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India’s huge infrastructure and construction sector- contribution and prospects

India’s infrastructure and construction sector growing rapidly

The world is growing at a very fast pace. With the growth of a country, its infrastructure sector needs to rise as well. Investment in infrastructure is very important for an economy. In today’s world, the need for infrastructural progress is arising at a very fast pace. Every country is investing its precious funds in infrastructural development as it always gives positive results for the economy. India’s infrastructure sector is on the rise for a very long period and will keep rising in the upcoming years.

The country’s infrastructure and construction sector have an average of 7.7% in GVA in the last five years. These factors have proved to be fundamental for the economy in its recovery as well as its growth.

India struggles to build up infrastructure dream | Financial Times

Since the introduction of COVID-19 in the country, the destruction of the economy has not stopped. Shutting down economic activities throughout the country has had severe impacts on its economy. The GDP of the country has contracted due to the virus. However, the industrial and construction sector has the potential to revive the economy.

The construction sector has been resilient during the pandemic and was able to perform well, therefore helping the economy to survive. The construction and infrastructure sector has had an average of 7.7% GVA from the last five years. It provides employment to nearly 50 million people, thus helping them sustain their livelihood as well as reducing the problem of unemployment in the nation.

How this sector helps in economic development

The infrastructure sector is known to be the savior of the economy. The infrastructural development stimulates the demand for materials like steel, cement, technology, construction equipment, etc. This in turn leads to a rise in the employment levels and improves the supply chain efficiency, all while developing public infrastructure. The government of the country is sincerely doing efforts in order to boost the infrastructure sector in the country. The capital spending has been increased to 26% and special emphasis has been given to the infrastructure sector.


The spending on large scale infrastructure projects not only helps the economy directly but also provides work to small businesses. You may wonder how? Well, with the rise in infrastructure development, the demand for raw material also rises which can be obtained by local businesses. It, therefore, creates a chain system for the local businesses and promotes their growth too. Thus, many businesses get promoted very easily without the need for huge supply networks.

The paradox of India's infrastructure | BHP

As the need to revive back the economy arises, after it was destroyed by the COVID-19 pandemic, the need for maintenance infrastructure also rises. It is highly beneficial for the country to focus on maintenance based projects. But how are these projects beneficial for the economy? These projects are approved faster, hastens the mobilization of funds, and also benefits the nearby communities. The maintenance based infrastructure will ensure infrastructure development as well as the growth of the people.

Green infrastructure

Another subsector that is very important to consider while talking about infrastructural development is green infrastructure. What is green infrastructure? Well, the concept of green infrastructure is the development of infrastructure which provides the cost-effective, resilient approach of infrastructural development keeping in mind the condition of the environment. Investment in the green sector can provide a kick-start to the revival of the economy post the virus. Adopting eco-friendly projects at the national level, influencing the transport sector to use eco friendly measures should be the key focus. All this while providing development of the economy as well as will keep our environment healthy.

Funding of the projects

The funding of infrastructural projects has always been a major issue for the country. Especially in the post COVID scenario, it has become more difficult for the government to fund these projects. They lack efficient management of funds for the infrastructural development in the country. Till now, much of the construction has been funded by commercial banks. It may not seem like a major issue but it actually is. It limits the scope for long term Public-Private partnerships (PPP).

It also lowers the scope for further funding by these commercial banks due to the increasing number of Non Performing Assets in the infrastructural sector. The number of Non Performing Assets may rise further due to the effects of the COVID-19 virus.

To be precise, infrastructure is the base upon which the economy is built. All the supporting services needed for the growth of the economy are provided by the infrastructure and construction sector.

How technology plays a major role

How to give India's infrastructure sector a competitive edge - The  Financial Express

We all learned the importance of technology during the pandemic when it was the only source that provided continuity. It has also laid premises for future workplaces through various technological advancements. Many technologies have been tested by the Engineering, Construction, and Infrastructure enterprises through innovation.

Once these technologies get started to apply in daily business activities, they will be used in all post-covid projects and will ensure less time and cost for their completion. Therefore, technological upgradation in the country provides better economic development. Our dependence on technology has increased in the modern-day world and this is resulting in better efficiency of operations.

The effect of the virus on the Indian economy has clearly shown that quick economic recovery is the need of the hour. This leads to the need for infrastructural development in the country to revive back the economy.

Infrastructure is very important for faster economic growth and also leads to alleviation of poverty by reducing the unemployment levels. Adequate construction and infrastructure like roads, railways, airports as well as their efficient working are also needed to promote the Indian economy. All and all, the infrastructure and construction sector can do wonders if it is backed up by the government. Adequate government policies are required to promote their healthy growth which will ultimately lead to the growth of the economy. Required actions, along with commitment will lead to sustainable economic development, the ultimate priority of today.

Edited by Aishwarya Ingle 

Simerleen Kaur
Simerleen Kaur
Talk to me about economics, trade, and all things India.
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