The construction sector witnessed a growth of 16.8 percent in the April-June quarter of FY2023, according to the Ministry of Statistics and Programme Implementation. This, as per experts, is on account of the government’s focus on infrastructure projects.
India's GDP growth surged to 13.5 percent in April-June from 4.1 percent the previous quarter, data released on August 31 by the Ministry of Statistics and Programme Implementation showed. The sharp uptick in growth was driven by a favourable base effect and the ongoing economic revival.
The construction sector has expanded by 16.8 percent in the first quarter of FY23 over a relatively normal GVA of last year – from Rs 225,166 crore in 2021-2022 to Rs 262,918 crore in 2022-2023. It was at Rs 131,437 crore in 2020-2021. Last year’s gross value added (GVA) was at 71.3 percent on account of a low base rate in 2020-2021 due to construction coming to a grinding halt during the initial phase of COVID-19.
This year, it has grown by 16.8 percent due to the government’s focus on infrastructure projects and despite the RBI’s intervention to tame inflation and increase the policy rates by 140 bps in the last three months.
“This year, the GVA for the construction sector is on an expansionary mode and the growth of 16.8 percent is on a much higher base than last year,” explained Samantak Das, Chief Economist and Executive Director - Research & REIS at JLL India.
The growth was possible this year on account of the government’s focus on infrastructure projects this year. Going forward, this growth trajectory will be maintained but there may be a moderation or plateauing of the growth rate on account of the inflationary outlook and the increasing interest rates, Das said.
The financial, real estate and professional services sector also showed a growth trajectory in the first quarter of 2022-2023 at 9.2 percent compared to 2.3 percent in 2021-2022. The GVA was at Rs 880,313 crore in 2022-2023 and Rs 805,847 crore in the April-June period of 2021-2022.
“There has been a growth in GVA for financial, real estate and professional services sector due to increasing consumer confidence, increased lending to home buyers despite the rising home loan rate. Broking services have also grown and that is reflected in the rising leasing numbers for commercial as well as residential sales, Das added.
“India’s economy grew steadily despite global recessionary trends due to ongoing geopolitical crisis and highly volatile global financial market. The data shows some base effect, but overall recovery was aided by growth in the core sectors coupled with pent-up demand in various sectors like real estate, retail and hospitality, and enhanced personal mobility. Continued expansive vaccination coverage also supported the progress of the recovery. We remain optimistic about the economic outlook and the real estate sector,” said Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE.
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