Owing to the involvement of a large number of blue-collar workers in construction activities across India, the real estate sector was one of the most affected by the outbreak of the Coronavirus infection. In the last one year, the industry made several strides towards recovery, only to be struck by the pandemic yet again in 2021.
The construction industry in India is the second-largest employer after the agriculture sector. According to an estimate, around 51 million people are engaged in the construction-related jobs in India. With such a scale, the impact of COVID-19 infection was estimated to be equally massive when it first struck the country in February 2020. The fear was such that the migrant workers fled the construction sites and attempted to return to their hometowns. The industry came to a point where it was working at one-third capacity, badly hitting the on-ground projects. The situation remained grim until June 2020, since the country went into a strict lockdown. The markets reopened partially post July 2020, and construction work resumed gradually. While the industry expected a revival by the end of the year 2021, the sudden outbreak of the second wave of the pandemic has made matters worse. Once again, construction workers are heading home in the fear of a lockdown and housing and infrastructure projects have taken a hit. Developers, however, are of the opinion that their incessant measures at providing food and shelter to the workers have controlled the migration activity and the impact this time would not be as severe as the previous year.
Here is a detailed account of how events unfolded last year.
Construction activities came to a halt
The COVID-19 crisis badly impacted the business environment. More so for the construction workers, who earn their livelihood from the ongoing building projects. The nationwide lockdown announced in March 2020 halted the construction activities of several residential projects (many already delayed).
The fear of getting infected and the sudden loss of job left little to no motivation for the construction workers to stay put at sites. According to an industry estimate, more than thirty percent of the construction workers left for their native places in the first month of the lockdown itself.
Meanwhile, the developer community faced the brunt of mass exodus initiated by the Coronavirus crisis. Leaving construction workers halted or slowed down the pace of construction, and the impact was massively seen on the profit margins of the companies eventually. The real estate industry which was already reeling under the pressure to deliver the housing projects delayed for years, faced a calamity of sorts due to construction work coming to a total half.
Reports by rating agency India Ratings, at that time, estimated that the nationwide lockdown (though necessary) to contain COVID-19 spread, would adversely impact the construction companies and a month’s lockdown would erode approximately 8-10 percent of the fourth-quarter revenue. The agency predicted that the construction activities in major cities, such as Bangalore, Delhi, Mumbai and Pune, would be greatly hit.
However, the industry remained hopeful of tiding over the challenge. Expressing his opinion in this regard, Prashin Jhobalia, VP-Marketing Strategy, House of Hiranandani, said, “There has been a tremendous upheaval on the economic front due to COVID-19. As safety and preventive measure against the virus that is infiltrating every aspect of our life, we are dissuading direct interactions among our customers, construction workers and employees. In order to ensure business functions at a normal pace or with the least impact, we are promoting our projects through digital enablers for domestic and international prospects.”
Government lifted construction ban
Around April 2020, the Indian Government declared an extension on the COVID-19 lockdown, and formulated a set of guidelines for resuming construction of shelved developments and commencing new construction activities. Construction work kick-started in a limited manner and the groundwork for full-scale resumption post the lifting of the lockdown was established.
Revised guidelines for ‘Lockdown 2.0’ from the home ministry spelled out that fresh construction work could be carried out for the building of roads, renewable energy and irrigation-related activity, and industrial projects outside municipal areas post April 2020. The final authority to allow these constructions, however, rested with the respective district administrations or local authorities.
One of the primary requisites to begin construction work was the availability of workers on-site (In-situ). With this, Government restricted the movement of construction workers between cities and States.
There were several other measures announced by the State governments. For instance, Tamil Nadu released a Standard Operating Procedure (SOP) for restarting the construction activities. As per the SOPs, the construction sites needed to have thermal scanners at the entry and exit gates, the premises needed to be disinfected twice a day, and the company management had to ensure a regular visit of doctors. The Government also asked the contractors to make arrangements for hand sanitisation and to provide staggered lunch breaks.
Similarly, the State governments of Delhi, Himachal Pradesh, Odisha, Telangana and Maharashtra also allowed construction activities with certain restrictions, subject to strict social distancing norms.
The Central Government allowed the industrial and construction activities, along with Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) works in rural areas. Brick-kilns were also allowed to operate. The Government also allowed the construction of renewable energy projects across the country.
Amid the Coronavirus-induced panic, the Finance Minister launched a relief package on March 26, 2020, amounting to Rs 1.7 lakh crore to ease the stress of economically weaker sections. The package was primarily for the benefit of the migrant workers and construction labourers. The Government directed the State governments to use the fund of Rs 31,000 crore for the welfare of building and construction workers to ease the disruptions caused due to the lockdown.
The Supreme Court of India categorised over 2.8 crore construction workers and labourers as ‘Consumers’ so that they could not be denied any statutory benefits promised under various welfare schemes implemented from the funds collected as ‘Cess’ (Building and Other Construction Worker’s Cess) from the builders. This enabled the workers to approach the consumer court in case of non-providence of benefits.
Expressing his opinion over the development, Satish Magar, President, CREDAI National, said, “The Garib Kalyan Scheme, announced by the Government for providing the much-required relief to the economically weaker sections amidst these hard times, was the need of the hour. We thank the Government for taking cognisance of CREDAI’s recommendation and advising the States to use Building and Other Construction Workers (BOCW) cess funds collected by the labour welfare boards in providing immediate relief to the construction workers.
Concurrently, the Government must consider providing similar relief to the unregistered construction workers. We are also ensuring that our construction workers are provided with basic amenities to be able to cope up with the ongoing situation. With this positive step, the industry eagerly awaits the economic stimulus required for further revival. We stand in solidarity with the Government as a socially responsible organisation.”
Additionally, suggestions poured in from various quarters including NGOs, such as Jan Sahas, Nirmana and SEWA, that called for an increase in the amount of assistance to construction workers from Rs 333-500 per month to Rs 1,000-1,500 per month for a period of six months. They also demanded the payment of pending wages worth nearly Rs 2,000 crore to workers employed under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
By the end of the year, the COVID-19 crisis had affected both the developers as well as the construction workers. However, the Government continued to maintain its priority as the containment of the virus. The economic measures announced by the Government were a step in the right direction.