The Economic Survey 2022 said on January 31 that the construction sector is well on the path of growth trajectory and that the estimated growth would be 10.7% after a contraction during the first Covid-19 wave of 8.6% during the previous financial year.
This growth is slated to take the construction sector to pre-pandemic levels at 101%, it observed.
The real estate services sector along with financial and professional services, too, is expected to witness a 4% growth in FY2022 after a decline of 1.5% last year. The sector along with financial and professional services has already touched pre-COVID levels at 102.5%, the Economic Survey has said.
“It is extremely important to understand that the recovery that is happening in this financial year is maintained going forward in order to have a sustainable growth which is required for the real estate sector at this juncture,” said Samantak Das, chief economist and head of research, JLL India.
Rising capital expenditure by the government on infrastructure and an uptick in the housing cycle have been responsible for reviving the construction sector. This has allowed the consumption and production of steel and cement consumption to revert to pre-COVID levels, the Survey said.
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Services account for more than half of the Indian economy and was the most impacted by the COVID-19 related restrictions, especially for activities that need human contact. Although the overall sector first contracted by 8.4 per cent in 2020-21 and then is estimated to grow by 8.2 per cent in 2021-22, it should be noted that there is a wide dispersion of performance by different sub-sectors. Both finance/real estate and the public administration segments are now well above pre-COVID levels, the survey noted.
However, segments like Travel, Trade and Hotels are yet to fully recover. It should be added that the stop-start nature of repeated pandemic waves makes it especially difficult for these sub-sectors to gather momentum, the Economic Survey said.
It also noted that housing loans, the largest constituent of personal loans, registered growth of 8 per cent in November 2021.
“The 2022 Economic Survey infuses optimism for what lies ahead. The projection of 8-8.5% GDP growth for the fiscal 2022-23 will be led by supply-side reforms and easing of regulations. The survey also indicates that the consumption is growing and inching closer to the pre-pandemic levels," said Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers.
"Total consumption is estimated to have grown by 7.0 per cent in 2021-22 with significant contributions from government spending. The Survey clearly spells out that rising capital expenditure by the government on infrastructure and an uptick in the housing cycle have been responsible for reviving the construction sector. This has resulted in the consumption and production of steel and cement consumption to revert to pre-COVID levels,” said Nair.
“We expect the Fiscal Budget 2022-2023 to announce reforms and incentives that will continue to boost consumer spending and thus aid in the overall revival of the real estate sector,” he added.