Construction

19

Other Priority Sectors

CONSTRUCTION SECTOR

BACKGROUND

19.1. Construction activity creates physical assets in a number of sectors of the economy. Construction sector has two key segments: (i) Buildings, falling into one of the following categories: residential, commercial, institutional and industrial; and (ii) Infrastructure such as road, rail, dams, canals, airports, power systems, telecommunication systems, urban infrastructure including water supply, sewerage, and drainage and rural infrastructure. Assets once created also need to be maintained. Many upstream economic activities depend upon the construction sector. It is roughly estimated that 40–45 per cent of steel; 85 per cent of paint; 65–70 per cent of glass and significant portions of the output from automotive, mining and excavation equipment industries are used in the construction industry. 19.2. Construction accounts for nearly 60–80 per cent of the of project cost of roads and housing and a significant portion in case of other infrastructure sectors. Construction materials such as cement and steel, bricks and tiles, sands and aggregates, fixtures and fittings, paints and chemicals, petrol and other petro-products, timber, minerals, aluminium, glass and plastics account for nearly two-third of the construction costs. The forward and backward multiplier impact of the construction industry is significant.

CONSTRUCTION SECTOR AND THE INDIAN ECONOMY

19.3. The Construction sector has been contributing around 8 per cent to the nation’s GDP (at constant prices) in the last five years (2006–07 to 2010–11). As indicated by Table 19.1, GDP from Construction at factor cost (at constant prices) increased to `3.85 lakh crore (7.9 per cent of the total GDP) in 2010–11 from `284798 crore (8 per cent of the total GDP) in 2006–07. The growth in construction sector in GDP has primarily been on account of increased spending on physical infrastructure in the last few years through programmes such as National...