The Karnataka government is considering relaxing tender eligibility norms after contractors demanded clearance of Rs 38,000 crore in pending bills and an end to new works without confirmed budgetary allocation, Chief Minister DK Shivakumar said after a meeting with the Karnataka State Contractors’ Association on Monday.
The association submitted a memorandum seeking payment of outstanding bills before fresh development works are taken up. It also demanded greater transparency in bill payments, an end to alleged interference by legislators in tendering and the removal of the package system, which it said had excluded small and medium contractors.
Shivakumar said some of the contractors’ demands had been accepted for consideration. He attributed the accumulation of liabilities to a high number of works taken up by previous BJP governments under former chief ministers BS Yediyurappa and Basavaraj Bommai without allocating funds. “Currently, we are bringing this under control,” he said, without disclosing details of the decisions reached at the meeting.
One proposal under consideration is a relaxation of the turnover requirement for contractors. Under the existing norms, contractors must have an annual turnover equivalent to 50% of the tender value in three of the previous five years. The association has sought an extension of the assessment period from five years to 10 years, arguing that the Covid-19 pandemic affected business activity and made it difficult for contractors to meet the current requirement.
Officials said the finance department had agreed to reconsider the turnover clause. Any change could affect the pool of firms eligible to bid for public works, although the government has not announced the final terms or a timeline for implementing the proposal.
The contractors’ association also claimed that around 70% of legislators in Karnataka interfere in tendering and asked the chief minister to direct authorities at the district and taluk levels to award tenders to local contractors. The government is considering measures to curb such interference, according to the report.
On pending payments, the association demanded that bills be cleared according to seniority rather than through undisclosed or selective procedures. The government has agreed to follow this system for bills related to the Public Works Department and the Greater Bengaluru Authority, and is considering extending it to other departments.
The dispute places the state’s public works pipeline alongside its payment obligations. Contractors’ ability to execute roads, buildings and other government-funded works depends on the timing of bill payments, while fresh tenders issued without budgetary backing can increase financial pressure on firms and complicate project delivery.
The chief minister has asked the finance department, his financial adviser LK Atheeq and Additional Chief Secretary to the Chief Minister Tushar Giri Nath to work towards resolving the contractors’ crisis. Further decisions on tender eligibility, payment sequencing and the proposed restrictions on fresh works are expected through that process.
