Moneycontrol

Budget 2021

Associate Partners:

  • SMC
  • Samsung
  • Volvo

Moneycontrol

Budget 2021

Associate Partners:

  • SMCSamsungVolvo
Webinar :Join an expert panel for a webinar on Smart investments for a secure retirement January 28, 2021. Register now!

Construction can be growth multiplier; government heavy lifting in highway and infra can help in job creation

Sectors like manufacturing, construction, trade, hotels, transport and communication, which account for almost 45 percent of the country's GDP, are bearing the brunt of the pandemic.

August 31, 2020 / 07:14 PM IST

The Indian economy, which was already battling a slowdown before the coronavirus outbreak heaped further misery, is facing the challenging task of tackling the disruption in economic activity and displaced labour.

Sectors like manufacturing, construction, trade, hotels, transport and communication, which account for almost 45 percent of the country's GDP, are bearing the brunt of the pandemic.

Data released by the Central Statistics Office on August 31 showed that the construction sector contracted 50.3 percent while the manufacturing sector witnessed a contraction of 39.3 percent.

Construction could add as many as one in four of the incremental gross jobs. Both labour-intensive and knowledge-intensive sectors will have to sustain and improve on their past strong momentum.

Spending a huge amount of money on large infrastructure projects can give an impetus to the economy, feel experts.

Close

Also Read | India's GDP contracts 23.9% in Q1FY21 as lockdowns, restrictions bludgeon economy

According to a report by KPMG, infrastructure spending is expected to have a multiplier effect on overall economic growth, primarily based on the Keynesian theory that aggregate demand can be reactivated by increasing public expenditure.

A well-planned pipeline and well-developed infrastructure can lead to the creation of valuable assets, build investor confidence, increase revenue and finance sources, grow businesses, generate employment, improve ease of living and enable inclusive growth, it said.

Also Read: Q1 FY21 GDP | Budget estimates and projections need a relook as economy contracts

According to a report by McKinsey, manufacturing and construction sectors could achieve the fastest acceleration in sector GDP growth relative to the past.

The report also highlighted that India will have to create 90 million non-farm jobs over the next decade, which will require an ambitious reform agenda able to deliver 8-8.5 percent annual GDP growth and productivity gains.

Follow our coverage of the coronavirus crisis here
Moneycontrol News
first published: Aug 31, 2020 07:14 pm

stay updated

Get Daily News on your Browser
Sections