The construction sector is likely to grow in double digits at 10.7 percent in FY22 in a rebound from a contraction of 8.6 percent last year, aided by the base effect and a projected 9.2 percent growth in the economy, according to the Ministry of Statistics and Programme Implementation.
The Ministry has estimated India's GDP to grow 9.2 percent this fiscal amid soaring concerns over the Omicron virus infection.
The growth in the gross domestic product (GDP) of 9.2 percent in April 2021 to March 2022 fiscal (FY 2021-22) given by the National Statistical Office (NSO) in its first advance estimate compares with 9.5 percent expansion forecast by the Reserve Bank of India (RBI) last month.
The construction sector is likely to clock 10.7 percent in FY22 due to the government’s increased focus on infrastructure projects and smart recovery of demand expected for residential as well as commercial segments.
“Other allied sectors such as logistics, warehousing, and data centres are also expected to fuel demand going forward,” said Samantak Das, Chief Economist and Executive Director - Research & REIS, JLL India.
The estimates also said that the financial, real estate, and professional services segment is expected to see a 4 percent overall growth in FY22 versus the 1.5 percent contraction. “This is expected to be driven by investments in the construction and real estate sectors,” Das said.
The advance estimated GDP growth rate of 9.2 percent released by the statistic ministry is on the optimistic side considering the evolving situation of the pandemic. Though the estimate is slightly lower than what was projected by the Reserve Bank of India, it is still much better than compared to the contraction of 7.3 percent recorded during FY21, said Anuj Puri, chairman, Anarock Group.
“The construction sector contribution towards the GDP has been significant with a 10.7% increase in the contribution towards the GVA during this year. As we progress further into the year, the increase in the construction activity and initiation of large-scale infrastructure projects are going to be significant contributors to the GDP,” Puri said.
According to Vivek Rathi, Director ‑ Research, Knight Frank India, the third wave and Omicron variant across the world has increased caution but policy and business response this time is expected to be nuanced, and we are not seeing knee-jerk reactions like those of the initial two pandemic waves.
Mainly led by strong Investment activity and followed by consumption growth, the FY22 GDP advance estimate has arrived at 9.2 percent. This is a tad lower than the earlier government estimate but still among the fastest globally. With improved pandemic awareness and technology-led preparation, business and consumer confidence are high and government response on pandemic is graded and more localised now.
"Hence, we hope to have a softer landing from the third wave and continue economic momentum without severe disruptions," Rathi said.
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