Reserve Bank of India (RBI) is formulating a one-time package for the construction sector, government sources said on Wednesday.
Reserve Bank of India (RBI) is formulating a one-time package for the construction sector, government sources told ET Now on Wednesday. This is aimed at improving cash flow for debt trapped construction sector. “The announcement of the package will be made in 7-10 days. The package will likely include relaxation in debt payment period,” sources said. “Impact on banks will be minimal from construction package and it will also include relaxation in margin money rules,” sources added.
In a bid to revive the stuck construction and real estate projects, the Cabinet recently approved an array of measures to help quickly resolve disputes, pump in liquidity and deal with stressed assets. The Cabinet allowed contractors to move to the new speedier arbitration process, approved release of 75 per cent of the amount in the 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 the functioning of the construction sector,” he said. “We have simplified arbitration law so that the process of dispute redressal could be made easier. We have also allowed the establishment of the commercial court,” Jaitley added. 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.