The real-estate boom is a very important part of the India story, says the Asian Development Bank (ADB) in the new Asian Development Outlook released on Tuesday. That’s why ADB has reported the real-estate sector as a separate component of GDP, apart from the standard three—agriculture, industry and services. This is a first.
ADB data shows that the construction sector has grown much faster than the other three in recent years. Also, around 6% of India’s labour force was employed in construction in 2004, up from 3% in 1993.
But construction will grow at less than 10% in 2007, the first time since 2002. The natural corollary of this is that the current slowdown in real-estate prices as well as construction activity could be a harbinger of a general economic slowdown. ADB forecasts slower growth of 8% this year. But the slowdown will be gradual. ADB chief economist Ifzal Ali says he expects a soft landing for the Indian economy.