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Editorial | Investment
- Key to Revival
A challenging and unpredictable time, certainly. The credit
crunch will, but naturally, have negative effect on the industry.
Because of the global financial crisis, the indian industry
is expecting around a 15 per cent drop in business in the 2008
calender year, compared to last year. As per the annual outlook
survey of the Association of Equipment Manufacturers, recession
in important construction markets such as the USA, Spain, Great
Britain and France, Germany are already causing the industry
quite a bit of trouble. A positive change in the economic situation
for the construction equipment and building material machinery
industry can be expected, according to sources, in the second
half of 2010 at the earliest.
What is more interesting is, as per the international foreign
trade statistics, the global market for construction equipment
and building material machinery has been steadily growing
for years. Though the downturn has affected the industry,
construction projects in the infrastructure area are expected
to remain stable globally. The global demand for house building,
for private and commercial use alike, particularly in the
emerging nations, will stay as big as before, and sales to
worldwide markets are anticipated to increase 8.5 percent
by year-end 2008 and gain 5.4 percent in 2009. We have featured
the findings of two important surveys of world market.
Back home, as per the latest reports suggests, the government
has plans to raise spending on core sector, and efforts are
on by the government to inject a whopping Rs 50,000 crore
for funding infrastructure projects through public expenditure.
Since the recessionary trend in the global economy will continue,
the government is very keen to ensure that financing of infrastructure
projects will be smooth, and looking forward to ways and means
to ensure the same.
The real estate sector which recorded a growth rate of 25-30
per cent year on year, has also been affected. As per NAREDCO
reports, the strict monetary policies of RBI for real estate
projects and high rate of home loan finance by Indian banks,
closure of ECBs and rise in interest rates together with the
stock market crash due to selling pressure of FIIs, have lead
to a situation where credit has dried up and buyers are hesitant
to purchase, similar like the equipment industry where deals
are stuck. Though the government is taking measures to increase
liquidity in the system and bring down home loan rates, NAREDCO
feels that it is not sufficient to rejuvenate demand.
Initiatives are on to give a boost to housing and construction
industry to avert recession in the economy. The industry still
remains very optimistic about the growth in the infrastructure
sector. And in the long run, that optimism will show results.
After all, can Spring be far behind…..
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