COVID-19 lockdown Disruption Construction Sector across India

Lockdown Disruption on Construction Sector

Originating in the wet markets of Hubeiprovince in China, the virus has affected nearly 181 countries of the world. Read more to learn about the corona virus Effect on Indian construction sector.

This exponential pattern of its spread along with associated morbidity and mortality lead the World Health Organisation to declare it as a pandemic and a global health emergency. Till now, the world has witnessed two stages of its progress.

Although being biological in nature, the implications of COVID-19 are not limited to the medical field only but have affected nearly every aspect of the human world.

From the economy to education, market trends to the sports world, Governmental policies to household living patterns, everything has been displaced from the normal routine into times of uncertainty and despair for many. Reports say that the imposition of Section 144 by state governments and suspension of public transport till May 3 has already impacted manpower mobility. Strict checks on the same have led to many corporate scaling down their operations. 

Larger goodwill measures regarding the health and safety of employees and labourers have also resulted in slowing down of execution by the corporate.

Effect on Economy

Assessing the impact of corona virus, the resultant economic effects have been the major cause of concern worldwide. With the setting in of the global recession, it won’t be wrong to say that the biological virus is slowly evolving into a sort of economic virus and causing substantive damage.

In the absence of a possible vaccine, social distancing has been advocated to be the safest way to contain the spread.

The stock markets throughout the world have witnessed a massive negative shift since the outbreak in December with investors fearing an excessively receding economic growth.

Although the banking sector is trying to stabilize the market downfalls by introducing various instruments excessive unemployment and resultant less consumerism may override the progress that this move intended to create. Safer investments eg; gold has also stumbled.

A research report by Emkay GlobalFinancial Services observed that the fiscal situation in the construction sector for both the Center and states is already worsening and continued funding of infrastructure capital expenditure (Capex) will be a challenge in the near future.

Due to the impact of Corona virus, many small and small scale industries have been surrounded by economic crisis today. Men power in construction and economically capable industry is also facing a crisis.  In a phased manner, the construction undertaking will be required to meet the requirements of cooperation and resources.

Effect on Construction Sector

“Labour movement issues, supply chain disruptions have taken a toll on projects”

Lockdown has resulted in various infrastructure project sites staring at closure. The reports stated that it is mainly due to an effect on the labour movement due to the lockdown and also due to supply chain disruptions that may contract further over the next three or four days as more states enforce COVID-19 lockdown. The state borders are also getting sealed to restrict movement and only essentials items are allowed to pass. 

Fortunately today all countries of the world have effectively implemented the lockdown to avoid the corona epidemic in their country, causing a complete halt to the movement of people, making it difficult for workers to survive.  is.  Most of the workers have started migrating from their homes, which will be seen in the construction industry.  Due to the system of lockdown, transportation and machinery have also become very depressed, due to which people will now start selling goods at arbitrary prices, it will become the model of chaos and frustrated society.The banks are also expected to slow down disbursals due to scarcity of manpower at their head offices and overall reduction in execution at site. 

This may end up creating a number of legal problems for renewal or penalty percentages, especially in the case of various ‘time-bound’ projects. A serious issue is arising in terms of fixed cost procured by construction firms beforehand in terms of money spent on land lease, site facilities, electricity charges, etc.The work on different constructions sites of many housing and residential projects has also halted due to the lockdown. It is being estimated that this can result in delayed residential and housing projects.

“A lot is currently at stake for Indian residential real estate as cities go into complete lockdown mode to battle the spread of COVID-19. Developers tend to schedule project launches during the auspicious festivals of Gudi Padwa, Akshaya Tritiya, Navratri and Ugadi. The strict advisories for complete lockdown across cities will impact housing sales during the upcoming festivals, usually considered auspicious by several home buyers to buy homes. With construction activity almost coming to a standstill, homebuyers will have to brace themselves for another wave of delayed project deliveries,”

“Since this is a crisis with pan India ramifications, all impacted projects will have to be excused from construction delay penalties under the respective state RERA,”

A number of stalled or canceled projects will automatically result in losses for the company.
Getting projects from paperwork onto the ground sites is another challenge in many spheres. This mainly depends on two factors– availability of labor and availability of material.

The labor force currently can’t be commissioned as their presence at a site clearly defies the social distancing protocol that needs to be followed. However, in projects that follow the distancing protocol, construction firms need to keep a thorough check on their employees- both permanent as well as commissioned.

This is critically important for the unorganized workforce employed in the form of daily wagers. Construction firms need to keep their accommodation, sanitation, and more importantly, their travel history (state/regional) documented so as to prevent any spread while working on a project.

This involves scenarios where constructionfirms need to spend extra bucks to provide masks, gloves, PPE gears, sanitizers, etc to the workers. Thermal scanners, medical facilities, disinfection tunnels need to be kept available 24*7.

The unavailability of materials (mostly China-based) is also creating a need to venture into other possible markets and this may involve a lot of paperwork/ contracts/ agreements in a relatively short period of available time.

Another challenge faced by the construction sector is the overburdened contractor who is responsible for maintaining the proper functioning of not only his key staff but also at the subcontractor level.