Economic Survey: Highlights, review of the economic survey: RICS South Asia

By Sachin Sandhir, Managing Director, RICS South Asia

Highlights of the economic Survey: Construction and real estate have continued to contribute strongly to the overall economic growth. In 2011-12, the construction industry contributed 8.2% (~ 670,778 crore to national GDP) while real estate contributed 10.6% in 2010-11 (real estate GDP contribution for 2011-12 is not available in the eco survey). Of this, housing  contributed  nearly 5%  and is expected to increase  to 6% with the institutional credit growth of 20% over next three years. What is worrying is that the growth rate of construction has decelerated to 4.8% ,  due to external factors and hardening of interest rates and challenges associated with land acquisition in some places. With steep increases in cement and steel prices, the profitability of construction companies has also gone down, while it is expected to increase marginally over this year.

RICS views: While fiscal consolidation remains on track, it does need to remain as the key focus in this budget as well. Even as services sector performed well, slow growth in manufacturing and industry, stubborn inflation ,high interest rates and ever rising subsidies bill, all put pressure on the country