Bihar finances in spotlight: Contractors say govt owes Rs 50,000 crore, Opposition flags contingency withdrawal

5 min readPatnaJul 4, 2026 07:00 AM IST

Leader of the Opposition and RJD working president Tejashwi Prasad Yadav said the move reflected a worsening fiscal situation. (File)

The Bihar Contractors’ Welfare Association (BCWA) and Opposition parties have raised concerns over the state’s financial health, citing unpaid contractor dues and the government’s recent decision to draw from the Contingency Fund to meet welfare expenditure. The ruling NDA, however, dismissed the criticism, describing the situation as temporary.

The BCWA claimed that contractors are owed more than Rs 50,000 crore by various government departments, with payments allegedly pending since October last year.

BCWA president Suyas Kumar, alias Munna Singh, told The Indian Express: “Contractors across almost all government departments, including the Rural Works Department, Road Construction Department, Public Works Department, Public Health Engineering Department, several PSUs, and those working at the panchayat levels, have been running from pillar to post for the last six months to secure even partial payment of their dues. We have already submitted representations to the Chief Secretary and secretaries of various departments.”

Singh said the association had been informed that the state government expected to receive around Rs 1.5 lakh crore in July-August, with GST collections forming a major component of the inflow.

“Most of our contractors operate on a medium scale and rely on loans from open markets and banks. We have even requested the return of our security deposits, but even that is not being conceded. Such prolonged non-payment is unprecedented,” he claimed.

Contingency Fund

Further concerns were raised following the state Cabinet’s recent decision to withdraw Rs 3,662 crore from the Contingency Fund to clear pending social security and other pension payments.

When pension disbursements for March and April ground to a halt, the Bihar government had approached the Reserve Bank of India (RBI) for an emergency Rs 12,000 crore loan. However, with tranches of that RBI loan facing delays, the government dipped into the Contingency Fund to continue welfare measures for pensioners.

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Leader of the Opposition and RJD working president Tejashwi Prasad Yadav said the move reflected a worsening fiscal situation.

“Bihar is going through a financial emergency. Under Article 267 of the Constitution, a state’s Contingency Fund is traditionally reserved exclusively for unbudgeted, unforeseen crises, such as natural disasters — not for predictable, recurring government obligations like monthly pensions. Political and fiscal records indicate that this is a first-of-its-kind move in Bihar’s recent history. The state has never previously used emergency reserves to cover monthly welfare pensions, fuelling allegations of severe structural mismanagement,” he said.

Bihar Congress spokesperson Asit Nath Tiwari also questioned the government’s fiscal management.

“The fact that the state Cabinet recently decided to levy toll taxes on state highways is proof enough that the state finances are in bad shape. This is the direct result of the NDA overdoing populism to win the last elections,” he said.

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The Opposition has linked the fund crunch to a series of welfare measures announced by the NDA government, including enhanced social security pensions, the Mukhya Mantri Mahila Rozgar Yojana and electricity bill waivers for eligible consumers.

Temporary, says NDA

The ruling alliance rejected the allegations.

JD(U) spokesperson Neeraj Kumar said, “Things will settle by July once we receive central tax transfers. The Opposition must not hit the panic button. The Chief Minister has already assured that pensions are a fundamental right and will be duly paid.”

A senior government official also maintained that the situation was temporary. “We will soon receive our share of GST and other central taxes. This is just a temporary phase,” the official said.

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Chief Minister Samrat Choudhary had recently said pending pension payments would be cleared and the situation would normalise once central tax transfers were received.

The state government has also maintained that the use of the Contingency Fund was a temporary measure to ensure uninterrupted welfare payments and that the fund would be replenished through supplementary budgetary provisions.

According to RBI data and the latest Budget, Bihar’s total outstanding liabilities have climbed to Rs 4,03,868 crore in 2026, accounting for roughly 34% of the Gross State Domestic Product (GSDP).

The Opposition alleged that this has caused persistent delays in salary payments, contractor dues for projects cleared in the 2023–24 cycle, student scholarships, and student credit card schemes.

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However, the government pointed to its ambitious Rs 3.47 lakh crore Budget for FY2026–27, which targets aggressive development through its Saat Nishchay-3 programme and new industrial corridors, as proof that Bihar’s economic foundations remain on an expansionary path.

Santosh Singh is a Senior Assistant Editor with The Indian Express since June 2008.

Expertise

He covers Bihar with main focus on politics, society and governance.

Investigative and explanatory stories are also his forte. Singh has 25 years of experience in print journalism covering Bihar, Delhi, Madhya Pradesh and Karnataka.

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