Niti Aayog has instructed concerned Ministries and Departments regarding awarding of public contracts and projects, a move that will help revive the construction sector. Construction sector has been facing a number of problems, mainly arising from the liquidity constraints caused on account of their payments not being released by the Government Departments/PSUs pursuant to the arbitral awards, the Government think tank said in a statement today.
To discuss the sector’s problems, the Aayog held detailed consultations with representatives of the industry, banks, major government PSUs and concerned Ministries, it added. Based on the deliberations/consultations, Aayog placed a proposal before Cabinet Committee on Economic Affairs (CCEA) for its consideration suggesting various short- term and long-term measures required for addressing the issues ailing the construction sector, it said. “The CCEA, chaired by the Prime Minister, has considered the proposals of NITI Aayog in its meeting held on August 31, 2016 and approved the same for the revival of construction sector,” the policy think tank said.
Accordingly, Aayog has issued instructions for compliance and necessary action by all concerned Government Departments/ Ministries/ PSUs awarding the public contracts/ implementing various projects involving construction activities, it added. The instructions say that in the case of contracts or concessions, where the process of arbitration was initiated under the pre-amended Arbitration Act, the PSUs/ Departments may seek the consent of the contractors/ concessionaires to transfer the pending cases under the amended Arbitration Act, wherever possible.
The shift to amended Arbitration Act is expected to make the arbitration process more cost effective and help in settlement of the disputes in a timely manner, the Aayog suggested.
The premier policy making body has also separately issued instructions on the subject with regard to immediate measures to be taken by all concerned for the revival of the construction sector.
These measures include substituting item-rate contracts, by EPC (turnkey) contracts, wherever appropriate. Explaining the rationale, the Aayog said such contracts have been in vogue for over two decades in the developed world. Besides, Federation Internationale Des Ingenieurs-Conseils (FIDIC – an International Federation of Consulting Engineers, known by its French acronym) has also published such contractual frameworks, it added.