Bengaluru: The Karnataka State Contractors Association on Wednesday accused the D.K. Shivakumar-led Congress government of using them in elections and forgetting them afterwards, claiming Rs 38,000 crore owed to them remain unpaid. They also alleged several MLAs interfere in their work, allegedly demanding “commissions” for awarding tenders and releasing payments.
The dues accumulated since 2022 but payments are delayed, further fuelling the narrative of a compounding fund crunch in the southern state.
“They (government) should not use our money to fund their guarantees. They should first clear our dues,” R. Manjunath, the association president, told reporters Wednesday in Bengaluru.
The ‘Guarantees’ refer to five high-budget welfare programmes central to the Congress’ election manifesto. These guarantees include Shakti Yojana (free bus travel for women), Gruha Jyothi (free electricity up to 200 units per month, Gruha Lakshmi (monthly Rs 2,000 to woman head households), Anna Bhagya (10 kg of free food grains) and Yuva Nidhi Rs 3,000 unemployment allowance to educated youths).
Running these schemes cost the state exchequer more than Rs 50,000 crore annually.
The association said that the contractors were drowning in debt and were left with few options but to take their own lives. “Tell us if you do not want to pay us, all of us contractors will just consume poison and die. Such is our condition,” Manjunath said.
The association also alleged that interference by MLAs had increased with several demanding ‘commissions’ or bribes for awarding tenders and later releasing funds.
The association warned if their dues are not paid by November this year they will make public details of who demands these alleged bribes.
According to the association, eight government departments owe them in excess of Rs 38,000 crore which includes Rs 14,000 crore on Major Irrigation, Rs 8,000 crore on the Public Works Department, Minor Irrigation (Rs 3,600 crore), and Rural Development and Panchayat Raj (Rs 3000 crore).
The association said that almost three years have passed since the Congress came to power in the state riding on its ‘PayCM’ campaign—corruption allegations made by former state Congress President Kempanna against then chief minister—but they have since forgotten their promises to contractors.
“The homes of several contractors have been seized, we have bank notices and our own contractors are questioning what we have been doing at the state level. Our losses are compounding and the government has not paid us our dues,” V. Krishna Reddy, the association’s Vice President, told ThePrint.
The non-payment of dues compounds the challenges for the three-month-old Shivakumar-led Congress government, which officials say is caught between the tightening fund crunch and the pressure to announce new projects.
The other challenge, they add, is continuing with its flagship guarantee schemes whose financial burdens are rising despite calls by its own party leaders to stall–or scrap–some of these programmes and replace them with infrastructure projects which could potentially have a higher political appeal ahead of crucial elections.
Chief Minister Shivakumar reacted Wednesday to the allegations by the contractor to reporters, stating that these were contracts given out during the term of BJP leader B.S. Yediyurappa.
“What happened is that Yediyurappa gave too many contracts despite there being no budget. Those works are getting completed and we have to pay them now. This was the reason why the finance department had raised concerns earlier. We will think about what needs to be done,” he said.
On the allegations of “commissions” being demanded, Shivakumar asked contractors to file cases and said he will inquire into it–repeating the response of his predecessors, including BJP CMs, which the Congress refused to accept as a valid explanation to the grave charges.
Mounting troubles
The failing rains and worsening drought across Karnataka have exacerbated the fund crunch, further adding to pressures on the government.
Officials say that the drying up coffers are affecting not only contractors and their work in the state, but several other departments, especially those directly involved in the guarantee schemes.
The opposition has started to mount pressure on the government, demanding answers for the allegations of commissions and the details of the fund crunch in the state.
“Approximately, Rs 38,000 crore in pending payments remain unpaid to contractors of various state departments. The Contractors’ Association itself has stated that commissions are being demanded for the payment of these pending bills, and priority is given to bill payments for those who provide commissions,” R.Ashoka, the leader of the opposition said in a post.
₹38,000 ಕೋಟಿ ಬಿಲ್ ಬಾಕಿ, ಸರ್ಕಾರವೇ ಕಮಿಶನ್ ಗಿರಾಕಿ! @INCKarnataka ಸರ್ಕಾರದ ಆಡಳಿತದಲ್ಲಿ ಭ್ರಷ್ಟಾಚಾರ ಮತ್ತು ಆಡಳಿತ ವೈಫಲ್ಯ ಯಾವ ಮಟ್ಟಿಗೆ ತಲುಪಿದೆ ಎಂಬುದಕ್ಕೆ ರಾಜ್ಯ ಗುತ್ತಿಗೆದಾರರ ಸಂಘದ ಹೇಳಿಕೆ ಸ್ಪಷ್ಟ ನಿದರ್ಶನ.
ರಾಜ್ಯದ ವಿವಿಧ ಇಲಾಖೆಗಳ ಗುತ್ತಿಗೆದಾರರಿಗೆ ಸುಮಾರು ₹38,000 ಕೋಟಿ ಬಾಕಿ ಹಣ ಪಾವತಿಯಾಗದೆ ಉಳಿದಿದೆ.… pic.twitter.com/C6vC5TiTv0
— R. Ashoka (@RAshokaBJP) September 30, 2026
A senior government official said four road transport corporations—Karnataka State Road Transport Corporation, Bengaluru Metropolitan Transport Corporation, North Western Karnataka Road Transport Corporation, KKRTC (Kalyana Karnataka Road Transport Corporation—enabling the Shakthi scheme (free public bus rides to women) have accumulated losses of over Rs 8,000 crore.
“On an average, the four road transport corporations are accumulating around Rs 600-800 crore in losses annually. Coupled with rising fuel costs, the situation is only likely to worsen,” said the official, requesting anonymity.
The official added that the road transport corporations have become increasingly reliant on the government to procure new buses, undertake modernisation schemes through PPP (public private partnerships) models and explore other avenues since their own revenue streams have dried up in recent years.
“RTCs need to get their (respective) houses in order. They have to improve fuel efficiency, rationalise routes, decrease dead kilometers, repurpose their human resources, electrify buses, and introduce more services. For now, they are dependent on the government for support since their own financial condition is not very good,” the official said.
Another official said that the road transport corporations have been accumulating losses for a while now which has been exacerbated by global pressures like fuel prices and other factors.
“Despite this, ticket prices have not been increased,” the second official said, also requesting anonymity.
However, the second official said that the Shakthi scheme—the state government reimbursing the transport corporations for free journeys—helped improve cash flows into the four road transport corporations. “With Shakthi, these corporations get about Rs 5,500 crores annually which is a steady revenue stream,” the official said.
While the government is trying to mitigate some of these losses by removing ineligible beneficiaries, the cost of running the guarantee schemes continues to rise.
‘Knew the pressure of guarantees’
Over the past few days, at least two cabinet colleagues of Shivakumar have acknowledged the burden of the guarantees.
“Everyone knows that we have to spend significant sums of money for guarantees…it’s common sense. Despite this, if we are spending Rs 52,000 crore (annually) won’t there naturally be some pressure on the finances? But we have managed it all these years. It (Guarantees) will continue and its financial burden will continue to rise,” Deputy Chief Minister G. Parameshwara said on Monday.
H.C. Balakrishna, the Minister for Municipal Administration, said Saturday that guarantees had added to its inability to deal with other problems.
“If we did not have these guarantees, perhaps all these things would not have appeared to us to be such major problems. It would have been easy for us to do all this. But we have to run the government. Everything must be managed within the system and within the budget,” Balakrishna said on Saturday.
This, however, has not stopped Shivakumar or the cabinet from announcing new schemes or big-ticket infrastructure projects, including projects worth more than Rs 1.5 lakh crore just in Bengaluru (Rs 40,000 crore tunnel road and elevated highways).
These infrastructure investments, including those into education, healthcare and other sectors, Shivakumar says will help Karnataka transform into a USD 3-trillion economy, equivalent to Rs 320 lakh-crore, by 2047.
In a cabinet meeting held in Mangaluru on 18 September, the coastal district about 350 kms from Bengaluru, Shivakumar announced over Rs 32,000-crore worth of new projects, including about Rs 13,300-crore package for the three coastal districts.
On the same day, the state’s own finance department had cautioned Shivakumar from undertaking any big expenditures, citing constraints on the state’s fiscal space and the need to adopt a “realistic and prudent” approach to funding new projects.
The finance department made these observations while examining the proposal for the chief minister’s Rural Road Connectivity Scheme, estimated to cost Rs 10,000 crore.
(Edited by Ajeet Tiwari)
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