Reduce loans, costs: Gadkari to builders

Nagpur: A number of infrastructure contractors have burnt their fingers by depending on loans to carry out works, said Union transport minister Nitin Gadkari. Works get delayed due to procedures and clearances, but the interest burden only piles up leaving the businesses in crisis, he said.
“It has been my experience in the ministry that a number of infrastructure contractors are in trouble due to heavy debts,” said Gadkari, advising builders to reduce their dependence on loans. He was speaking at a TOI-Maharashtra Times event on real estate at Nagpur on Friday.
On the sidelines he later told TOI that apart from bank loans builders are also borrowing from private sources, paying as much as 18% interest. Gadkari said it is better for builders to have 50% of their own funds and rest debt for their ventures. “Clearances take too long. It is a priority in the Niti Ayog these days to ensure transparent and corruption-free clearances by corporations,” he said.
Gadkari also stressed on reducing the cost of construction through innovative methods. Citing an example, he said lately he has approved a Malaysian technology which reduces the number of piers in a bridge. At present, standard distance of 30 meters has to be maintained between two piers. The new technology allows gap of 120 meters with the use of steel fibre. This can lead to major cost reduction and also do away with the monopoly of steel bar makers by using an alternative material.
“Once there are alternatives, the rates of steel, which have been jacked up would come crashing down. The costs need to be cut through innovations,” said the minister.
Gadkari asked realty players to make homes more affordable by reducing costs. At present, around 10% of the population in Nagpur can afford homes upto Rs10 lakh. In Mumbai, the limit is of Rs50 lakh. The costs should come down, he said.