'SC stay on construction may hit project delivery timelines'

The stay on construction activities in Maharashtra, Madhya Pradesh, Uttarakhand and Chandigarh by the Supreme Court may impact the delivery timelines of housing and infrastructure projects, a report said Monday.

The real estate sector could be further hurt due to delay in project deliveries and related Rera implications in the form of penalties, the report by Care Ratings added.

The Supreme Court last week had imposed a stay on all construction activities in Maharashtra, Madhya Pradesh, Uttarakhand and Chandigarh for not framing any policy on solid waste management.

The three states Maharashtra, Madhya Pradesh and Uttarakhand account for about 15 per cent of the gross value added (GVA) from construction.

Further, constructions in these states and Union territories have been stayed until the policy is framed.

Care Ratings said there is lack of clarity on the type of construction under stay, and the order is expected to impact construction activity of real estate projects and infrastructure development.

"The stay is likely to affect delivery timelines of real estate (housing) and infrastructure projects," it added.

The agency expects the stay to impact the operations of real estate and infrastructure developers.

"This is significant as the construction sector is to be one of the leading sectors in fostering growth this year where housing and infrastructure have been priorities of the government," it said.

The report said, loans in the retail segment, mortgages, have been the driving factor of overall credit at present, and this can slow down until there is clarity on the court order.

Disruption in construction activity in turn would impact demand for steel and cement and, therefore, overall growth of core sectors till further orders of the apex court, it added.