In a bid to revive the stuck construction and real estate projects, the Cabinet approved an array of measures to help quickly resolve disputes, pump in liquidity and deal with stressed assets. The Cabinet, chaired by Prime Minister, Narendra Modi allowed contractors to move to the new speedier arbitration process, approved release of 75% of the amount in 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% of the GDP and provides employment to some 40 million people in the country. The Cabinet decided to give option for shifting of disputes between public bodies and contractors to new arbitration act from old arbitration act. Also, during the pendency of an arbitral award being challenged by the public body, 75% of the amount will be released to contractor against a bank guarantee. The amount so released will have to be spent on discharging liabilities towards bank and financial institutions and any money left shall be used in the projects. This move is expected to infuse the much needed liquidity in the sector. 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. Besides, item rate contract would be replaced by turnkey contract and a model draft turnkey contract will be circulated.
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