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POLICY REVIEW
& Dholakia, IIM-A 2000), employment generation in the As per the CSO estimates, the
investment in construction economy as a whole due to an GDP growth in first quarter
has a Type-I employment additional unit of investment (Q ) of FY 2021-22 was 20.1%
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multiplier (showing the in construction sector), which compared to the (-)24.4% in
extent of direct and indirect includes the effects of induced first quarter of FY 2020-21.
employment generation changes in the final demand One of the key reasons for this
in the economy as a whole for other sectors on the total revival in GDP in Q of 2021-
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due to an additional unit of employment generation, 22 is the substantial growth
investment in construction is 7.76. This indicates that in the construction sector
sector) of 2.02 which indicates during the same period, i.e.
that an additional unit of final an additional unit of final from being (-)49.5% in Q
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expenditure in construction expenditure in construction of FY2020-21 to 68.3% in Q
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sector results in employment sector induces overall of 2021-22.Therefore, it is
generation by an extent which employment generation in evident that any investment in
is twice the direct employment the economy as a whole by an construction sector including
generated in the construction extent which is almost eight the housing sector has the
sector itself (Table-1). times the direct employment potential to give a big push
The Type-II employment generated in the construction to the economy through its
multiplier for construction sector itself, through the strong multiplier effects.
(showing the extent of direct, indirect and induced
direct, indirect and induced effects. IMPACT OF HOUSING
(RESIDENTIAL
Table-1: Multipliers of Investment in Construction Sector CONSTRUCTION)
SECTOR INVESTMENT
Multiplier Type-I Type-II
Investment in housing and
real estate activities can be
Employment Multiplier 2.02 7.76
considered a barometer of
Income Multiplier 1.95 4.71 growth of the entire economy.
Housing is an important
Source: Dholakia & Dholakia, IIM Ahmedabad Study, July 2000 employment generator,
particularly for the unskilled
and semi-skilled people,
Further, the construction the construction sector would
sector has Type- I (direct & generate additional income including the urban poor
indirect effects on income level in the economy as a whole and women. As per a Study
of a change in final demand which would be almost 5 (NCAER 2014), for every
in construction sector) & times as high as the direct lakh rupees invested in the
Type- II (direct, indirect as income generated within the housing sector, 2.69 new
well as induced effects on construction sector itself. jobs (2.65 informal and 0.4
income level of a change in formal) are created in the
final demand in construction The role of construction economy (direct and indirect
sector) income multipliers sector in the growth of Indian effect of housing investment
of 1.95 and 4.71 respectively. economy can also be seen from with Type-I employment
The Type-II income multiplier the recent growth in Gross coefficient of 2.69). With
indicates that a unit increase Domestic Product figures in induced effect (Type II
in the final expenditure on the pandemic ravaged years. employment coefficient), the
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