Roads and highways are not the flavour of the season! Yes, you read correctly. They are not. The growth magnet now has moved to water supply, irrigation, affordable housing and railways too. EPC projects are increasingly finding favour over HAM projects.
A huge consolidation exercise is under way as the Insolvency & Banking Code (IBC) has paved the way for resolving management under debt stresses, and new management armed with fresh infusion is set to put these assets to productive use. Essar Steel is being taken over by Arcelor Mittal, thereby not only do the assets continue to contribute to productivity but even jobs are protected to some extent. NBCC is eyeing Jaiprakash Associates along with Suraksha Group and Amrapali; JSW Steel has already taken over Monnet Ispat; Tata Steel has taken over Bhushan Steel; Vedanta has taken over Electrosteel Castings; UltraTech has taken over Binani; Brookfield has bought over Leela Hotels; Reliance has bought over Alok Textiles; Sharad Sanghi of Net Magic is set to buy over Jyoti Structures, thereby stalling its liquidation – all would contribute around Rs 800 billion. Several construction companies could not sustain the debt shock and have landed with the National Company Law Tribunal, such as Punj Lloyd, IVRCL, Hubtown, Unity Infraprojects, Gammon India, among others.
India promises to be the world’s fastest growing construction market, and so, these changes are a way of setting the order for growth. Global construction equipment sales hit an all-time high of 1.1 million units in 2018, with a retail value of approximately US$ 110 billion, according to Off-Highway Research. This is redeeming news since China has caused a deceleration in growth of many industries by reporting moderation in its GDP figures. Although, improvement in equipment sales continued with increases in North America, Europe and Asia, sales of construction equipment in China, including mobile cranes, grew 37 per cent in 2018. This followed on from the 81 per cent surge seen in 2017 and took the market to 343,817 units. This was the highest Chinese equipment demand has been since 2012.
India too had a great year.
Sales of construction equipment grew 35 per cent, the third successive year of robust growth, generating sales of a record high of 98,204 units, which is 45 per cent above the previous high seen in 2011.
Elections will determine the pace of growth in 2019-20. In all likelihood, this momentum will continue. The government has announced gross market borrowing of Rs 7.1 trillion in 2019-20 as against FY2019, which stood at Rs 5.71 trillion, indicating a provision for the largest borrowing plan in the last nine years. This will ensure that the programmes for development will continue unabated.
India needs to continue to offer equal opportunity, ease of doing business, rationalisation of taxes and their compliances, building infrastructure, strengthening institutions, privatisation of banks, making government sector and government servants more accountable, and spending higher
on education, healthcare and social security. The government that can deliver on these can help us gallop.
Mission on Mars to Mission Shakti, our courage is laudable and our intentions are honourable, we need to transform our legacy and build on our youth energy. Make sure you ink your finger and press the right button.