Railways to release payments to contractors within 30 days, else will pay interest

NEW DELHI: Union minister Ashwini Vaishnaw on Tuesday said the railways has set a new norm of releasing payments to private players within 30 days, eliminating the “biggest risk” that contractors face. If the payment is not made within 30 days of raising an invoice, the railways will pay interest on the amount, he said.

At the CII Partnership Summit, Vaishnaw said Prime Minister Narendra Modi had asked the railways to take out the biggest risk in government contracts. “When we attempted that, we found that payment risk is the biggest risk in any contract. How did we solve it? Today, in most of the railway contracts, if the payment is not done within 30 days of the invoice, the government will pay the interest to you. Can you believe that? That has started happening. The psychological impact it has on people who are managing the contract is that if I have to pay the interest, then my job is gone. So instead of contractors running after the government officers, now it’s the reverse and all payments are digital,” he added.