Construction may grow at 10.7% in FY22

According to the Ministry of Statistics and Programme Implementation (MoSPI), the construction sector is expected to rise in double digits in FY22, rebounding from an 8.6 per cent contraction last year, supported by the base effect and a forecast growth in GDP. India's GDP is expected to expand 9.2 per cent this fiscal year, according to the Ministry, despite growing fears about the Omicron virus.

The National Statistical Office (NSO) forecast a 9.2 per cent GDP growth in FY 2021-22 in its first advance estimate, compared to the RBI’s 9.5 per cent expansion projection last month. Because of the Government's heightened focus on infrastructure projects and the predicted smart rebound in demand for both the residential and commercial segments, the construction sector is expected to grow by 10.7 per cent in FY22.

The financial, real-estate and professional services industry will increase by 4 per cent in FY22, compared to a decrease of 1.5 per cent in FY21. Investments in the construction and real-estate sectors are projected to drive this.

Given the unfolding circumstances of the pandemic, the advance anticipated GDP growth rate of 9.2 per cent given by MoSPI appears to be on the optimistic side. Though the estimate is slightly lower than the RBI’s forecast, it is still far better than the 7.3 per cent shrinkage experienced in FY21. With a 10.7 per cent increase in contribution to Gross Value Added (GVA) this year, the construction sector's contribution to GDP has been noteworthy. As the year progresses, the growth in construction activity and the start of large-scale infrastructure projects will lead to substantial contributions to GDP.