Tuesday, May 28, 2024

Cover Story February 2023

Guest Article- Madhav Patil – Founder – Sangam Project Consultants

Unleashing Potential of Construction

Construction sector is on its way to post robust performance moving forward when FM reiterated Sustainable 9 times and Green 23 times during her Budget speech.

The Budget 23-24 has paved way for A big boost for domestic manufacturing, job creation and ease of doing business with reduction of more than 39,000 compliances and decriminalization of more than 3,400 legal provisions aided further due to setting up of an Urban Infra Development Fund. The Multiplier effect should reveal itself in next few years. The demand for housing is already very robust and the Budget 2023-24 would further augment growth for India’s real estate sector.

Sustainable cities of tomorrow will get a big push through urban planning, ease of land availability and TOD scheme promotion ultimately helping entire construction sector & employment of skilled and unskilled alike. Focus on overall infrastructure development and on Tier 2 and 3 cities will be key to overall economic development and new construction. India’s commitment to net zero carbon emissions by 2070, sustainable development programmes for green buildings are bound to generate green job opportunities.

Infrastructure budget has been pegged to `10 trillion, apart from making additional expenditure on green transition. This implies top Indian companies led by L&T, GMR, GVK, IVRCL, Simplex, Gammon, Siemens, Thermax, HCC, Tatas & many more including little known MSME’s can expect a surge in their order booking. With a capital outlay of `2.4 trillion for the railways, there will be a dynamic change in strengthening the infrastructure of the entire railway system aiding construction in turn. Government’s attempt to prioritise the 100 critical transport infrastructure projects for ports, coal, steel, fertilizer and food grains sectors will increase the capacity utilisation propelling in turn various Manufacturing Companies to increase their capacity to meet the growing demand from the railways, roads, and infrastructure sectors. This will create huge employment across all levels, especially in the labour class. Therefore, money circulation in the economy is expected to increase drastically leading to increased spending in the consumer segments- FMCG, real estate, consumer retail etc. Nevertheless, due to the increase in demand in the real estate sector, prices for steel, cement and other raw materials can go up resulting in increase in construction costs and the same would be pushed forward to the final consumer.

The announcement of 50 additional airports, heliports, water aerodromes, and advanced landing zones to be revitalised shall lead to development of commercial and residential real estate in these cities.

Due to all the herein above mentioned push, demand for new Construction will pick up as all these mega infrastructure projects commence. This will lead to a surge in demand for steel, cement, railway wagons, auto products like trucks and tractors including whole lot of Construction equipment.

Aided by the push from Shri Nitinji Gadkari, the success of recently concluded bauma CONEXPO INDIA at India Expo Centre is an indicator of things to shape up for the construction industry.

With the outlay for PM Awas Yojana being enhanced by 66 per cent to over `79,000 crore, more is in store for Manufacturers, Contractors, Vendors, Suppliers and Consultants in the coming years. CLSS benefits shall boost the demand amongst the LIG and EWS groups.

Nevertheless, additional push is required by the Government in terms of

  1. Some boost in terms of lowered interest rates,
  2. Subsidies for first-time homebuyers,
  3. Reduced cost to Construction (regulating prices for steel & cement),
  4. Provision of single clearance window especially during Regulatory / Statutory Approvals,
  5. Better credit facility to developers,
  6. Sound policies to support women homebuyers,
  7. Infrastructure Status to Real estate etc.
  8. Reduce cost of compliance,
  9. Assist stakeholders in private investment in infrastructure,
  10. Credit guarantee schemes for public-private partnership projects or a national platform for asset backed securities.

About the Author:

Madhav Patil, Founder, Sangam Project Consultants, has over 30 years experience and has successfully competed Hospitality, Healthcare, Educational / Institutional. Retail, Commercial, Villas, Residential & Infrastructure projects. Currently he is involved in monitoring projects for various Developers in Punjab, Haryana, U.P., Delhi NCR, Tamilnadu, Karnataka and Maharashtra. He has worked with Gammon India Ltd., L&T (ECCG), Madhav holds qualification of B.E. (Civil), MCM (NICMAR)

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