Construction investments likely to contract by 12-16%: CRISIL Research

Construction investment is likely to contract by 12-16 per cent for the industry during the current fiscal, a CRISIL Research analysis showed.

Accordingly, the investment might fall to Rs 7.3 lakh crore from Rs 8.6 lakh crore in fiscal 2020 due to the outbreak of Covid-19 and its subsequent economic consequences.

The analysis said that extended lockdown to stem the Covid-19 pandemic has compounded India’s growth woes.

Besides, external risks such as weak global demand, supply disruptions, and global financial shocks, the economy now faces factory shutdowns, reduced discretionary spending and delayed capex cycle which were cited as other factors hampering investments.

“The estimate factors lower capex by central and state governments due to diversion of funds towards healthcare, public welfare and social obligations,” the report said.

“This, at a time when their finances are already strained and gross budgetary support to infrastructure is expected to decline due to lower revenue receipts. Budgetary allocation to infrastructure by the Central government for fiscal 2021, is lower compared with fiscal 2020.”

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