Why India’s construction slowdown threatens to increase poverty

The construction sector is now India’s second-largest employer after agriculture, the trend coinciding with India’s high-growth phase and decline in poverty levels

The construction sector in India, which employed more than 44 million people at the end of 2010 (the last date for which official data are available), is witnessing a slowdown, affecting millions of people moving from farming to the construction sector.

Constituting 7.8 per cent of India’s gross domestic product (GDP) in 2013-14, the real-estate sector was buffeted by domestic and global slowdowns, with growth decelerating from 7.6 per cent in 2012-13 to 6 per cent in 2013-14.

As India tries to move its people away from agriculture – which contributes 15 per cent of the GDP but employs 263.2 million or 54.6 per cent of the working population – a majority of those leaving are finding employment in construction.

While agricultural employment declined 5 per cent between 2005 and 2010, construction saw a growth of nearly 70 per cent.

The construction sector is now India’s second-largest employer after agriculture, the trend coinciding with India’s high-growth phase and decline in poverty levels.

India’s poverty rate declined from 37.2 per cent in 2004-05 to 21.9 per cent in 2011-12; 269.7 million Indians now live below the official poverty line, down from 407.2 million in 2004-05.

Construction has played a major part, both in rural areas (through the 10-year-old Mahatma Gandhi National Rural Employment Guarantee Act, which provides jobs building ponds, roads and other infrastructure) and urban areas (through real estate and infrastructure).

Construction is a $126 billion (Rs 8.39 lakh crore) industry – larger than pharmaceuticals and gems and jewellery sectors, for example – attributed to the infrastructure sector, industrial activities, residential and commercial development.

India’s urbanisation might also explain the expansion of rural infrastructure and non-farm jobs in rural India. India’s urban population rose from 286 million in 2001 to 377 million in 2011, a growth of about 32 per cent, according to Census 2011. These are estimations; the actual figures may be higher.

How rural and urban construction benefits from the declining interest in farming is evident in this 2005 survey from the National Sample Survey Organisation (NSSO), which found that about 40 per cent of 51,770 farm households surveyed would quit farming if given a chance.

A more recent study released in 2016 by the Delhi-based Centre for Study of Developing Societies confirmed this trend, revealing that 76 per cent of youth are not interested in farming.

 

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Source by rediff