Water Infrastructure Growth Driver of Construction Sector

The Government is keen to accelerate the country’s economic growth momentum through construction projects that provide the much-needed thrust to the beleaguered economy. Through the National Infrastructure Pipeline (NIP) it has announced an ambitious plan to spend ₹111 lakh crores by the year 2025 and has so far listed 6,835 projects across sectors such as energy, social and commercial infrastructure, communication, water and sanitation, roads, airports, and ports etc. Government initiatives such as Swachh Bharat, developing 100 smart cities, world-class highways, shipping infrastructure, housing and urban development, water and energy infrastructure, metro rail etc. have attracted huge investments through FDI, private players and from budgetary allocations.


The restrictions on construction activities due to the pandemic lockdown, labour migration, and supply chain interruptions have had a cascading impact on construction projects. The Government has put on hold a large number of projects and deferred major spending on already planned and on-ground projects. However, the government is taking necessary steps to protect the construction industry and has announced a ₹1.7 lakh crore relief package. The state governments have been asked to use the building and construction workers welfare funds to provide relief to the workers. RBI is taking steps to combat the slowing GDP growth and is helping the industries with restructuring of loans and deferring payments to arrest the falling economy and the declining construction sector, which is also the backbone of several other sectors and industries.

The long-awaited measures in infrastructure development, labour policy reforms, digitization of business, technological advancement in project execution, privatization of assets and utility services and more resilient business models can now be implemented. Despite the Q1 traction, India is taking swift remedial actions and international financial organisations are positive about India’s growth prospects in coming times. A rapid and sustained economic growth with about 8% of GDP expansion annually, fuelled by heightened productivity and critical reforms, will enable the nation to achieve the ambitious target of becoming an economic power in the world order. McKinsey Global Institute has suggested that manufacturing and construction are the two sectors that would need to amplify the most, adding 9.6% and 8.5% annual GDP growth while creating 11 million and 24 million jobs, respectively, from 2023 to 2030.

In the current scenario when almost all the sectors are on a decline, initiatives for water infrastructure development schemes, including the ambitious Jal Jeevan Mission, and an exclusive budgetary allocation of ₹3.6 lakh crores, are going to be the growth drivers of the construction sector during the next few years.

Developing Water Infrastructure
Water has become everybody’s business now. As human needs water to survive, similarly business needs water to thrive. The reality is that we are heading towards a ‘no water’ scenario if we continue using it unsustainably. Across the globe, major cities like Cape Town and numerous metropolitan areas and over 20 Indian cities are facing the threat of a diminished water supply.

The situation becomes more threatening as India has just a fraction of the world’s fresh water sources for a formidable (almost) 18% of global population. Imagine the crisis if 80% of our surface water is contaminated. In fact, nearly 60% of India’s ground water reserves are already contaminated with biological, organic, and inorganic pollutants. The Central Pollution Control Board (CPCB) has found that 18 major rivers in India are unfit for domestic and industrial water use.

The policy think-tank Niti Aayog has flagged the issue in their water report last year saying that the water situation in the country is quite stressful and around 100 million people will be affected by the shortage of ground water in 21 Indian cities including mega cities like Delhi, Bengaluru, Chennai and Hyderabad, unless strong measures are taken immediately for replenishing our water sources.

Dramatic changes are required to develop a robust water infrastructure and maintain it with a view to long-term demand and supply. The affliction point is insufficient availability of clean water for distribution and scarcity. The water pollution, in general, and degradation of groundwater quality, in particular, are the other pitfalls of water scarcity.

Jal Jeevan Mission
The United Nations under its Sustainable Development Goals (SDGs) has raised the issue of water as an important subject and has advised its member countries the world over to target and ensure universal and equitable access to safe and affordable drinking water for all by the year 2030. The Government of India has taken up the cause of water and made it the theme subject for social and economic development.


With a renewed focus on water supply and, more importantly, on sustainable water management practices, the Jal Jeevan Mission is developing fast across the nation as several states have received central funding and are focusing on infrastructure development. A look at the Ministry of the Jal Shakti dashboard clearly states that the percentage of connected households at present varies from 100% in Goa to just 2.4% in West Bengal. There is a large scope for rural water infrastructure development not only for water companies, but also for manufacturers of pipes, valves, pumping systems and other ancillary companies.

Jal Jeevan Mission, the first in Indian history to have such a large financial allocation for a rural water supply scheme, is envisioned to provide safe and adequate drinking water through individual household tap connections by 2024 to all households in India. Presently 65% of the people (900 million) of India live in rural areas. The task under the Jal Jeevan Mission is to provide functional household tap connection (FHTC) to almost 160 million unconnected households by 2024. The development so far has provided 25.6 million households with tap water connection, so currently 134.4 million still remain. This is a mammoth task for which a budget of ₹3.6 lakh crore has been earmarked by the government.

It has been decided that every rural household in the country will be provided clean drinking water at the rate of 55 litre per capita per day (LPCD) through functional household tap connections. Under the provision, every village will be required to prepare a village action plan (VAP) consisting of three important components: identification of water source and its maintenance, developing and operating water supply system, and management of domestic wastewater for reuse. The Mission will take a community-driven approach for water infrastructure development and operation and maintenance, along with information, education, and communication.

Of the budgetary allocation, about ₹30,000 crore will be made available from the Centre to the States during 2020-21 under the Jal Jeevan Mission. While ₹6,429.92 crore is the opening balance for States, an additional ₹22,695.50 crore has been allocated for 2020-21 to ensure “assured availability” of the ₹29,125.42 crore of the central funds to States and Union Territories in 2020-21. Of the amount allocated for 2020-21, ₹11,500 crore has been provided in the Union Budget, and ₹12,000 crore has been considered as extra-budgetary resources.

Under the scheme, Union Territories without legislature will receive 100% central funding, whereas it will be 90% for the North-Eastern and Himalayan states and the Union Territories with a legislature. All other States will receive 50% central funding and the remaining will be arranged by the States themselves. The Government has also assured that additional funding will be available for States which will show good physical and financial progress and, accordingly, several large States have planned to complete the 100% functional household tap connection before the targeted time of 2024.

All States and Union Territories have received funds in the current year ranging from ₹12.40 crore to Goa and ₹2,760.76 crore of central share funds, along with ₹5,770 crore of the states’ share in West Bengal to provide household tap connections. The Chief Ministers of the States are visiting villages and projects’ progress review meetings are being held by the Prime Minister himself. On Mahatma Gandhi’s 151st birth anniversary on 2nd October 2020, the Ministry of Jal Shakti launched a mini scheme within the large Jal Jeevan Mission - a 100-day campaign to ensure potable water supply in all schools and Anganwadi centres across the country.

These large budget allocations and project executions at the ground level are certainly encouraging for the construction sector and as the situation becomes normal, a number of other large infrastructure development projects will again be started according to the plans of spending ₹111 lakh crore on infrastructure projects in the next four years to help achieve the target of $ 5 trillion economy by 2025.