Wednesday, March 15, 2023

Railways must disburse contractor payments within 30 days or else pay interest

Railways to release payments to contractors within 30 days, else will pay interest


Delhi, India: On Tuesday, union minister Ashwini Vaishnaw stated that the railways have eliminated the "biggest risk" contractors face by establishing a new standard for releasing payments to private players within thirty days. He stated that the railways will charge interest on the amount if the payment is not made within thirty days of the invoice being issued.

Vaishnaw stated that Prime Minister Narendra Modi had asked the railways to cover the biggest risk in government contracts at the CII Partnership Summit. When we attempted that, we discovered that the greatest risk in any contract is the payment risk. How could we tackle it? Today, in the majority of the rail route contracts, in the event that the installment isn't finished in the span of 30 days of the receipt, the public authority will pay the interest to you. Might you at any point trust that? That has begun to occur. The fact that I will lose my job if I have to pay the interest has a psychological effect on those managing the contract. Therefore, instead of contractors following government employees, all payments are now digital,” he added.

Officials stated that this provision was included in all new government-funded projects and tenders.

This payment provision has been in place for many years in contracts for highway projects funded by the government that are handled by the highways ministry. The contract also states that if the government agencies fail to pay, they will pay interest that is 3% higher than the bank rate.

Vaishnaw stated earlier that the government has begun to see results from its increased focus on railways since 2014. He stated that, after decades, the proportion of cargo transported by rail has begun to increase. Logistics costs will significantly decrease as a result of a larger share in railways. "Our focus in railways is to significantly increase railways' carrying capacity," he stated.

In addition, the minister stated that the railways had identified 70 major bottlenecks, which would be resolved within the following two years. He said the public carrier has submitted a request for 85,000 carts and 1,200 trains. According to Vaishnaw, the current strategy is to add 1,000 additional locomotives annually to meet the need.

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