Construction Industry Development Council (CIDC), an apex industry body under the Planning Commission has developed a grading system covering clients, contractors, consultants and projects in association with the credit rating agency ICRA.

CIDC will make a presentation to Indian Banks Association (IBA) on October 5 on the new grading system to encourage bankers to be more willing to extend loans to construction projects, CIDC director P R Swarup told PTI in an interview.

Later, presentations will also be made to foreign banks on the importance and need for investing more in construction projects to meet the immense requirements of the sector as also for their own survival and health, Swarup said.

"Investments in construction have a huge multiplier effect as they support many core industrieslike steel and cement," he said.

"The health of an economy can be gauged with the percentage of GDP going into construction sector." Banks and FIs have been traditionally reticent about investing in infrastructure projects as returns are very slow, Swarup said.

"But banks have to realise that high-return, low maturity period loans in consumer goods are not sustainable unless they invest in infrastructure projects, which have the tendency of stirring up demand in other sectors," he said.

Although some kind of grading or pre-qualification system does exist, an all encompassing perspective of the entire project involving all players in the field is not available, Swarup said, adding the CIDC proposal aims to fill this gap.

Nearly 22 per cent of gross domestic product of the country is generated by construction industry, which employs about 10 per cent of the working population directly or indirectly, besides supporting many core industries like steel and cement, he said.