Bengaluru: The Karnataka Government has released Rs 2,400 crore towards pending contractor bills in the irrigation department over the past three days, amid growing pressure from the Karnataka State Contractors’ Association over an estimated Rs 38,000 crore in unpaid dues.
The release comes shortly after the contractors’ association warned of protests across the State if its outstanding bills were not cleared. The association has said that payments have remained pending for several years and that delayed settlements have increased the financial burden on contractors.
The government had earlier set aside Rs 1,400 crore specifically for clearing pending irrigation bills. Officials have now indicated that departments will be allowed to use funds from the next quarter earlier than scheduled to settle pending bills while continuing ongoing works.
Rs 2,400 crore released for irrigation bills
According to government officials cited in the report, Rs 2,400 crore has been released to the irrigation department during the past three days.
The irrigation department is reported to have the largest share of pending contractor payments. The government had already earmarked Rs 1,400 crore for clearing bills in the department.
Officials said the Finance Department would issue the necessary no-objection certificate for the release of funds. A similar exercise could subsequently be considered for clearing pending bills of contractors working with the Public Works Department.
The latest release is part of an effort to manage pending liabilities within the existing budgetary framework rather than provide an entirely new allocation.
Contractors say release is not enough
The Karnataka State Contractors’ Association has welcomed the movement of funds but said the amount released remains far below the total dues claimed by contractors.
Association president R. Manjunath said the Rs 2,400 crore release amounted to less than 10% of the overall dues claimed by the association. He also questioned the practice of releasing payments at intervals of several months instead of clearing the outstanding amount in a single settlement.
The association has estimated the total pending bills at around Rs 38,000 crore across several government departments.
The issue has affected a large number of contractors across Karnataka. The association has claimed that around 1.5 lakh contractors are waiting for payments for works completed over the past several years.
Association had threatened statewide protests
The release of funds comes amid an escalating dispute between the contractors’ association and the State Government.
The association had warned that it would organise protests in all districts if the outstanding dues were not cleared. Under the proposed programme, contractors planned to march from their district association offices to the respective Deputy Commissioner’s offices and submit representations demanding payment of their bills.
The association had also given the government a November deadline for addressing the dues issue.
The contractors have repeatedly raised the issue of payments being delayed for bills dating back to 2021-22. They have argued that prolonged delays have affected their ability to repay loans and meet financial obligations connected with completed government projects.
Pending dues spread across departments
The contractors’ association has identified several departments where it claims substantial amounts remain unpaid.
According to figures cited by the association, the Water Resources Department accounts for around Rs 14,000 crore of the claimed outstanding amount. The Public Works Department is reported to account for Rs 8,370 crore, while minor irrigation accounts for around Rs 3,600 crore.
The Rural Development and Panchayat Raj Department has been cited at around Rs 3,000 crore. Housing and Waqf and the Greater Bengaluru Authority have each been listed at around Rs 2,600 crore, while the Labour Department is reported at Rs 2,000 crore and the Urban Development Department at Rs 1,800 crore.
The department-wise figures provided by the association total close to Rs 38,000 crore.
The figures represent the association’s assessment of pending bills and are not necessarily an independently audited government total.
Government plans to use existing allocations
Government officials have indicated that there will be no additional budgetary provision specifically created to clear the outstanding contractor bills.
Instead, the government has decided to allow departments to access part of their next-quarter allocations earlier. Departments will be expected to balance payments towards pending bills with expenditure required for ongoing development works.
A senior government official said departments would have to use the funds judiciously and maintain a balance between clearing liabilities and continuing current projects.
This approach allows the government to address part of the accumulated liabilities without making a fresh provision outside existing budgetary allocations.
Contractors seek payments in one go
The contractors’ association has maintained that periodic payments do not adequately address the financial pressure created by long-pending bills.
Association president R. Manjunath has argued that contractors face difficulties when payments are released only once every few months, particularly when they have outstanding loans and other financial commitments linked to completed projects.
The association had earlier written to Chief Minister D.K. Shivakumar seeking the release of the outstanding amount. It said the government had previously given assurances that the pending bills would be addressed but claimed that payments had not been released as expected.
The government, meanwhile, has indicated that payments must be managed within available budgetary allocations.
Dispute also includes allegations over tendering
The contractors’ association has also raised allegations concerning the functioning of government tenders and payment processes.
The association has alleged that some elected representatives and others interfere in government contracts and demand commissions. These are allegations made by the contractors’ body and have not been established as facts.
The issue has prompted a response from Chief Minister D.K. Shivakumar. According to reports, he has asked the association to submit an affidavit and identify those allegedly demanding bribes so that an inquiry can be initiated.
The association has separately said it may release documents relating to alleged commission demands later if its concerns over pending payments are not addressed.
Payment issue remains unresolved
The release of Rs 2,400 crore provides some movement on the long-running contractor payment issue, but the amount remains significantly smaller than the Rs 38,000 crore in dues claimed by the association.
The immediate challenge for the government will be to balance the clearance of old bills with expenditure on ongoing infrastructure and development projects.
For contractors, the key concern remains the pace and regularity of payments. The association has indicated that it wants the outstanding bills to be cleared rather than receiving intermittent releases.
The State Government’s decision to advance part of the next quarter’s allocation could provide departments with additional flexibility to settle pending bills, but officials have stressed that they must continue working within existing budgetary limits.
Conclusion
The Karnataka Government has released Rs 2,400 crore towards pending irrigation department bills amid pressure from contractors over an estimated Rs 38,000 crore in outstanding payments. While the government plans to use existing allocations to clear more dues, the contractors’ association continues to demand faster and larger payments and has warned of protests if the issue remains unresolved.