Construction biz to see 12-16% fall in investments

Investment in Indian construction industry is likely to witness a 12-16 per cent decline to nearly Rs 7.3 lakh crore during the current fiscal year, as Covid-19 pandemic has severely impacted the economy and liquidity scenario, Crisil said.

According to the rating agency, the economy, which has been facing external risks such as weak global demand, supply disruptions and global financial shocks, now faces factory shutdown, reduced discretionary spending and delayed capex cycle.

"The construction industry, which mirrors the economy, is expected to take a huge blow from all this. As a result, a 12-16 per cent contraction in construction investment is expected this fiscal to Rs 7.3 lakh crore from Rs 8.6 lakh crore in FY2020," the agency said.

The decline in investment factors in lower capex by central and state governments due to diversion of funds towards healthcare, public welfare and social obligations.

"This is at a time when their finances are already strained and gross budgetary support to infrastructure is expected to decline due to lower revenue receipts.

Budgetary allocation to infrastructure by the central government for the fiscal is lower compared with fiscal 2020," it said.