Covid-19 And its ongoing impression on the construction Industry

The second wave of COVID-19 has devastated major Indian states, leaving people gasping for oxygen. Every day, hospitals and crematoriums run out of space, giving everything into the hands of fate. From major cities, this deadly second wave is now penetrating small cities, disrupting every industry in between.

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The Indian construction industry is also witnessing the impact of COVID-19. An already crippling industry was brought to its knees when the pandemic hit India last year. With partial lockdowns, micro-containment zones, and exemption to the construction industry during the ongoing second wave of COVID-19, ICRA suggests that it is unlikely to have a material impact on the credit profiles of large companies.

However, migrant workers and the construction industry are still facing challenges when India is witnessing lakhs of case reportings each day. Even after taking necessary precautions at work sites, the shortage of space for setting up labour camps are causing issues, especially for small developers.

Possibilities of Reverse Migration

Earlier this year, the sector had started witnessing recovery at the construction GVA growth of 6.2% in Q3 FY2021. For Q4, the growth was estimated at 8.4%. Despite a steep contraction of 29.1% in H1-FY2021, the construction GVA for the entire financial year 2020-21 expected contraction merely by 10.3%. The recovery was driven by the rising pace of project executions, favorable policies, and quick clearance and approval of bills.

However, the resurgence of COVID-19 this year is making workers reconsider their move to bigger cities of work for the mayhem it is causing. Metro cities like Delhi and Mumbai are again facing lockdowns making migrant workers leave their places of work in a semi-panic state. Since a majority of workers are planning to move back to their hometowns after seeing the deadly effects of coronavirus pandemic, it may leave the real estate in India in shackles.

Impact on the Construction Industry

Real estate in India is the second-largest employer only preceded by agriculture. CREDAI says there are at least 20,000 projects in progress across 18,000 construction sites employing millions of people. Even if 20-30% of migrant workers leave to return to their home states, its impact on the construction industry will be significant. The shortage of workforce will only add to the challenges the industry is already facing.

While construction activities have not been halted despite the deadly second wave of coronavirus pandemic, a similar situation may soon arise given the extent of devastation being witnessed each day. Following SOPs, paying wages on time, and taking care of food, shelter, and health of workers on sites are keeping a check on reverse migration for now. But in a month or two, the prevailing situations will tell if it gains or fails. Currently, the projects are moving at a steady pace.

Developer Taking Measures for Situation Betterment

After the 2020 crisis, developers are taking utmost precautions to retain their workforce this year and ensure they don’t face challenges on living basics. Frequent in-situ sanitisation, vaccine awareness, regular health check-ups, and provision of food and shelter are major fronts where developers are taking initiatives.

In fact, CREDAI announced a COVID-19 vaccine drive earlier this year that will benefit 2.5 crore construction workers at its developer member sites. Many developers are also offering paid vaccination leaves concerning the growing coronavirus strain this year.  

Even after taking in-situ measures, if the situation of people gasping for oxygen prevails, it is likely to hit every developer in the construction industry because the virus does not differentiate or negotiate.

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.


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