AUG
31, 2016, 02.25 PM
Prime
Minister Narendra Modi-led Cabinet took several measures to revive the real
estate and construction sector.
Resurrecting
life into stagnant sectors, the Cabinet gave nod to more liquidity in
construction projects and faster redressal of disputes.
These
measures come as good news for builders as the Cabinet approved release of 75
per cent of the amount in dispute against bank guarantee and provided for a conciliation
board comprising of independent domain experts in new contracts.
Finance
Minister Arun Jaitley said the construction sector contributes 8 per cent of
the GDP and provides employment to some 40 million people in the country.
"There
are various challenges before the construction sector and the government has
been trying to improve upon the functioning of the construction sector. We have
simplified arbitration law so that the process of dispute redressal could be
made easier. We have also allowed establishment of commercial court," he
said.
Meanwhile,
in case of a pending challenged arbitral award by the public body, 75 per cent
of the amount will be released to contractor against a bank guarantee. This sum
will be used in the projects.
Jaitley
said in new contracts, there will be a provision for a conciliation board
consisting of independent domain expert who will enter into contractual
negotiations if there are changes in commercial circumstances around the
project.
Besides,
item rate contract would be replaced by turnkey contract and a model draft
turnkey contract will be circulated.
Department
of Financial Services under Jaitley's Ministry and the Reserve Bank of India
will prepare a policy to "deal with those companies which have lot of
stressed assets in the construction sector," he said.
These
measures will pump in liquidity as well as activate the stranded projects, he
said.
