Investments in construction projects may drop by 30 pc in FY20 if lockdown extends till June
According to the consulting firm KPMG, in comparison to the economic crisis of 2008, the government now has limited options to undertake corrective interventions owing to the financial stress which was already prevalent in the pre-COVID-19 period.
Investments in construction related projects may reduce by nearly 30 per cent in the fiscal if the coronavirus lockdown continues till June, a report by KPMG said.
According to the consulting firm, in comparison to the economic crisis of 2008, the government now has limited options to undertake corrective interventions owing to the financial stress which was already prevalent in the pre-COVID period.
"Though funds are being allocated for various relief measures, the ability to fund and spend on infrastructure projects in the coming 1-2 years is likely to be impacted. Also, if the lockdown gets further extended, the investments in construction sector is likely to reduce by 30 per cent," it said.
With an industry size of Rs 10.5 lakh crore, the construction sector accounts for around 8 per cent of the nation's GDP and employs close to 57.5 million people. It also contributes to around 60 per cent of the total investments that take place in India.
The consultancy had earlier estimated the investments in the sector will increase to Rs 32.24 lakh crore as against Rs 29.41 lakh crore, without factoring the pandemic.
However, due to the lockdown, these investments are now expected to reduce by 30 per cent from the expected number of Rs 32.24 lakh crore, it said.
The report was based on a survey conducted across more than 30 construction sector professionals to assess the impact of the ongoing COVID-19 pandemic on construction projects.
May 08, 2020