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Construction activities to register 10% growth


India’s economy to grow at 8.5% in this fiscal and 9% in 2011-12, Dr. C Rangarajan, Chairman, Economic Advisory Council to the Prime Minister said while releasing the document ‘Economic Outlook 2010-11’ in New Delhi.

The report says that there are three issues of primary importance in ensuring a sustainable 9% economic growth rate—containing inflation; improvement in farm productivity and closing the large physical infrastructure deficit, especially in the power sector.
The report observes that the construction activity showed a sharp up-tick in the third and fourth quarters of 2009-10, with 8.1% and 8.7% growth, respectively. “We expect this trend to be further reinforced in 2010-11 and in the next year. This conclusion flows from the expected expansion of investment in physical infrastructure, including housing,” the report says. Accordingly, the GDP arising in the construction sub-sector would rise by 10% in 2010-11, which is likely to inch up to 11% in 2011-12.
The report asks for faster completion of infrastructure projects, especially power. “In the first three years of the Eleventh Plan, there were considerable shortfalls in the completion of infrastructure projects. In the power sector, as against a planned target for creating 78,740 mega watts (MW), it appears we would be lucky to get 62,000 MW by March 2012. This rests on large capacities being commissioned in 2010-11 and 2011-12,” it says.
The report observes that the failure to create physical infrastructure in time has not only been persistent, but has also been a binding constraint on the expansion of manufacturing output, and this has been a significant contributor to lower competitiveness. “It is important to accelerate the pace of capacity creation in the power sector and reform the distribution set-up in order to attract greater private investment,” the Economic Outlook report says. It also cautions about fuel becoming limited. “In the power sector, fuel has increasingly become another limitation. In the medium to long term, we have to broadbase our fuel usage to encompass nuclear power, natural gas and renewable sources and reduce the proportion of coal,” it adds.

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