Lacklustre construction activities, which helped drag down India’s economic growth to 7.7 per cent for the first quarter of this financial year against 8.8 per cent in the corresponding period of last year, are bogged by high input prices and the lack of skilled labour, said the Associated Chambers of Commerce and Industry (Assocham) on Wednesday.
It said the construction sector’s contribution to gross domestic product would stay below eight per cent in 2011-12, as against 8.1 per cent in 2010-11. The sector’s growth dipped to 1.2 per cent in the first three months of this financial year, against 7.7 per cent in the previous quarter.
“The domestic construction industry has been jostling with a steep and steady rise in prices of cement, steel rods, bricks and other input material, which has risen by over 30 per cent since 2009,” said Assocham. Besides, the industry faces a severe shortage of about 40 per cent in skilled workers. Construction projects are getting delayed, cancelled or halted all over the country, said a chamber study on ‘Current trends in Indian construction industry’.
The study is based on a survey in Ahmedabad, Bangalore, Chandigarh, Chennai, Delhi-NCR, Hyderabad, Kolkata, Lucknow, Mumbai and Pune between April and August.
It says the cost of construction labour had risen over 30 per cent during the past couple of years. “Inflationary pressures, leading to an abnormal price rise in food and basic cost of living, have pushed the price of labour upwards. Besides, depletion of migratory work force owing to improved, locally generated employment opportunities from government welfare schemes have led to scarcity of labour and increased costs,” said the study.
Steel, cement and labour are the key components, making for almost 75 per cent of overall construction cost. “The rise in costs is largely due to rising global demand for goods and commodities; besides, ever-increasing transportation and energy costs are collectively responsible for such a hike in the sector,” the chamber said.