The infrastructure sector plays a crucial role in the growth of the Indian economy. Currently, the Rs 15.4 trillion construction industry contributes to about 8 per cent of the country’s gross domestic product (GDP). At the recent webinar on Infrabuild, organised by Indian Infrastructure, D.K. Sen, whole-time director and senior executive vice-president (development projects), L&T Limited, shared his views on the upcoming opportunities in the construction sector and the growing need for digital initiatives by construction companies. Excerpts…
Impact of Covid-19 on the construction sector
The construction sector has been consistently witnessing an average yearly growth rate of 5.2 per cent over last five years. However, the ongoing Covid-19 pandemic has created havoc in the entire construction fraternity. During the January-March quarter of 2019-20, the construction sector suffered a year-on-year degrowth of 2.2 per cent, which was followed by another massive drop in the first quarter of 2020-21. While construction activity came to a standstill during the fiscal’s first quarter, the second quarter turned out to be even worse for industry, in terms of business performance. Although construction activity started picking up by the end of the second quarter of 2020-21, with work being resumed in almost all areas of infrastructure construction, normalcy in operations is expected to begin from the fourth quarter. Going forward, the year 2021-22 is expected to fare better for the construction industry, compared to 2019-20.
Mobilising the required labour has become a huge challenge in the construction industry amidst the pandemic. The construction sector alone employs roughly 60 million workers, which is close to 12 per cent of the country’s entire working population. The distress caused by the pandemic led to widespread exodus of migrant labour, hampering construction activities across the country. While the challenge of labour unavailability has been mostly dealt with adequacy, getting back to high productivity levels with skill enhancement and initiatives for safety and high quality is expected to take at least another couple of quarters.
Upcoming opportunities and the need for technological upgradation
The central government is highly bullish about its Atmanirbhar Bharat scheme and the Rs 111 trillion National Infrastructure Pipeline (NIP) plans. Further, infrastructure spend under the NIP might also go up to Rs 133 trillion, based on some of the ambitious projects being announced by the government. On the way to become a 5 trillion economy by 2025, 50 per cent of the GDP growth will be contributed by the construction sector. Roads, railways, heavy civil construction, renewables, power, water and waste, and smart cities’ infrastructure are some of the sectors that are expected to pick up in the near future. Key milestones have already been achieved in the areas of high speed rail and dedicated freight corridors. The Airports, minerals and utilities sectors have also witnessed heightened activity recently.
With the launch of the NIP by the central government, about Rs 20 trillion worth of projects are expected to come up every year, creating immense opportunities in the construction sector in the near future. In this view, scale and speed will be of utmost importance to achieve such ambitious targets. Contractors need to focus on skill upgradation of workers and deployment of digital technologies to enhance productivity. The construction industry in India has been suffering from low productivity for the past decade, while on the other hand, some other industries such as shipbuilding, automobiles and aerospace have been able to achieve significant improvements in their productivity over time. Real- time monitoring is the need of the hour. Use of digital tools for remote inspections, virtual project monitoring through drone technology, use of VR/AR in safety training, and monitoring productivity through IoT and data analytics will be of highest importance in the current scenario. Besides, technologies such as BIM (building information modelling) and 3D printing etc. will also play an important role in minimising the need for physical manpower. Construction companies should also focus on modular construction to save time and cost. Safety and quality should be of paramount importance. The Covid-19 pandemic has made it necessary for the construction industry to switch to digital in order to survive the crisis.
The way forward
The investment targets laid by the government are set to offer huge opportunities for the construction industry. However, the government should come up with policy interventions to address issues pertaining to some critical areas such as dispute resolution, approvals and clearances, contractor liquidity and scrapping of projects by state governments post the award. Along with ensuring timely project award, it should also be ensured that projects are being awarded on a quality- and cost-based selection, in order to ensure optimal allocation of projects to different types of contractors.