Some 400 disputes between government agencies and contractors, involving a substantial sum of money, are stuck in arbitration and courts.

The Ministry of Road Transport and Highways (MoRTH) expects the government’s Vivad Se Vishwas (dispute to trust) to speedily resolve these cases and unlock stuck capital.

But for this to happen, claimants must fulfil the eligibility criteria for filing of dispute resolutions and adhere to submission deadlines. According to a recent notification from the finance ministry, the deadline for submitting claims under the Vivad Se Vishwas scheme has been extended until December.

However, the deadline has already passed for challenging a legal order in an existing dispute.

Arbitration orders passed up to 31 January 2023, and court awards up to 30 April 2023, qualify for a one-time settlement of claims. The ministry now wants an extension of this eligibility cut-off date till the end of November to bring more disputes for resolution.

“Based on the suggestions from the industry, the ministry has sought extension of the scheme eligibility. This would unlock a lot of capital that could be deployed for road and highway construction,” one of the two people quoted above said.

P.C. Grover, director general of the National Highway Builders Federation (NHBF), added, “We had requested MoRTH to take up the issue of amending the eligibility criteria for settlement of disputes under Vivad Se Vishwas with the finance ministry to maximize benefit to the industry and reduce disputes.”

Determining the actual amount entangled in these disputes is challenging as it varies from total project costs, he added.

In its letter to the roads secretary, NHBF has sought an extension of the eligibility criteria for arbitration awards from the 31 January to 31 August. Additionally, they sought an extension for court orders, from 30 April to 30 November 2023, for resolutions under the scheme.

The finance ministry had initially set a deadline for new claim submissions— ones that are not challenging an order—to 30 October. However, it has now extended it to 31 December.

Queries to MoRTH and the finance ministry did not elicit any response till press time.

The Vivad Se Vishwas scheme is particularly significant for the roads and highways sector, as it promises to unlock capital that can be used to expedite the construction of more highways.

Highway construction has been slowing over the past couple of years, and has been progressing at a sluggish pace in FY24. In the first seven months of the current fiscal year, only 4,474 km of highways had been constructed, falling well short of the 13,800 km target.

The pace of road awards is even slower, with only about 2,595 km awarded in April-October, compared with over 5,000 km a year ago. The target for awards this year is 12,500 km.

Delays in approving revised cost estimates for Bharatamala Phase 1 projects also impacted highway awards, while a significant portion of contractors’ and builders’ liquidity is tied up in disputes. According to a report by SBI Caps, national highway awards saw a subdued first half, though there was an uptick in September, with awards in Q2 closing only 6% up from a year ago.

Awards might decline compared with FY23, to 10,500 km in FY24, below the target set by MoRTH.