Lack of demand from ITeS, BPOs and tourism segment for residential and commercial properties is severely affecting the construction industry, one of the sectors hit badly by the global financial meltdown.

"The paucity of demand is particularly evident in ITeS/ BPO, tourism and trade. This would adversely affect the demand for residential housing, office space and other commercial space," Delhi-based think-tank National Council for Applied Economic Research (NCAER) said in a report.

"The construction activity in these segments will gradually taper off," the report said, adding construction sector is in the danger of being severely hit by the slowdown.

Earlier, the government on December 7 and January 2 announced two stimulus packages to bailout sectors, including construction, which are reeling under the impact of global crisis. The package allowed India Infrastructure Finance Company to access in tranches an additional Rs 30,000 crore through tax-free bonds apart from earlier Rs 10,000 crore.

The segment, which accounts for 7 per cent of the country's GDP and is the second largest employer after agriculture, could see a silver lining in the present turmoil on the account of lower prices of key inputs like steel and cement. Both account for over 50 per cent of construction costs.

Though facing a plethora of problems from lower demand, erosion of construction firms' wealth, banks' aversion in lending and drying up of external funding channels, the industry, NCAER survey indicates, could still hope for revival of growth on account of certain positives.

"There are certain positives which when combined with proactive government measures, could contribute to revival of growth in the construction industry," the report stated.