India, Nov. 16 -- Welfare sops and pre-poll freebies have squeezed the state's finances, stalling payments to private contractors executing government schemes. Their pending dues are now Rs.77,770 crore.

Sameer Shaikh from Ahilyanagar was awarded a Rs.20-lakh contract to build a gram panchayat office but, for six months, he's been struggling to get the project off the ground as he's unable to raise fresh capital. Shaikh is still owed Rs.86.50 lakh for earlier projects under various government departments.

Shaikh is one of thousands of small and medium contractors whose outstanding payments with the government are holding them back from working on future contracts. While the bill in outstanding dues was a colossal Rs.89,000 crore until M...