Construction market of India and its the drivers of growth

In this interview, Dr Patil talks about the growth prospects of India’s construction sector, the impact of demonetisation on the sector, the myriad challenges the industry faces and the need for skill upgradation in the sector.

04 July 2017

Expert Talk

It has been eight months since the government announced demonetisation of high value currency notes. While we have heard a lot about its impact on the real estate sector, not much is known about the extent of its impact on the construction industry. Could you give us an idea of the effects of demonetisation on the construction sector? 

Construction sector is one of the leading sectors in the country providing employment to a large number of people and contributing towards the growth of the national economy. This sector is however perceived as a parallel black market.  

I personally feel India’s construction sector is one of the most disorganised sectors. It largely depends on cash transactions with absolutely no transparency in its operations right from purchase of construction materials, labour payments to actual property value, therefore leading to multiple government tax evasions.

I must say that demonetisation is a bold decision taken by the government and its immediate effect on the construction sector was that the entire parallel black market was wiped out. Initially, demonetisation brought many construction projects to a halt leading to delays and workforce layoffs as most of the payments tended to be in cash. But apart from this, there was negligible impact of demonetisation on construction activities. In fact, the sector is now regaining its pace. Demonetisation along with government’s new policies and regulations is bringing transparency to the sector and I believe it will gradually lead to a more professional and honest environment.  

India will become the world’s third largest construction market by 2025. The industry is growing at 7-8% every year, making it the fastest growing construction market in the world. What according to you are the drivers of this growth?

It is no secret that to boost the economy, the government needs to invest in developing robust infrastructure. Without the support of infrastructure facilities, all economic activities slow down. India does not have world class infrastructure in power, rail, road & highways, ports & airports and water & sanitation. Expansion of these infrastructure facilities is essential to furthering economic growth.

The government knows this and it is taking every possible initiative to step up the infrastructure sector because it is a key driver for the Indian economy. The government’s 100 smart cities mission, housing for all, new industrial corridors, metros, new airports etc. will definitely drive the growth of the construction sector. The Planning Commission of India has projected a US$1 trillion investment in infrastructure (12th Five year plan, 2012-17).

Government’s new policies and regulations in this sector is slowly bringing transparency and professionalism and such government initiatives will attract the private sector to fund half of these infrastructure investments through public-private partnerships (PPP).  Government measures to boost infrastructure development in turn will trigger growth in the construction sector.

India is facing a crisis of job losses. Employment generation is at an all-time low. The construction sector has always been the largest employer. Do you think India’s construction sector will continue creating jobs or do you foresee a slowdown in job creation?

I think the construction sector will continue creating jobs over the next few years, given that it is growing at a healthy 7-8% every year. The Indian government is investing heavily in the infrastructure sector in power, rail, road & highways, ports & airports and water & sanitation. This is expected to generate huge employment opportunities. I believe that the young generation must capitalise on this opportunity and make a career in this sector. 

As the construction sector grows, it is adopting new technologies such as Building Information Modelling (BIM), robotics and data analytics and looking towards project management to deliver projects on time and within the specified budget. The problem is that most civil engineering graduates do not have the skill sets to implement these technologies. What do you think should be done to address this skill gap?

The pace at which India is moving forward in creating world class infrastructure and urban development economy is exceptional. On the other hand, there is the question of whether we have enough professionals to create infrastructure that meets global standards. I analyse this problem as two-fold. On the one side, there is a huge demand-supply gap and on the other side there is a lack of skills.

To address demand-supply gap we need to set up more institutions to develop the required skills related to construction sector meeting international standards. Ministry of Human Resource, Government of India has come up with various schemes under the banner ‘Skill Development’ to set up such institutions in the country. Many private sectors in association with government and foreign entities have already entered Indian market and are developing professionals for construction sector. One such example is our Royal Institute of Chartered Surveyor (RICS) a well-known UK based organisation for built environment in association with Amity University, RICS has set up unique schools in Noida and Mumbai giving MBA and BBA degrees in Construction, Real Estate and Infrastructure sector meeting the required competences of global standard.

For last four decades construction sector in India has not shown much advancement in implementing technology, still large part of construction sector follows old and outdated techniques. As far as my knowledge there is no absence of technology in India, day by day new tools, techniques and methods are introduced in the construction market. These technologies need to act as catalyst to meet international standards and complete projects within given timeline, quality and budget.

We as academicians need to be very proactive in implementing these technologies in the curriculum. Bring industry problems in the classrooms, develop teaching learning strategies and design assignments wherein students apply these technologies with required learning outcomes. Academicians must have a system in place to map skills and competencies achieved by each student at the end of the course thus making them industry ready professionals.

How important is skill upgradation for civil engineers? A common complaint against civil engineering graduates is that they lack field skills and knowledge of basics such as structural engineering, geotechnical engineering, standard codes used in construction, quality control, on field management and design knowledge. A mere degree in civil engineering does not guarantee a job. What do you think civil engineers should do to improve their employability?

Skill upgradation is very important for civil engineers as construction sector is advancing with new techniques, tools and methods. Construction sector is currently in need of civil engineering professionals with core basic knowledge blended with innovation, creativity and competencies in latest software.

Apart from core skills they must have effective soft skills to communicate ideas without ambiguity and ability to deal with people. One must stay updated with such technologies and skills by engaging themselves with various professional bodies and attending continuous professional development programmes conducted by them. RICS, CIOB, ASCE are such professional bodies conducting professional development programmes throughout the year related to construction sector.

Civil Engineers need to get associated with these international professional bodies and keep themselves updated. During their study tenure, students are required to work on mini projects, case studies and assignments which need to be real field practical problems. Such exposure certainly helps them to improve their problem solving skills, critical thinking, and cognitive skills with innovative and creative solutions leading to employability. They must take advantage of such specially designed coursework’s and work through it seriously and not just prepare from examination point of view.

Here, academicians need to play a bigger role in designing coursework in such a manner that students are required to refer basic core modules related to different areas, such as structural and geotechnical engineering, land surveying, different standard codes and quality management etc. to solve the real field problems. Apart from this a very important area is that every student must seriously take up industry internship during vacation period which gives them industry exposure. Another area where students don’t perform very well is their final year project. Students must challenge themselves by choosing final year project with new and advanced topics in construction sector having emphasis on application oriented rather than obsolete topics.

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