Union road transport and highways minister Nitin Gadkari on Wednesday said the government will use Goods and Services Tax (GST) records to track layers of subcontracting in highway projects and is preparing rules to limit the extent to which contractors can subcontract work, amid concerns about projects being awarded at steeply discounted bids and the subsequent dilution of quality.
Addressing a Federation of Indian Chambers of Commerce and Industry (FICCI) event in New Delhi, the minister said excessive subcontracting was contributing to quality problems and that contractors sometimes offered explanations such as rain when confronted with poor work.
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“Earning money is not a crime. If you do business, contractorship, you must earn some money. But while doing the work, there must be quality work,” he said.
“Nowadays, it can be known which GST was filed for which work and by whom. So I am issuing an order now establishing the rules on what percentage a contractor can subcontract,” Gadkari added.
Gadkari said the move would target cases where work passes through multiple layers of subcontractors and projects are executed at 30-40% below the original bid.
{{/usCountry}}Gadkari said the move would target cases where work passes through multiple layers of subcontractors and projects are executed at 30-40% below the original bid.
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He referred to a recent incident in Pune, where a contractor from Punjab-Haryana won a contract by bidding 40% below the estimate and subsequently handed the work to another contractor after retaining a portion of the amount. The second contractor then handed it to a third, which resulted in poor quality of work.
He said the concerned chief general manager of the National Highways Authority of India (NHAI) was asked to forfeit the contractor’s bank guarantee and take action so that the contractor could not bid for future National Highways Authority of India (NHAI) tenders.
Gadkari also said that changes made to technical qualification requirements had contributed to the problem, calling it a “mistake.” He added that he had liberalised and diluted technical qualifications to encourage new contractors to enter the sector.