CCEA measures to give construction sector over Rs 39,000 crore boost: NITI Aayog

Operationalising the measures announced by the Cabinet Committee on Economic Affairs (CCEA) recently, government’s think tanks NITI Aayog has said that government’s construction sector initiatives will likely release Rs 39,366 crore to contractors and concessionaires. The CCEA approved a slew of measures including faster resolution of disputes, release of 75% of contract value stuck in arbitration against bank guarantees and provided for a conciliation board comprising independent domain experts in new contracts, among others. 

NITI Aayog CEO Amitabh Kant has said that as per estimation 597 cases are presently under arbitration proceedings or pending before courts in respect of four major infrastructure CPSUs-NHAI, NTPC, NHPC and IOCL, involving claims worth Rs 52,488 crore. 75% of this amount that is Rs 39,366 crore is likely to be released to the contractors/concessionaires on furnishing the bank guarantees. He added that deliberations with major stakeholders revealed that 618 awards have been announced by the Arbitration Tribunals in respect of three CPSUs that is NHAI, ONGC and NHPC, out of which 158 have gone in favour the state- owned firms and 460 in favour of contractors. 

The construction sector, which is one of the key contributors to economic activity accounting for about 8% of GDP, has been facing a number of problems, mainly arising from liquidity constraints caused on account of disputes raised by government agencies.  He said that these initiatives are expected to help in improving the liquidity of construction industry and will hopefully lead to faster completion of pending projects and also help banks to reduce their outstanding.