India's construction market in 2012 swallowed a bitter cocktail of policy paralysis, tight liquidity, rising inflation and increased activism, bringing double-digit economic growth in 2010 to an estimated rate of less than 6% this fiscal year. For many firms, this feels like a recession. The present economic crunch and inflationary pressures are adversely affecting workloads in the infrastructure sector. Even leading construction companies, such as Gammon India and Nagarjuna Construction, are recording flat revenue growth.
Developers are confronting legal and policy issues, increased labor costs and a cash-flow crunch, which are slowing down the real estate market, says Ramesh Upadhyay, Associate at Currie & Brown, an asset management and construction consultancy. However, some are more optimistic. The most recent market analysis from the Royal Institute of Chartered Surveyors (RICS) says the construction arena remains relatively upbeat for both the private housing and private industrial sectors, though public non-housing, energy and oil-and-gas have slowed.