Karnataka considers tender rule changes amid Rs 38,000 crore payment backlog
The state government is reviewing eligibility norms after contractors demanded that outstanding bills be settled before new works begin.
Karnataka is facing a reported Rs 38,000 crore backlog in payments to contractors, according to a report by Urban Acres. The issue was discussed during a meeting between Chief Minister DK Shivakumar and the Karnataka State Contractors’ Association.
The association requested that the government settle pending bills, provide transparent payment schedules, and stop inviting tenders for projects that lack budgetary allocation. They also called for an end to the package system and alleged that about 70 per cent of legislators interfere in the tendering process.
Chief Minister Shivakumar stated that some demands had been agreed to, though he did not provide specific details. He said the current situation resulted from previous BJP governments under former chief ministers BS Yediyurappa and Basavaraj Bommai undertaking many works without providing the necessary funds.
The association has asked the government to change turnover assessment rules for tender eligibility. Currently, contractors must show an annual turnover of 50 per cent of the tender value in three of the last five years, but the association wants this assessed over 10 years due to the impact of the Covid-19 pandemic.
The finance department has reportedly agreed to reconsider this clause. Additionally, the government has agreed to clear bills for the Public Works Department (PWD) and the Greater Bengaluru Authority based on seniority.
Chief Minister Shivakumar has directed the finance department, financial adviser LK Atheeq, and Additional Chief Secretary to the Chief Minister Tushar Giri Nath to work on resolving the crisis.