Govt clears steps to revive construction, real estate

New Delhi, Aug 31 (PTI) Seeking to revive constructionand real estate sectors, the Cabinet today approved an arrayof measures including easing of rules for quicker settlementof disputes, pump in liquidity and reinvigorate stalledprojects. It allowed transfer of cases initiated under the oldArbitration Act to the new and expeditious dispute resolutionlaw, approved release of 75 per cent of the amount in disputeagainst bank guarantee and provided for a conciliation boardcomprising of independent domain experts in new contracts. Also, Department of Financial Services in the FinanceMinistry and the Reserve Bank of India (RBI) will considergiving one-time scheme for stressed bank loans in the sector. Briefing reporters after the meeting of the Cabinet,Finance Minister Arun Jaitley said the construction sectoraccounts for 8 per cent of the GDP and provides employment tosome 40 million people in the country. The banking sector’s exposure to the construction sectorcurrently stand at over Rs 3 lakh crore, and 45 per cent or RsRs 1.35 lakh crore of the loans are under stress. "We hope that a series of these decisions will pump in alot of liquidity into the sector, activate real estate andinfrastructure projects which have been stranded for sometimeand support the entire process of dispute resolution inrelation to construction and real estate," Jaitley said. An official statement said that a key factor behind thedifficulties facing the construction sector is the pendency ofclaims from Government bodies. An estimated Rs 70,000 crore is tied up in arbitration.Over 85 per cent of the claims raised against governmentbodies are still pending of which 11 per cent is pending withthe government agencies, 64 per cent with arbitrators and 8.5per cent with courts. The contractors have also been allowed to shift "withconsent" their pending disputes with public bodies to the newarbitration procedures, from the old arbitration act. This will ensure a "cheaper and a quicker fast track"arbitral process, Jaitley said. An average settlement time for claims is estimated atmore than seven years. MORE PTI JD ANZSA