Covid threatens construction’s recovery in India

Andy Brown Head of Content, Construction and Engagement

15 April 2021

Construction in India was expected to grow by over 10% in 2021, but the surge in Covid-19 infections could negatively impact this

The recent increase in Covid-19 cases in India threatens the recovery of the country’s construction industry, which has been forecast to enjoy double-digit growth in 2021.

Construction market intelligence company Off-Highway Research recently forecast that the Indian market would return to growth this year, with sales rebounding to the levels seen in 2019.

Continued infrastructure investment is expected to see demand reach a record level in 2023, before the inevitable disruption of the general election scheduled for 2024.

India’s vaccination program began on 16 January 2021 and the plateauing of daily case numbers in early March led to hopes that the worst of the pandemic was over. However, the daily confirmed cases rose to 184,372 on 13 April, far exceeding the peak recorded in the first wave.

A report by GlobalData has highlighted the danger that the new Covid-19 infections presents. Willis Rooney, economist at the company, said, “GlobalData estimates the Indian construction industry to contract by 12.4% in 2020, the largest fall in output in South Asia. The performance of the industry was severely hampered by the 68-day national lockdown in March, deteriorating business and investor confidence and financial constraints arising over the course of the pandemic.”

The residential construction sector was particularly impacted, contracting by 15.2%, with falling confidence and worsening household incomes compounding an existing shortage of liquidity in the sector.

Rooney added that, “Growth in the construction industry in 2021 is forecast to be strong, with output values across much of the industry expected to recover to their pre-pandemic levels by 2022 at the latest. However, as previously mentioned, if the spread of the epidemic is not contained, and its effects on income, uncertainty and confidence return, the outlook for the industry would look far less promising.”