Share of construction infrastructure spending in Indian GDP FY 2008-2017
In 2017, infrastructure spending in the construction industry amounted to about nine percent of the country’s GDP. Infrastructure has been a key driver of the economy of India. The government has taken initiative to invest in the sector, mainly highways, renewable sources of energy and urban transportation. The increased impetus to develop infrastructure in the country with the ‘Make in India’ campaign has created opportunities for major investments. The sector is one of the largest receivers of FDI inflows across the south Asian country. In 2019, the amount of FDI equity inflow for was over two billion U.S. dollars.
The downside
Financial market uncertainties and the reluctance of banks to lend has affected investments in the industry. Inflation pressures, improper planning and faulty implementation models have prevented the industry from reaching its true potential. However, as of 2018, most Indians agreed that there has been sufficient infrastructure development has taken place in the past three years. On the other hand, information and cyber security were rated the biggest threats to this sector during the same time period.
Road ahead
The country has collaborated with Japan to develop infrastructure in the north-eastern states. This meant setting up an India-Japan Coordination Forum for Development of North East to undertake strategic projects. Smooth implementation of policy changes and structural reforms can further up the demands for infrastructural investments.
The downside
Financial market uncertainties and the reluctance of banks to lend has affected investments in the industry. Inflation pressures, improper planning and faulty implementation models have prevented the industry from reaching its true potential. However, as of 2018, most Indians agreed that there has been sufficient infrastructure development has taken place in the past three years. On the other hand, information and cyber security were rated the biggest threats to this sector during the same time period.
Road ahead
The country has collaborated with Japan to develop infrastructure in the north-eastern states. This meant setting up an India-Japan Coordination Forum for Development of North East to undertake strategic projects. Smooth implementation of policy changes and structural reforms can further up the demands for infrastructural investments.
