The government plans to use Goods and Services Tax records to track subcontracting in highway projects and identify how work is passed between contractors, Union Road Transport and Highways Minister Nitin Gadkari said on Wednesday. The move comes amid concerns that excessive subcontracting and heavily discounted bids are affecting the quality of highway construction. The government is also preparing rules to limit the extent to which contractors can subcontract project work.

Speaking at a Federation of Indian Chambers of Commerce and Industry event in New Delhi, Gadkari said multiple layers of subcontracting can weaken accountability and affect construction standards. He said contractors must be allowed to earn profits but stressed that this should not come at the expense of quality. GST records, according to the minister, can help authorities identify which company carried out work and track the financial transactions associated with a project.

Gadkari said the proposed rules would establish limits on the percentage of work that a contractor can subcontract. The government is particularly concerned about projects where contracts are awarded at significantly lower prices and the work is subsequently passed through several contractors. He said some projects have been executed after bids were placed 30 to 40 per cent below the original estimates, creating pressure on contractors and potentially encouraging cost-cutting during construction.

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The minister cited a recent case in Pune to illustrate the problem. According to Gadkari, a contractor from Punjab-Haryana secured a project by bidding around 40 per cent below the estimated cost and later handed the work to another contractor after retaining part of the amount. The second contractor subsequently passed the work to a third contractor. Gadkari said the resulting multiple layers contributed to poor-quality construction.

Following the incident, the concerned National Highways Authority of India chief general manager was instructed to take action against the contractor. Gadkari said the contractor’s bank guarantee was to be forfeited and steps were being taken to prevent the firm from participating in future NHAI tenders. The minister also acknowledged that changes to technical qualification requirements had contributed to the situation, describing the earlier liberalisation of those requirements as a mistake.

The proposed monitoring mechanism is intended to strengthen accountability throughout the highway construction chain. By using GST information to examine subcontracting arrangements, authorities could gain greater visibility into who actually executes work after a contract is awarded. Gadkari’s comments indicate that the government wants to reduce excessive subcontracting, discourage unsustainable bidding and ensure that highway projects maintain required quality standards from the primary contractor through to the final execution stage.

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