Country on course to become USD 5 trillion economy by FY26 on the back of 8-9 percent sustained growth
India’s economy is of global importance. The country is already the third largest economy and contributor to global economic growth. It will remain the fastest-growing major economy in the world during 2021-24, as per the projections of the World Bank, Asian Development Bank and International Monetary Fund, according to the Economic Survey 2021-22. In spite of the three waves of the pandemic related disruptions coupled with uncertain monsoons, India recovered much faster than many countries. Editor-in-Chief Mangala Chandran and Editor Mohana M share the synopsis on the growth map and analyse the potential of the Cleaning & Facility Service Segment starting 2022.
We are also focusing on building a clean India, a healthy India, a beautiful India to make the $5 trillion journey easier…
PM Modi
As per the data published in a Department of Economic Affairs report, in the first quarter of FY22, India’s output recorded a 20.1% YoY growth, recovering >90% of the pre-pandemic output in the first quarter of FY20. India’s real gross value added (GVA) also recorded an 18.8% YoY increase in the first quarter of FY22, posting a recovery of >92% of its corresponding pre-pandemic level (in the first quarter of FY20). The growth in the economic recovery is due to the government’s continued efforts to accelerate vaccination coverage among citizens. This also provided an optimistic outlook to further revive industrial activities.
The Union budget of 2022-23 had set clear priorities: PM Gati Shakti (for infrastructure development), Inclusive Development, Productivity Enhancement, increased capital investments and encouraging private sector & foreign investments. Under PM GatiShakti Master Plan, the National Highway Network will develop 25,000 km of new highways network which will be worth US$ 2.67 billion.
IMF’s latest World Economic Outlook (WEO) growth projections pegged India’s real GDP growth at 9 per cent in both 2021-22 and 2022-23 and at 7.1 per cent in 2023-24. This again projects India as the fastest-growing major economy globally in all these three years.
Why is that India’s growth path is without much bumps? The agriculture and allied sectors were not much impacted by the pandemic. According to the survey, the industrial sector too has had a sharp rebound from a contraction of seven per cent in 2020-21 to an expansion of 11.8 per cent in 2021.
Made in India
Even though the manufacturing, construction and many other sectors went through a medium paced phase, the Government’s Make in India initiative has been is adding energy and boosting the revival efforts. The services sector kept its head up with innovating and changing the service deliveries suitable to the conditions. The services sector is now estimated to grow very fast considering the revival in sectors like hospitality, healthcare, pharma, food processing, tourism, travel, etc. With this improvement in the economic scenario, there have been increased investments across various sectors in India.
Digital India
Besides, the Government has also come up with the Digital India initiative, which focuses on three core components: the creation of digital infrastructure, delivering services digitally and increasing digital literacy.
“An India Economic Strategy to 2035”, a report states that the technological developments will unlock growth and new markets in India in ways beyond current imagination. India may be able to leapfrog dated technologies to spur faster growth. Computing speed, device connectivity, data volumes and many other indicators of technological capability are increasing at exponential, not linear, rates. E-commerce is also taking off in India propelled by rising smartphone penetration and dropping data costs.
Industrial Growth
As per the data published in a Department of Economic Affairs report, in the first quarter of FY22, India’s output recorded a 20.1% YoY growth, recovering >90% of the pre-pandemic output in the first quarter of FY20. India’s real gross value added (GVA) also recorded an 18.8% YoY increase in the first quarter of FY22, posting a recovery of >92% of its corresponding pre-pandemic level (in the first quarter of FY20). The growth in the economic recovery is due to the government’s continued efforts to accelerate vaccination coverage among citizens. This also provided an optimistic outlook to further revive industrial activities.
The sectors particularly showing growth care include are Pharma due to good low-cost production facilities and Automobile that is benefitting from strong demand. India expects automobile sector to attract US$ 8-10 billion in local and foreign investments by 2023.
In January 2022, total production of passenger vehicles, three-wheelers, two-wheelers and quadricycles reached 1,860,809 units. Focus is also shifting to electric vehicles to reduce emissions.
The report also states that the future of transport will influence India’s energy and connectivity scenarios. Faster progress in electric vehicle development could lead to shifts away from liquids-driven transportation, presenting risks and opportunities to India’s automotive manufacturing sector. Autonomous and electric cars, ride sharing, and other technological innovations in heavy-duty vehicles could substantially reduce oil demand and could see a trend away from private ownership of vehicles.
The health sector is getting special focus by the Government. The public health spending is being increased to 2.5% of the GDP by 2025.
India’s real estate sector — from commercial spaces to residential projects — is also witnessing a healthy increase in demand in 2022 and this momentum is expected continue. Despite the pandemic the sector bounced back by the end of 2020 and residential sales, especially that of luxury houses witnessed an upward trend. As work resumes in offices, the recovery in the commercial sector is also very significant.
A number of initiatives have been undertaken by the Government of India with the hope of incentivizing real estate purchases. NITI Aayog expects that the Indian real estate sector will reach a market size of $1 trillion by 2030 and will account for 13 per cent of India’s GDP by 2025. Already the third-largest sector to bring about economic growth, the real estate industry is expected to continue its upward trajectory in 2022.
The Indian hospitality sector witnessed a growth of 100.3% year on year in Revenue Per Available Room (RevPAR) in quarter four of 2021, according to Property Management firm JLL’s Hotel Momentum India (HMI) Q4, 2021. Business travel has resumed in some markets. The last quarter of 2021 (Q4 2021) also witnessed a significant increase in international arrivals as compared to the same time in the previous year. JLL says that the next two quarters are expected to witness growth in airline and rail travel and provide impetus to hotel performances as the current wave subsides. The domestic segment will continue to drive demand for both corporate and leisure travel.
One can see clear indication of global confidence in India’s growth story going forward. The Government and the people have laid strong foundations to make India the foremost manufacturing destination.
Growing Services Sector
A driving force behind the growth is the much stronger contention to become “self-reliant”, a sentiment that is largely being adopted at various levels in different industries across India. The “Atmanirbhar” campaign of the Government of India has encouraged the supporting industries and segments to assist the growing industrial segments.
The Make in India program which will boost the manufacturing sector in India, will also cause a multiplier effect in adding to the portfolio of the service sector and vice versa.
As biz gurus put it in a 2022 report, the Service Industry will boom, and more so in India which is moving forward on a well-set roadmap of growth and business. While the flourishing industries are expanding, newer supporting segments are mushrooming.
In these circumstances, the Startup India program acts as a key enabler for the manufacturing and the service industry by offering to support innovative startups. The Indian startups have snagged record investments of up to $3.5 billion across 130 deals through January 2022. Positioned as the third-largest startup ecosystem in the world after the US and China, according to a survey, a record of 44 Indian startups achieved unicorn status in 2021 besides the existing 39 unicorns.
Interestingly most of the unicorns are in the services sector.
On the hindsight, the service sector in India has the highest employment generation among all sectors. Given the displacement of workforce following lockdowns in the last two years, Education and technologies have taken a lead to prepare them for highly productive jobs, thus resulting in revenue generation.
The Skill India program aims to provide market-relevant skills to about 40 crores of people by 2022 by adopting private sector initiatives in skill development programs, and by providing them with the necessary funding. One such initiative is directed to housekeeping and facility services.
Universities and institutions in the private sector are now including graduation courses in cleaning and facility services. Besides, private organisations are taking up international affiliation to give facility management a professional portfolio with certification.
The commercial segment tops in outsourcing facility management services, followed by residential and then industrial. The increased investment in the industrial growth will now witness a corresponding growth in outsourcing maintenance to FM professionals. Valued between USD 14-16 billion in 2021 by research bodies, the Indian integrated facilities management market is forecasted at a CAGR 14-17% between 2022-27.
Increased awareness about hygienic environments contributing to worker health & safety is the new beginning for the entire cleaning and facility services segment in India.
Seeking the best of the solutions, technologies and the right knowledge of applications & processes has necessitated the Indian cleaning segment to look at innovative, cost-effective and result-oriented products & solutions in making a Better India and Healthy India.
