Indian Road Construction Industry: Capacity Issues, Constraints and Recommendations

Over the last few years, the Indian economy has been in a phase of unparalleled growth of about 8-10 percent per year, making it one of the fastest growing economies in the world. Sustaining this rate of growth will need huge investments in physical infrastructure such as roads, water, power, and urban sectors. Preliminary estimates suggest that investment in infrastructure would need to increase from the current 4.6 percent of gross domestic product (GDP) to about 8 percent during the 11th Plan. An efficient transportation system is critical for sustaining economic growth and the burgeoning demand for passenger and freight movement. Recognizing this, the Government of India (GOI) and several state governments have launched initiatives during the past decade to modernize and improve the transport infrastructure. This study stems partly from GOI's concern regarding the capacity of the road construction industry to deliver, and partly from the Bank's growing need to understand the impact of the expanded road investments on the industry's capacity in South Asia. The study attempts to outline the entire gamut of problems and capacity constraints faced by India's construction industry. It builds on previous studies, reports and industry-wide stakeholder surveys and workshops. It recommends key actions to the central and state governments and the industry for enhancing its capacity and efficiency