Indian Economy News

Mr. Nitin Gadkari emphasises Coordination, Cooperation and Communication under PM Gati Shakti Master plan among all stakeholders for the National Highway development ecosystem

Union Minister for Road Transport and Highways, Mr. Nitin Gadkari, stated that coordination, cooperation, and communication among all stakeholders under the PM Gati Shakti Master Plan is essential for the National Highway Development Ecosystem.

At the National Highways Authority of India (NHAI) Workshop on the Implementation of e-BG and Insurance Surety Bonds for Contracts in New Delhi, he stated that decision-making must be time-constrained, transparent, and outcome driven.  

The goal of this event was to raise awareness of the benefits of e-BGs and Insurance Surety Bonds among various stakeholders and accelerate their implementation. Increased adoption of e-BG and Insurance Surety Bonds will increase process transparency and efficiency.

The workshops addressed several perspectives for suppliers and beneficiaries while digging deeper into the e-BG procedure and the regulatory framework of surety bonds.

NHAI has begun taking Bid Security and Performance Security in the form of e-BG. However, presently, only 13 banks in 19 states and union territories have the option of issuing e-BG. Despite this, about 202 e-BGs relevant to NHAI contracts have been issued by various banks in various states using the National E-Governance Services Limited (NeSL) platform to date.

NHAI is also in contact with insurance firms to investigate the usage of Insurance Surety Bonds as an additional way of submitting Bid Security and/or Performance Security Deposit. When released, the Insurance Surety Bonds will be reasonably priced and offer sufficient security for NHAI projects.

A Bank Guarantee (BG) is a Financial Instrument used as a legal contract in which a bank acts as guarantor and undertakes an obligation to pay the beneficiary a certain amount of money specified in the guarantee if the debtor from the original contract does not fulfil his contractual obligations.

Insurance Surety Bonds, on the other hand, are instruments in which insurance firms serve as 'Surety' and give a financial assurance that the contractor will execute its obligations in accordance with the agreed conditions.

As India strives to become a US$ 5 trillion economy, instruments such as the e-BG and Insurance Surety Bonds will increase liquidity and capacity, hence strengthening National Highway infrastructure construction and assisting our country's economic progress.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.