Due to government social schemes like Jawaharlal NehruNational Urban Renewal Mission (JNNURM) and Mahatma Gandhi National RuralEmployment Guarantee Act (MNREGA), a large number of construction projects arelagging behind their completion schedule mainly because of acute labourshortage, according to an ASSOCHAM paper.
The growth of India’s construction industry due to the delayin completion of infrastructure projects has gradually dipped from about 30 percent in 2007 to over 20 per cent in 2010 and to the current level of about 12per cent, according to the Associated Chambers of Commerce and Industry ofIndia (ASSOCHAM).
Market size of India’s construction industry might not evenreach Rs 30,000 crore mark by 2015 from the current level of about Rs 21,000crore as the labour intensive sector has been constantly grappling with theshortage of workforce, adds the ASSOCHAM paper.
To ascertain the extent of problems being faced by theconstruction industry and the major reasons behind its dipping growth ASSOCHAMrepresentatives interacted with about 200 industry players representing variousmajor segments “ roads, urban infrastructure, power transmission, real estateand others in five cities of Ahmedabad, Bangalore, Chennai, Delhi and Mumbaiduring June-September.
Labour shortage coupled with slowdown in capitalinvestments, continuing economic downturn and lackluster performance of realtysector are the major reasons cited for growing troubles for the constructionindustry as it is becoming difficult to bag orders, said 65 per cent of therespondents.
Of these many said that prices of key raw materials likecement and steel have risen by about 15 per cent since the last fiscal whichtogether with upward spiraling base interest rates has impacted their operatingmargin by about 20 per cent.
Profitability of construction companies has also been undersevere pressure due to rise in share of lower margin segments in the overall businessand soaring levels of competition in the industry and high interest burden dueto rise in working capital, said almost all the respondents.
About 30 per cent of those surveyed were mostly smallplayers who said that they are not able to benefit from increasingmechanization in the construction sector as they do not have the requiredmachinery.
Many industry players have blamed government social schemeslike Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and MahatmaGandhi National Rural Employment Guarantee Act (MNREGA) for locally generatingjobs leading to continuous depletion of migratory workforce from theconstruction sector.
