Demonetisation at the end of 2016 created a cash crunch in the country that reduced domestic consumption, broke down supply chains and interrupted economic growth.
The underlying growth story remains strong despite this, and a 20 percent increase in public sector wages over 2016 helped drive domestic demand.
Construction plays a major part in the economic growth of India. Numerous long-term and short‑term projects are underway in the public and private sector, including the 22.5km Mumbai trans-harbour link and two new metro lines in Mumbai.
Meanwhile, technology clients like Apple, Facebook, Google and Microsoft continue to invest in emerging markets, including manufacturing projects through the ‘Make in India’ initiative.
The residential construction sector, however, appears to be oversupplied and labour shortages in the commercial market are damaging growth in this area.
Eventually, demonetisation should help move economic activity into formal channels, increasing financial inclusion and government revenue. Once the impacts have had time to work their way through the system the outlook for construction is very positive.
Developer-led projects, while experiencing some slowing in major cities, should do well in less-tapped markets such as Ahmedabad, Hyderabad, Lucknow and Pune.