+
 Covid-19 second wave may not impact overall construction activities: ICRA
ECONOMY & POLICY

Covid-19 second wave may not impact overall construction activities: ICRA

Investment Information and Credit Rating Agency (ICRA) has told the media that the ongoing second wave of Covid-19, which has adversely affected several industry sectors in the country, may not impact the performance of most mid and large-sized construction companies.

According to ICRA's assessment, most of these companies are focused on non-urban infrastructure projects—roads, railways, irrigation, among others, which are primarily located in remote areas or at a distance from the metros. Unlike the first Covid-19 wave, there is no nationwide lockdown and only localised lockdown restrictions with exemptions for construction activities.

Projects located within urban areas, such as metro rail projects, building construction, among others, are likely to feel a greater impact due to localised restrictions and reverse migration of labour, ICRA said.

Before the second covid wave, the construction sector had started witnessing a recovery, and the pace of execution had crossed the pre-pandemic levels. The construction gross value added (GVA) growth of 6.2% in Q3 2020-21 and estimated growth of 8.4% in the March quarter reflect this.

Due to this recovery, the construction GVA for 2020-21 is expected to contract by only 10.3%, despite a sharp 29.1% contraction in H1-FY2021, the agency said. The recovery was driven by a healthy pace of execution, supported by favourable policies from the government in terms of lowering the bank guarantee requirement, faster clearance of bills, and speedier clearances.

The recent spike in Covid-19 cases increases the risk of restrictions on construction activities at the localised level and curtails labour availability at project sites, which could cause short-term disruptions in construction activities. Maharashtra and Delhi both announced lockdowns, while many other states have announced weekend lockdowns that would impact the movement of labour and raw material.

ICRA expects such a disruption to be limited and short-tenured and hence has not revised its revenue growth estimates of 15-20% for 2021-21.

Given that the sector had faced a more intense effect during the first wave, most companies have improved their preparedness in terms of labour and raw material availability. Companies that are focused on the construction of real estate projects would witness a higher impact, given that most of these projects will be in metro or large cities where the risk of labour migration and localised lockdown could hinder their execution.

Image Source


Also Read: ICRA Ratings: Indian logistics sector revives significantly

Also Read: Covid-19 second wave: Future realty sentiment takes a dip

Investment Information and Credit Rating Agency (ICRA) has told the media that the ongoing second wave of Covid-19, which has adversely affected several industry sectors in the country, may not impact the performance of most mid and large-sized construction companies. According to ICRA's assessment, most of these companies are focused on non-urban infrastructure projects—roads, railways, irrigation, among others, which are primarily located in remote areas or at a distance from the metros. Unlike the first Covid-19 wave, there is no nationwide lockdown and only localised lockdown restrictions with exemptions for construction activities. Projects located within urban areas, such as metro rail projects, building construction, among others, are likely to feel a greater impact due to localised restrictions and reverse migration of labour, ICRA said. Before the second covid wave, the construction sector had started witnessing a recovery, and the pace of execution had crossed the pre-pandemic levels. The construction gross value added (GVA) growth of 6.2% in Q3 2020-21 and estimated growth of 8.4% in the March quarter reflect this. Due to this recovery, the construction GVA for 2020-21 is expected to contract by only 10.3%, despite a sharp 29.1% contraction in H1-FY2021, the agency said. The recovery was driven by a healthy pace of execution, supported by favourable policies from the government in terms of lowering the bank guarantee requirement, faster clearance of bills, and speedier clearances. The recent spike in Covid-19 cases increases the risk of restrictions on construction activities at the localised level and curtails labour availability at project sites, which could cause short-term disruptions in construction activities. Maharashtra and Delhi both announced lockdowns, while many other states have announced weekend lockdowns that would impact the movement of labour and raw material. ICRA expects such a disruption to be limited and short-tenured and hence has not revised its revenue growth estimates of 15-20% for 2021-21. Given that the sector had faced a more intense effect during the first wave, most companies have improved their preparedness in terms of labour and raw material availability. Companies that are focused on the construction of real estate projects would witness a higher impact, given that most of these projects will be in metro or large cities where the risk of labour migration and localised lockdown could hinder their execution. Image SourceAlso Read: ICRA Ratings: Indian logistics sector revives significantly Also Read: Covid-19 second wave: Future realty sentiment takes a dip

Next Story
Real Estate

Shriram Properties Launches ‘Codename: The One’ in Bengaluru

Shriram Properties (SPL), a leading real estate developer focused on the mid-market and mid-premium segments, has announced the launch of its latest residential project under the banner “Codename: The One” in Bengaluru’s Electronic City corridor. This feature-rich gated community will offer 340 spacious 2- and 3-BHK residences, with a total saleable area of approximately 5 lakh square feet and an estimated revenue potential of over Rs 3.5 billion. The project is expected to be developed over a span of more than three years.  Strategically located near the Bommasandra Metro stat..

Next Story
Resources

India Warehousing Show 2025 Closes with Strong Global Presence

The 14th edition of the India Warehousing Show (IWS) 2025 concluded successfully at Yashobhoomi (IICC), Dwarka, drawing participation from over 300 exhibitors across 15 countries and welcoming 15,000+ visitors. Recognised as India’s leading platform for warehousing and logistics excellence, IWS 2025 offered a comprehensive display of cutting-edge automation, sustainable warehousing solutions, and next-gen supply chain technologies. The show was inaugurated by Shri Pankaj Kumar, Joint Secretary – Logistics, DPIIT, Ministry of Commerce and Industry, Government of India. In his opening a..

Next Story
Equipment

MHIET Launches 450kW Gas Cogeneration System with H₂ Co-Firing

Mitsubishi Heavy Industries Engine & Turbocharger (MHIET), part of the Mitsubishi Heavy Industries Group, has launched a new 450kW gas cogeneration system, the SGP M450, jointly developed with Toho Gas Co.,. The system supports hydrogen co-firing at up to 15 vol per cent, with no loss in performance or reliability.  The system is currently available in the Japanese market, and has been developed from the existing GS6R2 city gas engine platform. Key modifications were made to the fuel gas and engine control systems to enable hydrogen co-firing.   Verified through de..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?