Prime Minister 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.