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Govt gives big push to construction but labor shortage a concern

construction sector

In a move that will provide relief to the country’s construction sector, the Centre has decided to clear all pending payments that are due to the contractors. While all payments till the month of March have been cleared, the dues for April will be released in the next few days.

The government has also allowed extension of time for completion, Abhinav Singh, transportation and highways expert and chairman, YKS Infrastructure Group, told IN. Barring the red zones, construction of highways has already resumed in most places. “The government has been proactive in dealing with most of the problems and importantly the pending dues have been cleared, which is critical for the construction sector,” he said.

However, Singh said that the main challenge which the construction sector faces is the acute shortage of labor force, even as work resumed at most places. This will lead to uncertain delays in completion of projects. About 50 to 60 per cent of the on-site laborers have returned to their native villages. Singh also said that the machinery—the overall cost of which could be about Rs 50,000 crore—mostly has been procured through bank loans.

“The government is seriously looking at easing the liquidity constraints of construction companies. Both the government and the RBI are pulling all stops to increase liquidity and stabilize the financial market through various financial instruments and policy reforms,” Singh added. Meanwhile the government is set to issue tenders for 3,000 km of roads on build-operate-and transfer (BOT) and engineering, procurement and construction (EPC) models where it is expected that the private sector will invest in greenfield projects, despite the prevailing conditions and risk aversion.

“The focus would be on reforming project planning, execution and implementation under public-private partnership (PPP). The dispute resolution process would be in sharp focus under the system,” Singh said. He also pointed out that the slowdown in construction will lead to significant cost and time overruns.