Comments
The revival of the irrigation sector, backed by adequate funding support, may add to the order inflow of construction companies, a report said.
The irrigation sector has witnessed good traction over the last one year and is poised to see improved execution with increased funding support from the Central and State Governments budgetary allocation and the Long Term Irrigation Fund (LTIF) of Nabard, according to rating agency ICRA.
The corpus of the Nabard fund was increased to ₹40,000 crore in Budget 2017-18.
The construction sector gross value added witnessed a year on year growth of 2.7 per cent during the third quarter of 2016-2017, which is similar to the modest growth witnessed in the past quarters.
The growth in construction activity despite demonetisation reflects the resilience of the organised construction sector.
The Budget’s continued thrust on infrastructure, increase in allocation for the sector, and focus on major schemes towards infrastructure development and higher execution targets, will be positive.
A major push from the Government for the roads and urban infrastructure segments has helped construction companies improve their order book positions.
According to K Ravichandran, Senior Vice-President and Group-Head, Corporate Ratings, ICRA: “ICRA’s sample of construction companies witnessed an improvement in order inflows with a major push coming from segments like roads, metro rail, and urban infrastructure. Their current order book stood at over three times their last reported annual revenues which will support growth in the near term.”
In the irrigation sector, the focus is currently on the 99 projects selected under Accelerated Irrigation Benefit Programme which are targeted for completion in stages by December 2019.
Telangana and Andhra Pradesh have significantly increased allocation towards the irrigation sector, adding to order flow of construction companies.The pace of recovery in the overall construction sector is likely to be modest and will be linked to the on the ground impact of the policy measures and availability of funds for project development.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.