Rangarajan Panel: Pay entire premium before project completion

The panel headed by the Prime Minister’s Economic Advisory Council Chairman Mr. C Rangarajan to look into issues related to premium rescheduling for developers of highway projects has come out with its recommendations. According to the recommendations proposed, road developers should submit the entire premium amount three years before the completion of the entire contract.

75% of premium to be paid in the first three years:

As per one of the proposals made by the panel, 75% of the premium payable to the government will be restructed in the first three years of the contract. Besides, the entire premium amount should be paid by the developer three years before the contract expires. It is expected that the Rangarajan panel will submit its report to the Finance ministry at the earliest. No further details regarding the report was known as of now.

Panel entrusted with formulating guidelines:

While the panel was entrusted with the task of formulating guidelines to the proposal, the task of implementing the recommendations proposed will be the responsibility of the National Highways Authority of India (NHAI). The panel includes representatives from the Finance ministry, Road minsitry as well as the Planning Commission. The panel was constituted after the proposal put forward by the Road ministry was cleared by the Cabinet Committee on Economic Affairs.

Part of premuim to be paid in first year of project:

Presently, a certain amount of premium is paid by the developer company to the government in the first year of the project. This amount keeps increasing in subsequent years. This proposal was put forward in light of the fact that many private infrastructure companies had pulled out of infrastructure projects due to delays faced regarding land acquisition issues as well as due to issues related to obtaining environment clearances.