The Karnataka government has released Rs 2,400 crore to the irrigation department over the past three days to clear part of contractors’ pending bills, after the contractors’ association threatened protests over dues it estimates at Rs 38,000 crore across several departments.
The release follows a letter sent by the association to the chief minister two days ago. The government had already set aside Rs 1,400 crore for pending irrigation bills, the department identified as having the highest level of outstanding payments. A senior government official said the finance department would issue a no-objection certificate for the release and indicated that a similar exercise could be undertaken for Public Works Department contractors.
Contractors, however, said the latest payment covers less than 10% of the outstanding amount and does not resolve the financial pressure created by delayed reimbursements. R Manjunath, president of the contractors’ association, said payments made once every three or four months were inadequate and called for the dues to be cleared in a single settlement.
The dispute places public infrastructure contractors at the centre of a wider budget-management problem. Contractors typically require regular payments to service loans, pay workers and suppliers, and continue work on projects commissioned by government departments. According to the association, the delays have caused loans to accumulate, although the government has not accepted the association’s full estimate of pending dues.
Government officials said departments had been authorised to release part of their next quarter’s funds early. This would allow them to use existing allocations to clear pending bills while continuing ongoing works. An official said departments would need to maintain a balance between expenditure on current projects and payments against earlier work.
The arrangement does not create a new budgetary allocation. Officials said the government could not go beyond existing budget provisions and that there would be no additional funding specifically provided to clear the dues. This means departments must manage payments within their approved allocations, potentially requiring them to sequence current work and outstanding bills together.
The association has estimated pending payments at Rs 13,000 crore for major and medium irrigation projects, Rs 8,370 crore for the Public Works Department, Rs 3,800 crore for the Rural Development and Panchayat Raj Department, and Rs 3,000 crore for minor irrigation. Officials said these figures may include estimates for ongoing work, suggesting that the government’s assessment of immediately payable bills could differ from the association’s calculation.
Manjunath also alleged that the Rs 1,400 crore earmarked for irrigation bills would be distributed according to seniority. He said this could benefit larger contractors while leaving smaller firms waiting for payment. The allegation was reported alongside the government’s plan, but the supplied report does not include a detailed response from the government on the proposed payment sequence.
The chief minister’s office has sought a meeting with the contractors’ association. The next stage of the dispute will depend on that meeting, the finance department’s no-objection process and decisions by departments on how much of their early-released allocations can be used for pending bills without disrupting ongoing infrastructure work.