Indian Infrastructure And Construction Sector Anticipates Major Growth With 2024-25 Union Budget
With the upcoming Vote on account (election year) for 2024-25, before the final budget post elections, the Indian Infrastructure and Construction sector is set for a significant transformation. The market size of India's Infrastructure Sector is expected to reach USD 322.27 billion by 2029. This anticipated growth, occurring at a Compound Annual Growth Rate (CAGR) of 9.57 per cent during the forecast period from 2024 to 2029, underscores the sector's robust potential in the coming years.
In the upcoming budget, the sector is set to receive an unprecedented boost with a proposed allocation of INR 10 lakh crore, a 33 per cent increase from the previous year. This substantial investment, representing 3.3 per cent of India's GDP, is expected to markedly propel growth, bolstering the country's economic standing and improving the quality of life.
Key Focus Areas: Connectivity and Real Estate Development
The upcoming Union Budget is expected to strategically focus on key areas essential for India's growth, such as enhancing rural and urban connectivity, and developing railways, ports, aviation, and highways. These sectors are critical not just for their direct impact on economic growth but also for their capacity to create considerable employment opportunities.
Additionally, the budget may bring a pivotal change for commercial real estate by potentially granting it infrastructure status. This significant move is poised to offer substantial tax benefits to developers, particularly in the dynamic sector of flexible workspaces. Such a policy shift is likely to draw major investments and spur growth within the sector, fundamentally transforming India's commercial real estate landscape.
Boosting Demand in Tier-II and Tier-III Cities
A significant aspect of the budget is the emphasis on boosting demand in more affordable Tier-II and Tier-III cities. The government is likely to introduce policies and incentives to attract investments to these areas, promoting balanced urban development and infrastructure growth. This strategic shift is expected to alleviate the burden on metropolises and lead to more balanced urban development across the country.
Economic Implications: Investment and Monetary Policy
The 2024 Budget is expected to concentrate on investment and enhancing the supply side of the economy. The industry anticipates that this focus might lead to a change in the Reserve Bank of India's stance, potentially accommodating the withdrawal of liquidity and rate cuts, thereby supporting GDP growth at the margin.
The Infrastructure and Construction sector is gearing up for a remarkable surge in spending, with estimates suggesting that the sector's spending could double to Rs 143 lakh crore in the coming fiscal years. This increase is not only poised to provide a substantial boost to the sector but also contribute significantly to the overall growth of the Indian economy.
Digital Transformation and Workforce Development
Digital transformation is another focal area, with technologies like generative AI, Building Information Modelling (BIM), and IoT sensors are expected to revolutionise the sector. These technologies can enhance efficiency, reduce costs, and contribute to sustainable development.
Addressing the labour shortage is also crucial, with the sector hopeful for initiatives that promote workforce development, safety, and diversity in hiring.
Sector-Specific Expectations
In aviation, there is a need for financial support and rationalisation of costs to boost the sector's health. For roads and highways, a substantial budget allocation is anticipated, along with a push for more private sector participation. Railways, now integrated into the Union Budget, expect sustained capital expenditure and private sector involvement to keep up the momentum of modernisation and expansion.
Sustainability is a major theme, with a push towards green building and resilient design, leveraging advanced materials for sustainability and durability. Workforce challenges, especially the labour shortage, are crucial concerns. The sector anticipates initiatives for workforce development, emphasising training, safety, and diversity in hiring.
Thus, the Union Budget 2024-25 holds enormous potential for the Infrastructure and Construction sector in India. It is expected to introduce measures that address current challenges, foster demand in burgeoning urban areas, and pave the way for new growth avenues. The significant investment allocated for infrastructure development is set to enhance India's growth trajectory, thereby improving the overall quality of life for its citizens. This budget could very well set the course for the sector's growth and its contribution to India's overall economic development, making it a transformative one for the Infrastructure and Construction sector
