After the government announced a 34.5 per cent increase in capital expenditure for the construction industry in the budget 2021, experts are predicting a faster revival of the sector. According to GlobalData, a leading data and analytics company, the construction industry is expected to rebound by 14.5 per cent in 2021.
Apart from the planned federal capital expenditure, the government has also committed to provide US$27.4 billion to the states and autonomous bodies for capital expenditure in their respective areas.
Reflecting how serious the government is in terms of giving the economy a jumpstart to recover from the COVID-19 crisis, capital expenditure will be at a decade high of 15.9 per cent of the overall budget.
Dhananjay Sharma, Construction Analyst at GlobalData, said, “There are other aspects of the budget that will support the construction industry, including a plan to establish a new development finance institution – National Bank for Financing Infrastructure and Development. This will act as a provider, enabler and catalyst for infrastructure financing with an initial capital base of US$2.7 billion and a planned lending target of US$68.4 billion in three years.”
Another important step is the launch of a national ‘Asset Monetisation Pipeline’, which will monetize the assets and boost financing for the infrastructural segment through the sale of toll roads, oil and gas pipelines and power transmission lines.
“As a result of the planned capital expenditure, the construction industry is expected to help the economy come out from the COVID-19-induced slowdown and lead India onto a new growth trajectory and facilitate the government’s goal of turning India into a US$5 trillion economy,” added Sharma.
