The effect of India’s lockdown on the construction industry has been suggested by materials company Star Cement, which has reported an 80% fall in demand after resuming operations at one of its factories.
Central government ordered factories across the country to close on 25 March, but allowed some to reopen yesterday (4 May), even though the lockdown was extended until 17 May.
The phased loosening comes as the daily count of new cases is rising steeply.
There are presently around 46,500 confirmed Covid-19 cases in India, out of which some 1,500 have died.
Yesterday’s daily count of 3,932 new confirmed cases was the highest yet.
Demand has collapsed
But those businesses that are returning to work are finding that demand for their products has collapsed.
Bloomberg reports that Kolkata-based Star has resumed work at its Guwahati plant, in the northeast state of Assam, but only at 20% of capacity.
Sanjay Gupta, chief executive of Star, said in a phone interview with the agency that he expected the impact of the lockdown to last until at least September.
Star has applied to reopen another factory in Meghalaya State, also in northeast India, and hopes to re-employ about half of its pre-coronavirus workforce there.
According to Gupta, India’s cement industry would have sold about 30% less of its product this year than in 2019 if the lockdown had been lifted on 3 May, as initially announced.
Pockets of openness aren’t much help
The government has divided the country into red, orange and green zones, depending on the estimated threat of spreading the virus.
Businesses in green and orange areas have had restrictions relaxed, but many have not been able to take advantage of this in cases where their suppliers and customers are in red zones, or where their workers are confined to their villages.
Some construction work has been allowed in red zones, but only on renewable energy schemes and sites that do not require workers to be brought in from other areas.
Indian credit rating agency CARE has predicted a fall in revenue of between 5% and 8% for the construction sector over 2020.
Not much hope for Q2
A recent survey by the Confederation of Indian Industry reported that the lockdown has brought economic activity across the country to "a grinding halt" and that 65% of companies expected revenues to fall more than 40% in the second quarter.
Chandrajit Banerjee, the confederation’s director general, said the economic implications of the lockdown had been "dire".
"At this hour," he said, "the industry awaits a stimulus package for economic revival and livelihood sustenance besides calibrated exit from lockdown."
Image: Indian sites have resumed work, but face problems carrying it out (Dreamstime)
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