2025, Vol. 6, Issue 2, Part A

Over the past decade, the country has seen a strong emphasis on building physical infrastructure, leading to significant growth in the construction sector. This industry's growing role in driving the national economy became especially clear during the implementation of the Tenth Five-Year Plan, where key sectors like transportation, housing, irrigation, urban planning, and civil aviation received increased attention. The construction industry’s impact extends to a wide range of economic and infrastructure areas, including industrial facilities, mining operations, highways, railways, ports, airports, power generation systems, agricultural and irrigation networks, as well as communication systems. It also covers the development of essential public services such as hospitals, schools, housing, office buildings, and townships. Moreover, it contributes to urban infrastructure-like water supply, sewage systems, and drainage-and to rural infrastructure projects. Therefore, construction serves as a foundational element for the country's socio-economic progress.

India’s construction sector saw a notable rise in its contribution to the Gross Domestic Product (GDP), reaching ?4,636.41 billion in the first quarter of 2025, up from ?3,899.90 billion in the final quarter of 2024. Between 2011 and 2025, the sector has shown an average GDP contribution of ?2,591.23 billion. The highest ever recorded contribution came in early 2025, while the lowest was ?1,437.71 billion, seen during the second quarter of 2020.

The rise in the construction sector’s contribution to GDP is largely driven by a surge in public investment in physical infrastructure over recent years. With consistent backing from the government through key initiatives like the Dedicated Freight Corridor, Bharatmala, Sagarmala, Smart Cities Mission, and Pradhan Mantri Awas Yojana, the sector has witnessed substantial growth. At constant prices, its output expanded to ?14.36 trillion in the financial year 2024, up from ?7.77 trillion in 2012, reflecting a compound annual growth rate (CAGR) of 5.25%. Over the past five years, the construction industry has seen a significant increase in workload and has been expanding at an annual pace exceeding 10%.

While several efforts have been made to enhance the construction sector, it remains essential to implement further actions that can equip the industry to handle future growth challenges effectively. Therefore, this is an opportune moment to prioritize strategic management within India’s construction industry.