Recently, Finance Minister Nirmala Sitharaman confirmed an additional capital expenditure of Rs 18,000 crore for the urban housing scheme to help complete real estate projects that would build employment and improve the economy. 

Sitaraman Granted Huge Financial Aid for Urban Housing Scheme

The financial aid will be granted to Prime Minister Awas Yojana (Urban) by additional allocation and extra-budgetary support over and above the Budget Estimates for 2020-21.

The move would help to begin work on 12 lakh houses as well as 18 lakh houses in total. As well as it will generate demand for steel and cement and 78 lakh new jobs. While announcing funding for construction and infrastructure, Sitaraman said that Earnest Money Deposit (EMO) and performance security requirements would be relaxed for government tenders.

Instead of 5 to 10%, performance security on contracts will be reduced to 3 percent. This will be extended to ongoing, dispute-free contracts. It would also be applied to public sector firms, and states would also facilitate the implementation of the same. For tenders, the Earnest Money Deposit (EMD) will not be needed and will be replaced by a bid security report.

This relaxation will be given until 31 December 2021, also providing contractors relief by reducing the lock-up of capital and the cost of bank guarantees.

By: Shailaja K