NEED FOR REGULATING THE CONSTRUCTION INDUSTRY IN INDIA SK Tripathi, Director (Corporate Planning), HUDCO
Introduction - Construction Industry plays a major role in the economic growth of a nation and occupies a pivotal position in the nation’s development plans.
India’s
construction industry employs a work force of nearly 32 million and its market size is worth about Rs. 2,48,000 crores. It is the second largest contributor in the GDP after the agricultural sector. Also Construction sector is viewed as a service industry. It generates
substantial
employment
and
provides
growth
impetus
to
other
manufacturing sectors like cement, bitumen, iron and steel, chemicals, bricks, paints, tiles etc. whose combined value is Rs. 1,92,000 crores annually. The construction industry today is a whirlpool of progressing at a very fast speed.
opportunities and advancements
It is vital because of the desperate need for
infrastructure development. The level of a country’s development is reflected by its infrastructure.
It could be said that the construction industry is the infrastructure of
the infrastructure industry.
Combining in itself the potential for employment &
providing the critical infrastructure for practically every economic activity, the construction industry should be able to play a decisive role in the development of the nation. Houses, apartments, factories, offices, schools, roads and bridges are only some of the products of the construction industry. The industry’s activities include work on new structures as well as additions, alterations and repairs to existing ones.
The construction industry is divided into three major segments: ¾ General Construction contractors build residential, industrial, commercial, and other buildings. ¾ Heavy civil engineering construction contractors build sewers, roads, highways, bridges, tunnels, and other projects.
¾ Speciality trade contractors are engaged in specialized activities such as carpentry, painting, plumbing and electrical work. A significant factor constraining the growth is that construction sector continues to be governed by a host of laws, rules and regulations. This may have been manageable in the bygone era of low technologies, easy, non-competitive, not so efficiency-oriented environment and attitudes then prevailing but not so now.
Further, most of these
legal provisions being applied to construction were tailored mainly to suit the needs of other sectors. Many of these are not optimally suited & may be, some are not even appropriate to the specific sector of construction. The effects of these staggered and diverse regulations and the multifarious monitoring wings of the Government are the perennial and unnecessary time delays and cost overruns, which ultimately act as a dampener to the growth of the national economy. There are over 10 million building and other construction workers in India.
These
workers are one of the most numerous and vulnerable segments of the unorganized sector in India. The building and other construction works always face inherent risk to their lives and limbs when at work. The work is also characterized by its causal nature, temporary relationship between employer and employee, uncertain working hours, lack of basic amenities and inadequacy of welfare facilities.
Although the provisions of
various Labour Laws i.e. Minimum Wages Act, 1948, Contract Labour (Regulation & Abolition) Act, 1970 and Inter-State Migrant Workmen (Regulation of Employment & conditions of Services) Act, 1979 etc., are applicable to the building and other construction workers, a need was felt for a comprehensive Central legislation for this category of workers. Towards the above goal the following two enactments have come on the Statute Book w.e.f. 20.8.96, initially brought in as ordinances on 03.11.95. a. The Main Act - The Building & Other Construction Workers (Regulations of Employment and Conditions of Service) Act, 1996 : and b. The Building & Other Construction Workers’ Welfare Cess Act, 1996. a)
The Main Act of 1996 aims to provide for regulation of employment & conditions of service of the building and other construction workers as also their safety, health and welfare measures in every establishment which employs or employed
during the preceding year ten or more workers. The exception made is only in respect of residential houses for own purpose constructed with a cost not exceeding Rs. 10 lakh and such other activities to which the provisions of Factories Act, 1948 and Mines Act, 1952 apply. Some of other main provisions of the Main Act of 1996 are given below: 1. Provisions for an Advisory Committee at the Central and the State levels with the function to advise the Governments concerned on such matters arising out of the administration of the Act as may be referred to it. 2. Provision for registration of each establishment within a period of sixty days from the commencement of work to ensure that there are no malpractices and to discourage non-compliance of law by circumventing. 3. Provision for registration of building workers as beneficiaries under this Act. 4. Provision for constituting a Building and Other Construction Workers’ Welfare Board by every State Government to exercise the powers conferred on, and perform the functions assigned to it, under the Act. 5. Provision for immediate assistance in case of accidents, old age pension, loans for construction of house, premia for group insurance, financial assistance for education, to meet medical expenses, maternity benefits etc. 6. Provision for health and safety measures for the construction workers in conformity with ILO convention No. 167 concerning safety and health in construction revising the Safety Provisions (Building) Convention, 1937. For this purpose comprehensive Central Rules i.e. Building & Other Construction Workers (Regulation of Service and Conditions of Service) Central Rules, 1998 have been notified by the Central Government. 7. Provision for constitution of safety committees in every establishment employing 500 or more workers with equal representation from workers and employers in addition to appointment of safety officers qualified in the filed. 8. Provision for penalties of fine and imprisonment for violation and contravention of the Act. b)
The Cess Act of 1996 provides for the levy and collection of a cess on the cost of construction incurred by employers with a view to augment the resources of the Building & Other Construction Workers’ Welfare Boards constituted under the Building & Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996. It extends to the whole of India and came into force on the 3rd day of November, 1995.
Under this Act 1% cess shall be collected from every employer where the cost of construction is more than Rs. 10 lakhs. The proceeds of the cess so collected shall be paid by the local authority of the State Government collecting the cess to the Board after deducting the cost of collection of such cess not exceeding 1% of the amount collected. Further, the Central Government may, by notification in the Official Gazette, exempt any employer or class of employers in a State from the payment of cess payable under this Act where such cess is already levied and payable under any corresponding law in force in that State.
Responsibility for enforcement of this Act
primarily lies with the State Government / Union Territories. Besides the above, the National Building Code
(NBC) of India, 2005 is a national
instrument providing guidelines for regulating the building construction activities across the country. It serves as a Model Code for adoption by all agencies involved in building construction works be they Public Works Departments, other government construction departments, local bodies or private construction agencies. The Code mainly contains administrative
regulations,
development
control
rules
and
general
building
requirements; fire safety requirements; stipulations regarding materials, structural design and construction (including safety); and building and plumbing services. In a nutshell, a plethora of Acts, regulations and rules exist to check and throttle the growth of construction sector.
It is not advocated that there should be no regulations
to oversee the construction industry but the need of the hour is to streamline, consume and evolve a regulatory uniform Construction Law which should not only ensure welfare of construction workers, ensure quality products but also should oversee and check the profiteering tendencies of the construction agencies and contractors. The Law should also seek and eliminate the ill-efforts of unscrupulous contractors and builders who create artificial shortages in the market and jack up the prices, by enacting a uniform nationwide Construction Act taking all important issues from various existing laws and including even new issues like the extent of profit margins one is allowed to earn. This will go a long way in protecting the workers & consumers alike and will provide for reasonable profits for the agencies ensuring safety & quality of construction. *****
