The Covid-19 pandemic has become the world’s biggest socio-political and economic shock since the Second World War; a rare disaster, affecting millions and more through health as well as economic challenges due to the disease and ensuing lockdowns.
Under the assumption that the pandemic and required containment will peak in the second quarter for most countries and recede in the second half of the year, the April.
World Economic Outlook projected global growth in 2020 to fall to -three per cent. This is a downgrade of 6.3 percentage points from January 2020, making the Great Lockdown the worst recession since the Great Depression, and far worse than the Global Financial Crisis of 2008.
In such a scenario the country needs an infusion of motivation through fiscal measures to rise up and fight the economic battles.
The relief stimulus announced by the GOI on 12 May, extended to industry and individuals through various measures and schemes is, therefore, a welcome and a much-needed step.
The various stimuli packages are designed to aid the Indian economy to rise up and march on the road to recovery.
The cash flow relaxation on account of bank guarantees being reduced to cover the pending value of work, the credit guarantee scheme for NBFCs and HFCs, will prove extremely helpful in providing liquidity flow across the value chain. With respect to the Built Environment sector specifically, the finance minister has addressed one of the most pertinent challenges relating to the ambiguity on contractual agreements, the sector was struggling with. Stakeholders can rely on ‘force majeure’ clauses, giving much respite to developers and contractors alike.
The extension of the construction period by six months without any cost implications for all government projects will provide relief to the industry.
The announcement that government projects under Rs 200 crores shall be open only for Indian businesses will bring additional opportunities for the Indian players in the BE sector.
All real estate projects registered under the Real Estate Regulatory Authority (RERA) expiring on or after 25 March, will get a six-month extension as the lockdown stopped work. In line with the path laid down by country’s leadership, the way forward for the Built Environment is clear – Improved and World-Class Infrastructure is the requirement as it will be a critical in making the nation self-reliant.
While on commercial space side, there would be some consolidation of office space by the existing large occupants, however, in the longer run the Commercial Space demand is expected to increase in order to have anti-Covid compliant offices. Increased economic activity postlockdown is expected to lead to more employment and prosperity in the built environment sector leading to an alltime higher demand for real estate – housing, education, healthcare, entertainment, etc.
However, it is expected that by 2030 India will be having the highest demand for real estate and infrastructure job roles globally.
The writer is dean and director, RICS SBE School of Built Environment.