Twelve construction stocks rose 0.08% to 19.83% at 15:15 IST on BSE after the Union Cabinet approved initiatives to revive the construction sector.
HCC (up 19.83%), Unity Infraprojects (up 14.01%), Gammon Infrastructure Projects (up 6.71%), NCC (up 4.12%), Valecha Engineering (up 3.55%), Tarmat (up 2.31%), Patel Engineering (up 2.24%), KNR Constructions (up 2.14%), NBCC (up 1.17%), Man Infraconstruction (up 0.51%), RPP Infra Projects (up 0.14%) and Sunil Hitech (up 0.08%), edged higher. Sadbhav Engineering (down 0.25%) and IRB Infrastructure Developers (down 0.62%) edged lower.
The S&P BSE Sensex was up 152.11 points, or 0.54% at 28,495.12.
The Cabinet Committee on Economic Affairs (CCEA) today, 31 August 2016, approved a series of initiatives to revive the construction sector. As per the new initiatives, CCEA allowed contractors to move to the new speedier arbitration process, approved release of 75% of the amount in dispute against margin free bank guarantee and provided for a conciliation board comprising of independent subject experts in order to ensure speedy disposal of pending or new cases.
Item-rate contracts, may be substituted by engineering, procurement, and construction (turnkey) contracts, and PSUs/departments may adopt the model EPC contracts for construction works. The Department of Financial Services, in consultation with Reserve Bank of India, may evolve a suitable one-time scheme for addressing stressed bank loans in the construction sector, the government said in a statement.
These initiatives are expected to help in improving the liquidity in the short run and reform the contracting regime in the long run. Given the significant multiplier effect the construction sector has on the economy, these measures are expected to give a major boost to economic growth. As the sector provides the largest segment of direct and indirect employment, the revival of the sector would also help in significant employment generation, according to the government statement
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