Why Public Works needs to work for private!
Have you noticed that the size of project execution has grown manifold? New projects worth Rs 1.95 trillion were announced in the January to March quarter, up from Rs 1.20 trillion in the previous quarter. The capacity of companies in delivering larger projects has expanded. Earlier, we would rarely discuss a few mega projects concurrently in progress. But now, we have the launch of the Rs 167 billion Navi Mumbai International project; the finalisation of 18 bidders for the Rs 460 billion Mumbai Nagpur expressway for which work is expected to commence this September; launch of the Rs 79 billion fourth container project at JNPT to be operated by Singapore ports - all have raised the bar on value, scale and size. However, the construction sector's share in India's overall gross value declined to 7.4 per cent in the financial year 2017-18 (FY18) from 9.6 per cent in FY12 owing to poor demand in the real estate sector and lower capital expenditure. Essentially, private sector spending, which contributed a big chunk in infrastructure, has remained shy, and public spending purses have opened to drive the momentum.
The government has finally recognised this imbalance and the GST council is likely to reduce tariff from 28 per cent to 18 per cent for paints, cement, plywood, plaster, etc, later this month to give a fillip for building materials. The PMAY drive to build 'Housing for All by 2022' has Rs 600 billion being deployed to build 12 million houses with 0.3 to 0.5 million houses being built every month! Recently, the consortium of Tata Projects, Capacit'e Infraprojects and CITIC Group has been awarded a Rs 117.44 billion project by the Maharashtra Government for redevelopment in Mumbai. This year is all about stepping up awarding of contracts and expediting execution and we are likely to see results of construction companies improve. Non-clarity of our tax laws has been a major reason for litigation and corruption. This has helped the legal profession but paralysed our economic growth. While our ranking in the Ease of Doing Business improved to the 100th position among 190 countries, we are still ranked 119th in paying taxes, 164th in enforcing contracts, and 181st in dealing with construction permits.
Contractors are yet to be compensated by the Public Works Department (PWD) of various states for GST compensation on rates reduced from 18 per cent to 12 per cent for government contracts. Since, Tier-II and Tier-III centres are driving growth in aviation, automobiles and e-commerce, the 13th Construction World Architect & Builder (CWAB) Awards are going "Regional" too. Having completed Kolkata, CWAB is concluding its 'Regionals' in Pune, Bengaluru and Delhi and recognising talent all round. Get set for CWAB 2018 scheduled on 12th September in Mumbai.
Check website for more details: www.CWABawards.com