Uniform construction laws on cards

Reforms

A slew of changes in the construction sector is on the cards including enactment of a uniform construction law across the country, training programmes for construction workers, setting up of sector-specific banks and insurance policies among others.

The construction sector, which employs four crore people, has been contributing around eight per cent to the national Gross Domestic Product in the last five years, with an annual average asset creation of Rs 4.15 crore. The sector, however, remains largely unorganised.

A steering committee on construction constituted by the Planning Commission in the run-up to the formulation of the 12th Five Year Plan (2012-17) is looking at ways to provide a boost to the sector by recommending changes in regulatory framework, reviewing the present financial models for construction work and enhancing skill development of manpower.

The committee, which held its meeting in the City recently, wherein different stakeholders from construction sector including national experts participated, is deliberating on reports submitted by six working groups.

These pertain to regulatory framework, procurement system and dispute resolution, human resources development, institutional financing, quality standards and environment issue, research and development in the construction sector.

The reports of the working groups, copies of which are available with Deccan Herald, speak of formulation of a common construction law across the country. At present, construction activities are administered through 32 laws, rules and statutes. Besides, there is no singular nodal agency empowered by the government to administer construction activities. The committee, in its draft report arrived at the Bangalore meeting, is of the opinion that enacting a unified set of provisions leading to enactment of a construction law would be a major necessity.

Another major recommendation that the steering committee will be making to the Planning Commission is the establishment of a “construction bank” dedicated to suit the sector’s financial needs. Countries like China and Singapore have established construction banks.

“The construction bank can offer a wide range of consumer, retail and commercial banking products and service to consumers like retail housing finance and construction finance, investment funds and electronic banking services. The operational modalities of setting up the construction bank could be in the form of a joint venture with 51 per cent government share and 49 per cent private sector stake,” the report states. Business risks are also being addressed by recommending specific tailor-made insurance products designed for construction sector.

While the construction sector provides direct employment to four crore people in the country, only 5.65 per cent of this strength has the benefit of structured training and education. “Training, skill upgrading and certification of skills need to be taken up vigorously where the government and industry have to join hands. The resources to meet the monitory requirement could be channeled through welfare cess and Provident Fund deposits as well as from the training funds earmarked under various state and centrally sponsored schemes,” the committee has stated in its draft report.

The steering committee will be submitting its final report to the Planning Commission in the next few days, official sources said.