Construction Sector Revival Fuels Economic Growth in UP and Bihar

India’s construction sector is seeing a strong revival, and two states, Uttar Pradesh and Bihar are leading the charge. According to a recent report by HDFC Bank, both states recorded a sharp increase in the construction sector’s contribution to their Gross Value Added (GVA) in FY24, highlighting the growing role of infrastructure in driving their economies.

The report noted that construction activity in both UP and Bihar has picked up significantly since the pandemic, powered by government support and heavy investment in infrastructure development.

In FY24, construction accounted for 13.4% of Uttar Pradesh’s GVA and 11.2% of Bihar’s GVA, both well above the national average of 8.9%. The report said this resurgence has been crucial in sustaining overall state growth momentum

HDFC Bank also highlighted that Uttar Pradesh and Bihar rank among the top three states benefiting from the central government’s interest-free capital investment loan scheme, which aims to spur infrastructure projects across the country.

At the national level, Uttar Pradesh has now emerged as the largest contributor to India’s total construction GVA, holding a 12.5% share in FY24. It is followed by Tamil Nadu (11.8%) and Maharashtra (10%), while other major contributors include Gujarat (6.9%), Karnataka (5.7%), Kerala (5.6%), and West Bengal (5.4%).

The growth in Uttar Pradesh marks a clear turnaround from earlier years. The construction sector’s share in the state’s total GVA has risen from around 12% in FY12 to 13.4% in FY24, reflecting higher spending on infrastructure and housing projects.

Bihar too has shown a steady recovery after years of sluggish expansion, with the construction sector’s contribution climbing to 11.2% in FY24. This revival has been largely driven by increased public investment in infrastructure, especially in housing, roads, and urban development under various government schemes.

The report suggests that construction is becoming a key growth driver for regional economies, particularly in northern India, helping cushion the slowdown in sectors like agriculture and manufacturing.

Overall, the construction boom in Uttar Pradesh and Bihar signals a broader economic recovery, underscoring the impact of government-led capital expenditure and growing private sector participation in building the region’s infrastructure backbone.