Govt working on reviving construction sector: PM Modi
Construction sector was badly affected between 2011 and 2014 and the government is working to revive it through short-term and long-term measures, Prime Minister Narendra Modi said Friday, while citing the recent CCEA decision as a step in this direction.
New Delhi: Construction sector was badly affected between 2011 and 2014 and the government is working to revive it through short-term and long-term measures, Prime Minister Narendra Modi said Friday, while citing the recent CCEA decision as a step in this direction.
"At the CCEA and Cabinet meeting on August 31, 2016, the Government of India took crucial decisions aimed at giving a boost to FDI, investments and ?Make in India'," Modi said.
"I am glad that the CCEA approved key measures to give a boost to the construction sector, whose growth is very vital for the Indian economy," he added in a post on LinkedIn.Com.
He said that from 2011 to 2014, the construction sector was "badly affected by large number of stalled projects" and "this period of stagnation affected the economy badly."
The NDA government, he said, is constantly working to address these issues.
"The Government fully understands the need for short term and long-term measures to revive the construction sector," the Prime Minister said, adding "for the long run, measures we are considering include changes to bid documents and model contracts and increased use of conciliation."
In this context, he referred to the CCEA decision under which government agencies would pay 75 percent of the arbitral award amount to an escrow account against margin free bank guarantee, in those cases where the award is challenged. The escrow account can be used to repay bank loans or to meet commitments in ongoing projects.
This will allow recovery of loans by banks and allow construction companies to speed up execution of ongoing projects, according to an official press release on the CCEA decision.
It will also increase the ability of construction companies to bid for new contracts and the resulting competition will be beneficial in containing the costs of public works. This measure will provide a stimulus to the construction industry and to employment, the press release added.
Modi also referred to another decision of the Cabinet related to Permanent Residency Status to Foreign Investors. This scheme grants Permanent Residency Status (PRS) to foreign investors (subject to the relevant conditions as specified in the FDI Policy notified by the Government from time to time).
"This scheme is notable because it will facilitate more investment and reduce hurdles for foreign investors," he said.
"The measures cleared are in line with our - reform to transform - approach targeted at liberalizing the economy and making business easier and more attractive in India," the Prime Minister said.