The agency said that the first quarter of this year will record equipment demand growth by 45-50%. Further, the agency added 10-12% contraction in FY20 and declined to 39% in the first half of 2020. The mining and construction equipment (MCE) industry is expected to increase by 15-20% in FY21. The economy can have a negative impact due to the Covid-19 crises as observed in April 2021 when demand was comparatively subdued.

However, the overall equipment demand will be increased in 2021, partly due to the low base of 2020. A comparative subdued second quarter in this Covid-19 crisis and the emission-related pre-buy pick-up and post-buy drop in the third and fourth quarter of FY21.

While the Covid 2.0 throws negative surprises in the manpower-intensive construction sector it expects a better-prepared ecosystem, said ICRA.

Further, they added in support to ICRA's equipment demand estimates arising from the Indian government advancing its Build India momentum to counter the economic strike and the adequate liquidity in the ecosystem. Tailwinds from any pick up in state capital expenditure, related to the pullback in FY21, and strong production activity picking up in other sectors.

Vice-President and Co-Group Head of ICRA Pavethra Ponniah said that demand can be hit by the Covid second wave limiting mobility and equipment utilisation for an extended period.

Dealer checkpoints predicted a more subdued 0-5% volume increase in FY22 against ICRA's expectations of a 5-10% volume increase.

ICRA said that it anticipates demand growth by 15-20% in 2021 and expects to sustain in 2022 and 2023, before diminishing in 2024 pre-and post-the general elections during April-May 2024.