Governance & Social Justice
- Why honeybees are disappearing from Himachal Pradesh?
- Logistics Performance Index 2021 – Gujarat retains number 1 spot again
- Delhi Government launches Shramik Mitra scheme for construction workers
- Maharashtra Deputy CM Ajit Pawar’s property worth Rs 1000 crore seized – What is Benami Transaction?
- Is Indian economy getting formalised? Informal sector shrinking says SBI report
- Five years of Demonetization in India – Impact of note ban on Economy explained
- India China bilateral trade to cross 100 billion dollars for the first time
- Tripura develops India’s first ever Bamboo cricket bats and stumps
- Palakkadan Matta Rice scripts a success story in Kerala by using digital market
- How did Haryana become the state with the highest per capita income in India?
- Cryptocurrency ban in India coming soon? Will Modi Government launch its own fiat Digital Currency?
- Fertilizer industry in India, why it needs reformation? Issues and Solutions
Defence & Security
Science & Technology
- Why Facebook is shutting down its facial recognition system? Impact on 1 billion FB users
- Parliamentary Standing Committee on Information Technology slams Centre for internet shutdown
- What is One Health Concept & how it can help prevent future pandemics ?
- Facebook changes company name to Meta in major rebranding exercise – What is Metaverse?
- GS 3 || Economy || Infrastructure || General
Why in the news?
- The Delhi government recently launched the Shramik Mitra scheme to ensure all construction workers in Delhi are informed and able to avail benefits of government schemes.
Shramik Mitra scheme
- The Shramik Mitra scheme is a Delhi government initiative that aims to ensure that all government schemes benefit construction workers in the city.
- Approximately 800 Shramik Mitras will go door-to-door among construction workers in the national capital to inform them of various government schemes that benefit them.
- The Shramik Mitra scheme’s goal is to raise awareness of government programs among Delhi workers and assist them in taking advantage of them as soon as possible.
- The Shramik Mitras will ensure that no worker in Delhi is denied access to the benefits of any government scheme.
- With the help of this scheme, construction workers can avail pension, tools, loans, house, marriage, education, maternity benefits.
India’s construction Industry
- India’s construction industry is a key indicator of progress because it generates investment opportunities in a variety of related industries.
- In 2011–12, the construction industry contributed an estimated 670,778 crores (US$ 131 billion) to the national GDP at factor cost, with an estimated 8.2 percent share.
- The construction industry is fragmented, with a few major companies involved in all segments; medium-sized companies specializing in niche activities; and small and medium contractors who work as subcontractors and complete the work in the field.
- In 2011, India had slightly more than 500 construction equipment manufacturing companies.
Contribution of Construction Sector in India’s Economy
- The construction sector’s gross value added (GVA) increased by 15% in the last quarter, nearly doubling the previous year’s growth (7.7 percent).
- A sign of better times to come: Policymakers have hailed this sector’s robust growth not only as a sign of better times ahead but also as a source of inspiration.
- Growth in the construction sector is also viewed as an indicator of the economy’s ability to address the distress that households have experienced in the previous year.
- Taking care of the workforce’s needs: The Chief Economic Advisor cited high construction growth rates as evidence that growth would meet the needs of the beleaguered workforce.
- In addition, the Union budget for 2021 has set aside a significant sum for infrastructure and construction in the hopes of the sector serving as a catalyst.
- There is no strong link between GDP/GVA and Economy-
- While GVA and/or GDP are considered indicators of economic health, it has been argued that relying on these alone as measures of economic welfare may not be prudent.
- In particular, a sector’s growth may not always translate into benefits for its employees.
- According to our estimates from CMIE-CPHS, employment in the construction sector grew by 3% in the fourth quarter of 2019-2020, when GVA grew by nearly 8%.
- Employment generation – Construction has emerged as a fallback employment option for many displaced workers, which is why employment has grown in this sector even during a crisis year.
- The sector typically employs only about 10-15% of India’s total workforce during “normal” times.
- Even if this sector grows at the same rate as its GVA, it will be unable to employ a certain point.
- Material Costs on the rise
- The cost of raw materials is on the rise. The main reason is a shortage in the supply of materials to the sector due to a disruptive supply chain. Besides, to stabilize the economy, reforms are being introduced by Central as well as the state governments.
- Additional cess on taxes is being introduced, spurring up the cost of the raw materials. The result is high expenses leading to a high-value evaluation of the real estate constructions. Consequently, buyers are less attracted to invest in the construction sector.
- The mitigation path can be, adopting automated and modern technologies to increase customer satisfaction.
- Employment alone is insufficient- The average daily wage worker’s earnings in the sector have decreased this year. Again, the sector’s overall economic growth in GVA has not been passed on to employees.
- Environment Preservation
- A mandatory aspect of any construction project is to ensure the preservation of the surrounding environment. In India, it is tough to maintain soil erosion and degradation. The reason is mainly floods, droughts, soil alkalinity, aridity, and salinity. Besides air and water pollution levels are still not within controllable limits in the country.
- Urbanization in major cities has decreased the soil quality, impacting the environment. The builders and real estate owners are forced to adopt innovative measures and invest more in reducing the negative effect on the environment.
- Reduced Investment
- The impact of the pandemic has severely crippled the Indian economy. There have been several job losses and a reduction in wages. Consumers of the real estate sector are hesitant to invest in construction projects. The number of buyers has reduced considerably.
- Besides the need for commercial buildings has lessened due to the “work from home” policies enforced by the majority of the companies and firms.
- With the situations in the future being bleak and uncertain, there is no clarity on how long the recession will continue.
- Skilled Manpower
- The availability of skilled manpower at different stages of construction is sometimes a concern. Especially during pandemic situations, the crisis rises leading to delay in the proposed deadline of the projects.
- Besides lack of training provided to the construction workers further hampers the timeline and quality of the constructions. Focused attention is needed to speed up the skills and knowledge level of the workers.
- Modernization of technology- The above challenges have been impacting the progress of the construction industry in India. The need of the hour is to mitigate the challenges by introducing modernization and scaling up the labor force.
- Focusing on the welfare of workers-Any relief effort that solely relies on economic growth to uplift workers will be woefully inadequate, as construction workers have discovered.
- The time has come to look beyond sectoral growth as a means of providing relief to workers.
- Direct cash and food transfers, as well as livelihood support through employment guarantee programs, are also required.
- PPP model- The approach of public-private partnerships (PPP) is best for locating resources. Better construction management is required to maximize productivity and efficiency while maximizing resources.
Mains model Question
- What is the significance of the construction sector in India? Discuss some Challenges before Construction Industry in India and measures to solve the problem.