Monday, June 21, 2021

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Green Shoots On The Horizon?


India is set to become the world’s third largest construction market by 2022. The country will require investments worth Rs.50 trillion across infrastructure by 2022 for a sustainable development in the country. In tune with the ongoing developments and the prospective horizons, the construction & infrastructure activities received FDI inflows amounting to $25.78 billion and $17.22 billion, respectively between April – September 2020.


Addressing a virtual event by Assocham, Road Transport & Highways Minister Nitin Gadkari also affirmed the fact that to achieve the GDP of $5 trillion by 2024-25, India needs to spend about $1.4 trillion over these years on infrastructure. “Covid-19 pandemic has caused a slowdown in India. But its inherent resilience and capability will help it transform into a new India with an accelerated growth path fueled by infrastructure,” he emphasized.


As we go along tracing the growth charts, India holds the world record for fastest road construction. “We made three world records in March 2021. India now holds world record for fastest road construction. We made it to Guinness World Records by building a 2.5 km 4-lane concrete road within 24 hours. We also built 1-lane 25-km bitumen Solapur-Bijapur road within 24 hours,” Hon’ble Minister informed. The ministry of road transport and highways has constructed 13,394 km of highways in fiscal year 2020-21. The pace of highways construction in the country has touched a record 37 km per day in financial year 2020-21.


All these promising developments only point towards one fact that GROWTH IS BOUND TO HAPPEN AMID PANDEMIC! With such a exuberant Minister at the fore, construction companies & allied industries can only expect a growth uptick from here on even if we are in the middle of the worst hit second wave of Covid outbreak. 


If analysts are to be believed, Ratings agency, ICRA has highlighted that the heightened focus on infrastructure spend, particularly in the road infrastructure segment has led to a sharp scale up in volumes since July 2020 (20%+ Y-o-Y growth during July-Jan’21 period). Following a sharp correction in unit sales in Q1FY2021, construction equipment OEM volumes have recovered sharply since, supporting industry credit profile.


Amid the gloomy days, the construction equipment companies and ancillaries need to keep their hopes and enthusiasm alive as once the second wave of Covid peaks, India is set to offer a sharper recovery graph with renewed end user demands.

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