Association appeals to Governor amid mounting financial crisis
Munish Sood
MANDI: In a significant development that underscores the deepening financial distress within Himachal Pradesh’s infrastructure sector, the Himachal Pradesh Contractors’ Association has submitted a formal representation to the state Governor, requesting immediate intervention for the release of over Rs 2,000 crore in pending payments from various state departments.
The memorandum, submitted through the Deputy Commissioner of Mandi, outlines a deteriorating economic scenario caused by prolonged non-payment to contractors engaged in critical developmental works across departments, including Public Works, Jal Shakti, Electricity Board, HIMUDA, Industries, Forest and Telecommunications.
Payments withheld, progress stalled
The association warned that the backlog of payments, pending for several months, had triggered a domino effect, bringing construction activity to a virtual halt and pushing contractors, labourers and allied industries into an unprecedented fiscal crisis.
The crisis, as detailed in the memorandum, has multiple dimensions:
- Escalation of NPAs
Contractors’ bank accounts are increasingly being classified as non-performing assets due to irregular loan repayments, directly impacting their ability to secure further credit.
- Unsustainable interest burden
Compounded interest on overdue payments has led to an exponential rise in project costs, rendering many contracts financially unviable.
- Creditworthiness eroded
Delayed payments have caused a widespread collapse in CIBIL credit scores, permanently damaging the financial credibility of contractors across the state.
- Wage disruption for thousands
Inability to pay wages on time has affected thousands of skilled and unskilled labourers, many of whom are now facing livelihood insecurity, further fuelling social unrest.
- Supply chains on the brink
Vendors supplying essential construction materials — such as cement, steel, aggregates and transport — are facing severe liquidity constraints, breaking the financial flow of the state’s construction economy.
- Stalled infrastructure and job losses
With no fresh funding and mounting dues, ongoing projects have ground to a standstill, derailing infrastructure development and halting job creation.
- Risk of contractor insolvency
Contractors, unable to meet market liabilities due to zero cash flow, are facing the threat of insolvency and permanent business closure.
Key demands placed before government
To avert a full-blown economic and infrastructure collapse, the association has put forward five urgent demands:
- Immediate one-time payment package:
Fast-track release of all pending bills in a lump sum rather than in a phased manner. - Interest reimbursement mechanism:
Compensation or adjustment for the additional financial burden incurred due to delayed payments. - Mandatory e-billing system with 30-day cap:
Implementation of an electronic billing and measurement system that ensures payment within 30 days of submission. - Quarterly interim payments based on project progress:
Introduction of milestone-based quarterly payments to ensure uninterrupted cash flow. - Constitution of a high-level tripartite monitoring committee:
Establishment of a permanent body comprising representatives from the contractors’ association, the banking sector and the state government to facilitate regular dialogue and resolve emerging issues.
Crisis of governance, not just finance
In a joint statement, association president Keshav Nayak and general secretary Bhupinder Mahajan said, “This is not merely a financial issue but a structural governance failure. Delayed payments are crippling the foundation of development in Himachal. If unaddressed, the ripple effects will compromise the livelihoods of thousands and delay critical public infrastructure for years.”
The memorandum has been marked for urgent action to the Chief Minister, Chief Secretary and Principal Secretaries of all relevant departments, including Finance, Public Works, Jal Shakti, HIMUDA, Forest and Industries.
