Gujarat: Entrepreneurs cite escalating costs, threaten to block government projects, including PMAY

In the face of escalating commodity prices during the Covid-19 pandemic, the Gujarat Contractors Association (GCA) has threatened to block work on various government-funded projects that include 1.5 lakh of housing under construction under the Pradhan Mantri Aawas Yojana (PMAY) before Vibrant Gujarat summit.

Interacting with media representatives on Monday, association president Arvind Patel said, “We will not be able to complete ongoing state government projects at old rates. Raw material costs increased by 30-40% during the Covid-19 pandemic. This includes the prices of steel, cement, bitumen, gravel, sand, bricks, freight and labor costs. The financial situation of the entrepreneurs has become so dire that they are forced to shut down projects, which include PMAY projects worth Rs 15,000 crore.

The GCA, he said, has already made representation to the government of Gujarat regarding escalating prices in the projects of the Roads and Construction Department, the Urban Development Department, the Irrigation Department and police housing on Dec. 7, but the government has so far remained silent.

“Because of the Covid, work had stopped on government projects and the deadlines had been extended. The government did so without compensating us for the rise in prices… In central government contracts, the price indexation clause is incorporated. This is not the case with state government projects, especially those with a duration of 12 months or less. For projects with the price indexation clause, the upper limit is five percent, ”said Kishore Viramgama, vice-president of the association.

According to GCA, in addition to PMAY projects worth Rs 15,000 crore that are underway in Gujarat, there are ongoing projects worth Rs 25,000 crore from other departments.

“We are aware that the government can confiscate our deposits and put us on a blacklist. But the price escalation is such that we cannot continue. The losses we face are much more than the money deposited with the state government. How can the entrepreneur invest his own money in finishing projects, ”added Viramgama.

On Monday, members of the association met and decided not to participate in tenders launched by the state government from January 8.

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