According to data and analytics company GlobalData. The Indian construction industry already been showing signs of weakening before the outbreak of Covid-19. The residential market was struggling due to rising unemployment. A liquidity crunch in the non-bank financial sector, and a decline in new residential projects launched across major cities.
The situation expected to improve in 2020 due to government initiatives such as improving liquidity position. And expanded infrastructure investments under the National Infrastructure Program. The pandemic, however, has caused disruption in the economy, worsening unemployment amid the extended lockdown.
The industry expect to show unprecedented decline in the second quarter. As the strict lockdown to prevent the virus outbreak has largely brought construction to a halt.
Companies, such as JCB, which recently cut 400 jobs at its factories in India, are being pinch by a lack of demand for equipment as construction slows. There is an approximately 80% decline in demand for products in May and June as compared to the same period last year.
According to the World Bank, the Indian economy expect to contract by 3.2% in financial year (FY) 2021. The debt to GDP ratio expected to rise from 70% in FY 2020 to more than 80% as per market consensus. Due to the lower revenue generation and higher expenditure. This would limit the government’s ability to invest heavily in the infrastructure segment, including the National Infrastructure Pipeline.