THIRUVANANTHAPURAM: The unprecedented financial crisis in the state has started showing visible signs with government contractors warning of an imminent plan holiday. Payments towards contractors’ bills have been pending with some departments and state public sector units for close to a couple of years. A planned holiday entails the suspension of all planned development.
According to the contractors’ association, there seems to be no sign of an action plan by the state government to clear the arrears. While contractors’ payments from the public works department have been due for eight months, arrears from the Kerala Water Authority have been due for 20 months. Similarly, the Kochi corporation has to release arrears for 41 months. The government’s flagship institution, the Kerala Infrastructure Investment Fund Board (KIIFB), has not settled the bills of contractors for the past five months.
The finance department has imposed a treasury ban and capped the daily expenditure bills at Rs 5 lakh. “The amount due to government contractors for works carried out for PWD, KWA, corporations, MLA-fund works, Chief Minister’s Local Road Rebuild Project and NABARD will come to around Rs 12,000 crore,” Kerala Government Contractors’ Association state president Varghese Kannambally told TNIE. In the Jal Jeevan Mission, the arrears to contractors will come to Rs 1,500 crore, he pointed out.
“This is an unprecedented situation as far as the state’s economy is concerned. As the government has stopped disbursing funds, a situation has arisen where the contractors will be forced to stop taking up new work. The contractors have no money to pay their employees. We think declaring a plan holiday in the construction sector is imminent,” Varghese said.
Jal Jeevan Mission projects are implemented with the Union and state governments each bearing 45% of the cost. The remaining 10% is the beneficiary amount. Although the Union government has the funds, it will disburse the amount only if the state government releases its share. The bills for the work carried out for NABARD too face the same fate.
According to the association, the situation worsened after the Centre incorporated loans taken by KIIFB in the state’s overall borrowing limit. However, the finance department has denied owing increasing arrears to the contractors. “It is not possible that the government owes Rs 12,000 crore in arrears to government contractors,” said Jose T Abraham, additional private secretary to finance minister.
“Under no circumstance can this figure be correct. There may be a few isolated cases. The government has been issuing the funds through the bill discounting scheme via banks. In this scheme, the payment for bills up to six months will be received as advance payment. Banks charge a percentage from the customers. Of this, half will be paid by the government.”
The contractors’ association has demanded the government make available an option through forming a consortium of banks or ask for grants from the Centre. They had approached Governor Arif Mohammed Khan seeking his intervention to avoid the stalling of work and the disbursement of funds. In a petition to the governor, the association warned that the construction sector will come to a standstill if the issue is not solved by January.
PENDING BILLS