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The Indian economy, with a
projected medium term sustainable growth rate of 8 to 10%, is one of the beacons of hope
in a world, where most large economies consider themselves lucky
to avoid negative growth rates in the aftermath of what is now being
called the great recession. It is a widely acknowledged fact that if there is
one potential road block in the path of the Indian growth story, it is the
inadequate physical infrastructure. India is woefully starved of
infrastructure. Every single road, rail road,
port, power plant, bridge, airport, school, hospital, and irrigation system
which is built, boosts the factor productivity and competitiveness of the
Indian economy. According to Prime Minister, Manmohan Singh, India
needs $500 bn worth of investment in infrastructure over a five-year
period. Such investment is highly likely to provide supernormal returns to
the investor simply because of the enormous benefits that it will
undoubtedly provide to the end customer. Indian infrastructure is one of the
best investment opportunities available in the world today.
Infrastructure development and the construction industry are
tightly intertwined. In fact, in many infrastructure development projects
such as roads, housing, ports, etc., the cost of construction constitutes nearly
60 to 80% of the cost of the entire project. This means that the
lion's share of the US$500 bn investment in infrastructure will accrue directly
to the construction industry. In addition, the construction sector constitutes
an increasingly significant part of GDP, at close to 7% in 2008-09.
Furthermore, the impact of the construction industry is felt across important
economic sub-sectors, such as industry, mining, highways, railways,
ports, airports, power, irrigation and agricultural systems,
telecommunications, housing, hospitals, schools, water supply, drainage, etc. In
short, it is the mother industry of all the other industries. |
