget.

Dhananjay Sharma, Construction Analyst at GlobalData, comments: “There are other aspects of the budget that will support the construction industry, including a plan to establish a new development finance institution – National Bank for Financing Infrastructure and Development. This will act as a provider, enabler and catalyst for infrastructure financing with an initial capital base of US$2.7bn and a planned lending target of US$68.4bn in three years.”

Another important step is the launch of a national ‘Asset Monetization Pipeline’, which will monetize the assets and boost financing for the infrastructural segment through the sale of toll roads, oil and gas pipelines and power transmission lines.

Sharma concludes: “As a result of the planned capital expenditure, the construction industry is expected to help the economy come out from the COVID-19-induced slowdown and lead India onto a new growth trajectory and facilitate the government’s goal of turning India into a US$5 trillion economy.”

 

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