A Composite Indicator of Realty Sector Activity in India

The realty sector plays a crucial role in India in terms of employment generation, access to housing and as a major source of saving in physical form, besides direct contribution to the country’s Gross Value Added (GVA). In this study, we estimate a dynamic factor for housing (DFH) from a range of available high-frequency indicators of real estate activity. Our empirical findings indicate unidirectional causality from DFH to GVA with evidence of the first and second-round impact of revival in DFH driving recovery in GVA. Our empirical results also indicate the critical role of counter-cyclical fiscal and monetary policy measures, housing sector reforms and other policy incentives for the housing sector in reviving construction sector activity and GVA growth in the post- COVID period