MSMEs in construction sector counting on govt push

CRISIL has analysed the performance of 305 micro, small, and medium enterprises (MSMEs) in the construction sector, rated on the basis of their 2013-14 (financial year April 1 to March 31) financials. The sample includes MSMEs engaged in construction activity related to roads, bridges, irrigation projects and industrial projects, and excludes real estate projects.

The analysis reveals that while these MSMEs recorded an increase in their average annual turnover - from Rs 10.81 crore in 2011-12 to Rs 13.57 crore in 2012-13 and Rs 15.03 crore in 2013-14 - the sector showed a year-on-year decline in growth, from 25 per cent in 2012-13 to 11 per cent in 2013-14. Growth figures for 2014-15 and 2015-16 are expected to remain sluggish owing to lower order backlog and slow project execution.

As of today, the construction sector contributes about 10 per cent of India's GDP, and is among the largest employment-generating sectors in the country. However, going forward, the growth of MSMEs in this sector would depend on the government's propensity to ensure timely implementation of various projects proposed for the development of infrastructure in the country.

Note: CRISIL has rated over 75,000 MSMEs in India. This fortnightly tracker presents to our readers insights on MSMEs, a key element of the Indian economy.