De­fence min­istry owes 1,600cr to con­trac­tors

The Times of India (New Delhi edition) - - | POLITICS POLICY - @times­group.com

Ben­galuru: Hin­dus­tan Aero­nau­tics Ltd (HAL) may have hit the head­lines for not be­ing paid Rs 15,700 crore of its dues by the min­istry of de­fence, but the prob­lem is ap­par­ently not lim­ited to the de­fence PSUs alone. Small and medium-level de­fence con­trac­tors have also claimed that the MoD has not been pay­ing them their dues, re­sult­ing in more than 7,000 of them be­ing severely hit.

The con­trac­tors say their pend­ing bills are worth Rs 1,600 crore, and the out­stand­ing amount could touch Rs 2,000 crore by March. The min­istry owes con­trac­tors in the south­ern re­gion more than Rs 450 crore. More than 24 hours af­ter TOI sent queries to MoD, there was no re­sponse.

Of­fi­cials from the Mil­i­tary En­gi­neer Ser­vices(MES) have in­di­cated that they are grap­pling with acute funds short­age and sug­gested that con­tracts for which “there is no money to pay” be “sus­pended”. Az­izul­lah Khan, se­nior vice-pres­i­dent of MES Builders As­so­ci­a­tion of In­dia, New Delhi, the only as­so­ci­a­tion of de­fence con­trac­tors au­tho­rised by MoD, said: “Con­trac­tors have al- ➤ De­fence min­istry owes

1,600 crore in dues to more than 7,000 pvt cos

➤ Con­trac­tors in south­ern re­gion have pend­ing bills worth 450 crore

most stopped or slowed down work, have lost their mar­ket value as they’re un­able to pay sup­pli­ers.”

Ac­cord­ing to con­trac­tors, the armed forces — mainly the In­dian Air Force and the Army — owed them Rs 1,600 crore as of March 2018, pend­ing from the pre­vi­ous year. Of this, about Rs 1,000 crore was paid, leav­ing Rs 600 crore worth of bills un­cleared.

“Then the pay­ments just stopped. By Septem­ber, un­paid bills were worth Rs 1,600 crore again. We then planned ana­tion­wide strike, but the de­fence min­is­ter met us just be­fore Di­wali and promised pay­ments both be­fore and af­ter the fes­ti­val and re­quested us not to go on strike,” Khan said.

Soon af­ter, Rs 250 crore was re­leased by the MoD, leav­ing about Rs 1,400 crore in pend­ing bills, in­clud­ing a few more that were added.

“Most of the Rs 250 crore went to big con­trac­tors like L&T, and a ma­jor­ity of con­trac­tors did not get their ➤ Un­paid bills could touch 2,000 crore by March

➤ Min­istry of de­fence re­leased only 250cr be­fore Di­wali

dues cleared. The min­is­ter’s prom­ise of an­other in­stall­ment be­ing re­leased has not ma­te­ri­alised,” Khan added.

Tilak Narayanaswamy, sec­re­tary of the Ben­galuru chap­ter of MES Builders As­so­ci­a­tion, said: “The fact that MoD has not even been able to pay this much is alarm­ing. Even Rs 2 crore or Rs 3 crore money means big trou­ble for con­trac­tors. In the 30-plus years that I’ve worked with the mil­i­tary, I’ve never ex­pe­ri­enced such a sit­u­a­tion.”

A let­ter to all MES for­ma­tions in the coun­try from the en­gi­neer-in-chief of the ser­vice in Oc­to­ber last, reads: “For run­ning works where pay­ments are held up due to funds crunch and the con­trac­tor is not in po­si­tion to progress work, the work shall be put un­der sus­pen­sion…” A copy of this let­ter is with TOI and con­trac­tors said ev­ery meet­ing with of­fi­cials has elicited the same re­sponse. “There has been no de­vel­op­ment since then,” Khan said.

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