State to raise funds to pay road contractors 19,500 cr in dues

In FY2025-26, the outstanding sum was ₹29,049 crore, against which a budgetary provision for ₹12,785 crore was made. Of this, the government has paid ₹12,345 crore, while the release of ₹5,585 crore is in the pipeline

MUMBAI: The cash-strapped state government plans to raise money to make outstanding payments of around ₹ ₹19,500 crore to road contractors, through supplementary demands and interest-free loans from the central government. Bills amounting to ₹19,502 crore are part of road construction contracts worth ₹46,000 crore awarded before the Lok Sabha and assembly elections last year.

Picture for representation (HT PHOTO)

According to figures with the state public works department (PWD), the state paid ₹20,799 crore to contractors between January and October, towards outstanding bills. In FY2025-26, the outstanding sum was ₹29,049 crore, against which a budgetary provision for ₹12,785 crore was made. Of this, the government has paid ₹12,345 crore, while the release of ₹5,585 crore is in the pipeline. The government is still falling short of ₹11,119 crore, owed to contractors.

“The PWD plans to raise ₹11,119 crore by way of supplementary demands, which it will table during the winter session of the state legislature. Alternatively, it could raise a soft loan from the central government. The state, with its financial constraints, cannot earmark over ₹2,000 crore in supplementary demands, and there are limitations also on borrowing from the central government,” said an official from the PWD.

An official with the state finance department said the financial crisis has also prevented the government from awarding new road contracts. “While the annual budget for road contracts is ₹18,000 crore, contracts worth ₹46,000 crore were allotted prior to the elections last year,” he said.

“The spillover of contracts awarded against the available budgetary outlay will remain for at least two years. Due to this, the government has not been able to award fresh road construction or maintenance contracts, which in turn, has resulted in the deterioration of roads,” the official stated.

The annual budgetary outlay includes a provision for construction of state highways, district roads and bridges; repayment of Nabard-ADB-central government loans; the state’s contribution to hybrid annuity; and also construction of buildings.

Of the annual budgetary allocation, nearly half is meant for construction of state- and district-level roads, but no new construction has been undertaken in FY25-26 as the allocation has been utilised to repay outstanding bills, according to officials from the PWD department.

With the situation escalating, at a recent meeting, the government decided to approach the centre for an interest-free loan to clear outstanding payments to contractors.

Milind Bhosale, president, Maharashtra State Contractors’ Federation, said that apart from dues from the PWD, other government departments too owe a substantial sum to the same contractors. “There are no new projects undertaken by the government in FY2025-26, which has resulted in the industry coming to standstill. We have over 3 lakh contractors with over 2 crore workers under them. In the absence of new contracts, the labourers are unemployed,” Bhosale said.