A delegation that met Gandhi on Wednesday alleged that the financial strain had become acute for contractors executing public works across Maharashtra. The representatives said roughly Rs 40,000 crore was owed to small contractors, leaving many struggling to meet expenses and service borrowings.
The contractors also blamed Deputy Chief Minister Eknath Shinde, who served as chief minister from June 2022 until December 2024, for what they described as excessive sanctioning of works before the 2024 Assembly election. They alleged that tenders and work orders were issued far beyond available budgetary provisions as the then government sought electoral advantage.
Those allegations have not been established independently, and the contractors’ assertion that Maharashtra is heading towards bankruptcy is their assessment of the state’s finances rather than an official finding. Maharashtra’s budget documents for 2026-27 project a fiscal deficit of Rs 1.50 lakh crore, equivalent to 2.8 per cent of gross state domestic product, within the 3 per cent annual limit recommended for states by the Sixteenth Finance Commission.
The state’s outstanding liabilities are projected at 20.4 per cent of GSDP at the end of 2026-27, while the budget estimates a revenue deficit of Rs 40,552 crore, or 0.7 per cent of GSDP. Those figures point to fiscal pressures but do not substantiate the contractors’ bankruptcy characterisation.
The dispute over unpaid bills predates Wednesday’s meeting. Contractors’ organisations have repeatedly complained since 2024 that government departments were approving projects without matching financial provision and were delaying payment for completed work. Their demands have included clearance of arrears and a requirement that new works be sanctioned only when adequate funds are available.
By early 2025, the Maharashtra State Contractors Association and State Engineers Association were putting aggregate unpaid bills at close to Rs 1 lakh crore. They launched a stop-work agitation that February after saying repeated representations to the government had failed to secure sufficient payments.
At that stage, association president Milind Bhosale said dues included about Rs 46,000 crore from the Public Works Department, Rs 18,000 crore connected with the Jal Jeevan Mission, Rs 8,600 crore from the rural development department and Rs 19,700 crore from the water conservation department. The figures were claims by the contractors’ organisations rather than audited government arrears.
The scale of the dispute has continued to affect contractors during 2026. Bhosale said in August that government debt to contractors stood at about Rs 86,000 crore and argued that smaller firms were facing severe financial stress because payments remained blocked. He also contended that the Public Works Department had awarded works exceeding its annual budget before the 2024 election.
Contractors had raised funding concern before the 2024 election. Their associations announced a protest that October over bills then estimated at Rs 40,000 crore, arguing that departments should not award fresh contracts without financial provision. They also opposed combining smaller works into large tenders, saying the practice disadvantaged small firms and engineers.
The arrears subsequently became a wider issue as associations said delayed payments were affecting public works and employment linked to contracting businesses. Their February 2025 stoppage covered projects associated with public works, rural development and water supply programmes across the state.
The current state government is led by Chief Minister Devendra Fadnavis, with Shinde serving as one of the deputy chief ministers. Fadnavis said in January that his government had stopped urban development projects worth about Rs 40,000 crore because of cost overruns, adding that the decision had been taken in consultation with Shinde.
