Bihar’s financial health has come under fresh scrutiny after contractors alleged that the state government owes them more than Rs 50,000 crore in pending payments, while Opposition parties questioned the government’s decision to dip into the Contingency Fund to clear welfare pensions. The ruling NDA, however, has maintained that the cash flow issues are temporary and will ease once central tax transfers are received.
The controversy comes amid concerns over delayed payments across multiple sectors, with the Opposition accusing the government of fiscal mismanagement ahead of key welfare commitments.
Contractors claim over Rs 50,000 crore remains unpaid
The Bihar Contractors’ Welfare Association (BCWA) has alleged that payments worth more than Rs 50,000 crore have been pending since October last year across several government departments.
Speaking to The Indian Express, BCWA president Suyas Kumar said that the contractors working for departments such as the Rural Works Department, Road Construction Department, Public Works Department, Public Health Engineering Department, public sector undertakings and panchayat-level projects have been struggling to receive even partial payments.
He also said it has already submitted representations to the Chief Secretary and senior government officials, seeking an early release of pending dues.
Contractors also claimed that many medium-sized firms have borrowed heavily from banks and private lenders to continue executing projects, while even requests for the release of security deposits have allegedly remained pending.
Government expects relief from central tax transfers
The contractors’ body said it has been informed that the Bihar government expects to receive around Rs 1.5 lakh crore during July and August, with GST collections and central tax devolution expected to improve the state’s cash position.
According to the association, the government has indicated that payments could resume once these funds are received.
Why did Bihar use its Contingency Fund?
The debate intensified after the Bihar Cabinet approved the withdrawal of Rs 3,662 crore from the state’s Contingency Fund to clear pending social security and pension payments. The move came after pension disbursements for March and April reportedly faced delays. The state had also approached the Reserve Bank of India (RBI) seeking an emergency loan of Rs 12,000 crore, but delays in receiving the funds prompted the government to temporarily draw from the Contingency Fund.
The state government has maintained that the withdrawal was a temporary arrangement to ensure welfare beneficiaries continued receiving payments without interruption.
Leader of the Opposition Tejashwi Prasad Yadav described the development as evidence of worsening fiscal conditions, arguing that Contingency Funds are generally intended for unforeseen emergencies rather than recurring expenses such as pension payments.
The Congress also questioned the government’s financial management, linking the current situation to recent welfare announcements and arguing that increasing expenditure has put pressure on the state’s finances. Opposition parties have further alleged delays in payments related to salaries, contractor bills, scholarships and student credit schemes.
NDA dismisses concerns
The ruling NDA rejected suggestions of a financial crisis, insisting that the situation is temporary. JD(U) spokesperson Neeraj Kumar said the state’s finances would stabilise once Bihar receives its share of GST collections and central tax transfers. He also reiterated the government’s commitment to ensuring timely pension payments.
Government officials have echoed the same view, saying the Contingency Fund will be replenished through supplementary budgetary provisions after the expected inflow of central funds.
Bihar’s debt and development plans
According to the recent state Budget and RBI data, Bihar’s outstanding liabilities have risen to approximately Rs 4.04 lakh crore, accounting for nearly 34% of the state’s Gross State Domestic Product (GSDP).
Despite concerns over debt and liquidity, the state government has defended its fiscal position by pointing to its Rs 3.47 lakh crore Budget for 2026-27, which includes major investments under the Saat Nishchay-3 programme and new industrial corridor projects aimed at boosting economic growth.