India's construction sector levels up as housing demand spurs economy

investing.com:

By Manoj Kumar

NEW DELHI (Reuters) -If India needed any more proof that it was in the midst of a huge housing boom, it got in this week's GDP data, heightening expectations that the industry will continue to power the economy for years to come.

The construction sector grew 13.3% in July-September from a year earlier, up from 7.9% in the previous quarter and its best performance in five quarters, the data released on Thursday showed.

That helped India expand at a forecast-beating 7.6%, making it one of the world's fastest-growing major economies. In contrast, Western economies have been squeezed by high interest rates and energy prices, while China has been hobbled by a debt crisis in its property sector.

The long-awaited boom — which has created millions of jobs — comes after about six years of debt and pandemic-induced downturn before the construction sector began improving last year and hitting its stride this year. It has been driven by rising incomes for many Indians, a severe housing shortage in big cities and strong population growth.

The world's most populous nation had an urban housing shortage of around 19 million units last year — and that is expected to double by 2030, according to government estimates.

«The robust growth in construction has significantly contributed to the economic growth — and is likely to play the same role in next couple of quarters,» said Sunil Sinha, an economist at India Ratings and Research, an arm of rating agency Fitch.

Builders are bullish long-term with many saying the boom could last two to three years and some even more optimistic.

«The housing market could continue to perform well for another three to four years,» Sanjeev Jain, managing director at Parsvnath Developers, a