 Press Release
Introduction - Railways & Construction
26th February 2003
Railways is one of the sectors where construction plays an important role as it helps to establish and maintain the physical infrastructure for the sector. A study conducted by CIDC indicates that this Sector vis-à-vis the construction activities, has a multiplier effect of 1.43 on the economy. Further Railways have an important role to play for the core sectors of the economy - these sectors being: crude petroleum, petroleum refinery products, coal, electricity, cement and finished steel - as it provides transportation for the same. It is to be noted that cement and steel have a direct bearing on Construction Industry and fuel also plays a significant role.
Railway Budget 2003-04 and Construction Industry
The Railway Budget 2003-04 has not proposed any increase on both passenger and freight fares. In fact freight for certain commodities such as petrol, fuels such as LPG, CNG, Crude Oil etc. and steel, pig iron, cement, cement sheets etc is proposed to be reduced in stages. This will undoubtedly have a positive impact on the cost of construction, which has been increasing rapidly due to increase in cost of steel, labour and other inputs. The Rail Budget is also not likely to affect the consumers' purchasing power, which would further have a positive impact on construction. Further, the decline in the growth of core sector in the recent months is of concern and the budget is not likely to worsen the situation. The growth of core sector is important for Construction Industry to keep construction prices under control.
The proposals to enhance the railway infrastructure by way of constructing new lines, starting new trains, electrification, setting up of new terminals in Delhi and Kolkata will result in some growth in construction. The thrust towards safety will also enhance construction activity. However the magnitude of growth will depend directly on the investment in this sector. It is to be noted that only 2% of the Rail Budget is allotted for development works.
In all it is a very good budget proposal and would spur the growth of economy in general and Construction Industry in particular.
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