Ar.Praveen Chandra: Post-Covid Construction Scenario in Kerala

The ambitious target of having 100 smart cities by 2020 may be delayed following the present scenario.

            Just when the Construction sector was set to revive in small ways the Pandemic has set the ribbon back by a couple of decades. Despite having one of the highest rates of construction in India, despite having the highest number of migrant labourers in any state to work in the construction sector, despite a severe shortage of raw materials a revival of the construction sector in the state of Kerala was evident in the past few years led by a few factors.

Ar.Praveen Chandra

            In 2019 the GST Council slashed tax rates on under-construction housing properties to 5 per cent without input tax credit, from the existing 12 per cent, The Council also cut GST rates on affordable housing to 1 per cent from the current 8 per cent and expanded the scope of affordable housing to those costing up to Rs. 45 lakh and measuring 60 sq. metre in metros and 90 sq. metre in non-metro cities. Top realty sector players said the council’s decision to reduce rates for the real estate sector will bring many more properties, even in the premium segment, into the affordable category. Consumers are to benefit as also allowing for more projects in the pipeline.

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            The secondary or industrial sector has recorded the highest growth in Kerala for the first time in history as per the economic survey of 2019. The secondary sector, which consists of manufacturing, construction, power, gas, water supply and other utility services, had grown at a record 8.8 per cent. This was higher than the 8.4 per cent growth achieved by the tertiary or the services sector, considered Kerala’s mainstay. The boom has happened despite demonetisation, the roll out of the Goods and Services Tax and also two back to back floods.

            In 2017, the State government had repealed the Kerala RERA rules as several clauses in the Act were aimed at safeguarding builders, not homebuyers. The re-notified RERA’s implementation in the state in 2018 prepared the ground for increased transparency in Kerala’s real estate sector. That said, RERA deployment needs to increase and achieve wider market coverage in the state and with it is the expected push in the reality sector.

            But then a few events gave the industry a bad name in the last two years.

            The first major flood in recent years, in August 2018, due to the impact of the Southwest monsoon resulted in a disastrous flood. A total of 1,11,356 urban houses in urban areas and 6,92,848 houses in GramaPanchayaths were affected by floods in Alappuzha, Ernakulam, Kottayam, Pathanamthitta, Thrissur and Wayanad. Approximately 958 crores, according to government estimates, was the loss.

            The next major issue was the demolition of the Maradu Flats, an issue created by corrupt realtors and abetted by even more corrupt officials who very systematically misused the provisions of regulations to build and sell illegal real estate dreams to the public. The order for demolition came as no surprise and is an eye opener for the industry. Environmentalists rejoiced while the flat owners are still reconciling to the fact of a loss of their home.

            The floods of 2019 made similar damage as the 2018 floods. The situation in the state once again pointed to the absence of a scientific flood and disaster management system. The official measures taken since the deluge of August 2018 had failed to prevent the loss of human lives and livelihood. The state also has the dubious legacy of promoting encroachments of water bodies, rivers, forests and ecologically fragile lands. The state is now facing the combined after effects of climate change, population pressure and unscientific land utilisation.

            The real estate sector has been dealt another jolt in the form of the new building rules. Several multi-crore development projects would need to be shelved while those in the planning stage will turn unviable following the sudden and “arbitrary” implementation of the new building rules in the state. Affordable housing projects would be the most affected under the new rules. Due to lack of required access width many projects are being shelved across the state. The new rules make a 10-metre access road mandatory for large development while in the earlier rule two access roads above 5 metres would have been sufficient. Stakeholders in the construction sector expect the new rules will make the construction of multi-storeyed buildings at least 30 per cent expensive. Amendments are on but major issues still remain.

            The Covid Pandemic has now brought all construction activity to a standstill in the last month. Housing which makes up for a major chunk of construction activity in the state has suffered the most. The slowdown or lack of expatriate remittances will deal a deathblow to the construction activity in the state as also the issue of  lack of  labour& materials. Most migrant workers have left for their own states and until safe travels conditions are guaranteed for their return there will be very few people to work at site.  What can be done in the meantime to set the whole sector on a course correction? A month of two is hardly any time to make major changes on how the construction sector operates but the changes can be set in motion.

            The three Sectors of Construction are Building, Infrastructure and Industrial. Construction Industry Development Council (CIDC), New Delhi was set up in March 1996 by the planning commission, along with the constituents of Indian Construction Industry as the apex organisation with the twin objectives of professionalising the functioning and providing systematic institutional structure to various construction activities. Since the 1990s the sector has witnessed growth but some of the key numbers, that emerge since the sector was opened up by the central government to FDI vide the Consolidated FDI Policy effective August 2017, are

  1. By 2025, Construction market in India is expected to emerge as the third largest globally.
  2. By 2025, Construction output is expected to grow on average by 7.1 per cent each year.
  3. By 2020, Construction equipment industry’s revenue is estimated to reach $ 5 billion.
  4. 100 per cent FDI under automatic route is permitted in completed projects for operations and management of townships, malls/shopping complexes, and business constructions.
  5. 100 per cent FDI is allowed under the automatic route for urban infrastructures such as urban transport, water supply and sewerage and sewage treatment.
  6. 51 million are employed in this sector.
  7. 9 per cent is the share in India GDP.

The ambitious target of having 100 smart cities by 2020 may be delayed following the present scenario.

            Change in status: Despite its massive contribution to national building activities, construction industry in India has not yet acquired the status of an industry. The reasons may be:

  • Almost 95 per cent of the construction industry in India is in the unorganised sector where small time operators rule. More than 80 per cent comprises semi-skilled and un-skilled workers. Wages for labourers  in private sector are not fixed. Mostly workers are employed purely on temporary basis and on daily wages. Arbitrary compensation is paid in case of accidents. A large number of firms have developed specialist trades but they do not have permanent labour. There is no laid down procedure for their training and therefore quality of work is affected.
  • There are guidelines in construction industry including for procurement or materials but they might not be implemented properly. Construction methods have changed but old methods are still in use for small structures. Standardisation and quality control measure are weak or nonexistent. Many contracting firms run without adequate technically trained staff and without much appreciation for technical considerations. Very less safety norms are observed during construction.
  • Universities do not have a syllabus which integrates health and safety learning into their curriculum. The linkage between industry and technical institutes is very poor. Only recently has internship in industry been made mandatory for students. R & D is limited in this sector.

Once the above mentioned factors are dealt with satisfactorily and seriously and a framework given, the route to turning this sector into an industry will be easy.

The following four points may transform the way the sector performs.

            Procurement Methods: Currently there are no fixed procurement methods laid out by the government or policy makers and mainly traditional construction procurement methods are practiced. A cursory look at models in the developed economies will enable a similar approach in India and now is the right time to make a head start in India. Developed Economies practice design and Build, Construction Management, Management Contracting etc as standard methods of procurement. Similar methods of procurement will bring in major changes in quality. It will enable standardisation of work, buying construction materials at competitive prices, handling all legal procedures associated with obtaining a contract, budgeting costs for the goods and studying financial trends to ensure that money is being spent wisely.

            Technology: The construction industry in India is set to change with new materials, building technology, software, digitisation and artificial intelligence changing the way the industry conceptualise, build, and use the buildings. In major cities, a few developers have started using self-climbing formwork, aluminiumshuttering, precast concrete techniques and drywall systems. These technologies are not only cost-effective, but offer advantages such as minimal labour required, higher earthquake resistance, more durability, larger carpet area, smooth finish on walls and lower maintenance. Steel as a structural material is slowly replacing concrete in buildings which is reducing time, labour and cost in construction.

            Labour: The construction sector, which mostly relies on unorganisedlabour, is one of India’s biggest job providers.For any labourer refusing to work without proper safety equipment, there will be 100 others willing to take the job and so construction firms seldom fear losing their workforce with labourattrition rates being very high. The need of the hour is to change working conditions of labourers, Upskill the labourers, ensure health and safety of workmen, create social security schemes and ensure quality work is obtained from skilled labourers. The government scheme to provide vocational training should be expanded to all trades in  the construction sector and all workmen trained in their respective skills and certified for their respective trades should be allowed to enter sites.

            Trends: Trends like prefabricated, preassembled, modular, volumetric construction and similar solutions will ensure faster installation, pre-assured quality, less dependency on weather conditions, reduced need for on-site skilled workers, and, in total, higher efficiency in this sector. The use of 5G Technology, robotics, machine learning algorithms, artificial intelligence, digital sensors, and GPS tracking can ensure efficient accomplishment of repetitive and heavyweight operations with minimal or no human intervention. Drones solve construction monitoring problems with built-in mapping, scanning, and precision measurement features, paired with real-time accurate imagery, fast data transmittance, and the focus on saving human and time costs. BIM, a multi-layer system allowing not only 3D planning but also 4D (3D plus timing), 5D (financials added), 6D (sustainability issues involved), and 7D (facility asset management) options will enable real time monitoring of projects.

Policy Decisions that can help restart the sector:

            A steering group at both national and state levels can act as advisors to the ruling dispensations and create a framework for the return back to normalcy. Since construction and other sectors and industries are interrelated, an all encompassing view needs to be taken with experts from all fields. A response plan on the lines of the flood response plan last year needs to be put in place. Barriers to a smooth transition back needs to be identified and removed. Post Covid all sites need to be made medically safe for work to prevent another epidemic.  Restricted movement of workers will need to be ensured until normalcy returns. Supply chains need to be restored and movement of goods ensured for smooth transition back to normalcy. Most of all, liquidity needs to be ensured for all stakeholders. Relief packages will need to be provided for industry players. Idle machines and closed sites mean lack of returns and moratoriums on loans if required should be put in place to help realtors. Options to explore the use of manpower and machines in the government sector especially in the infrastructure sector needs to be examined until the private sector picks up. A stimulus package for housing needs to be put in place.

The next few weeks are crucial as the Governments of India and Kerala decide on the protocol to move back to normalcy post Covid. The interim period can be used to plan with the help of experts and stakeholders the modus operandi to move towards making this a robust industry once again.

പുതിയ ലക്കം ഡിസൈനര്‍ പ്ലസ് ബില്‍ഡര്‍ ഇപ്പോള്‍ വിപണിയില്‍.  ഡിജിറ്റല്‍ കോപ്പി സബ്‌സ്‌ക്രൈബ് ചെയ്യുന്നതിന് ഇവിടെ ക്ലിക്ക് ചെയ്യുക. പ്രിന്റഡ് മാസികയ്ക്കായി ഇവിടെ ക്ലിക്ക് ചെയ്യുക.

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Designer Publications Kerala Pvt Ltd, since its inception in 2003, promotes good architecture and design practices throughout the country.

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