The issue of pending payments to contractors in Karnataka has once again come into focus, as Karnataka State Contractors Association president R Manjunath states that the outstanding contractor bills have reached around ₹38,000 crore.
Manjunath said contractors have been dealing with the problem for nearly four years and challenged the process of clearing pending bills in the process. “The system is not transparent and does not take seniority into account in making payments.
Manjunath said, “The pending bills are around Rs 38,000 crore, and we have been suffering for the last four years,” the statement shared.
He also questioned the way payments are allocated through what he called the Special Letter of Credit (LOC) mechanism. The 80:20 ratio is applicable under the contract where 80 per cent is for contractors and 20 per cent is discretionary to the Executive Engineer or Chief Engineer, Manjunath said.
Manjunath alleged that this prescribed proportion is not being followed. He said deviations from the stated ratio have added to contractors' concerns over how pending payments are being distributed.
The contractors’ association also raised what they called the “24-contract issue,” along with the special LOC mechanism. These issues, Manjunath said, are contributing to dissatisfaction among the contracting community.
The reported ₹38,000-crore figure is one of the largest claims about the extent of outstanding payments, and it has implications for contractors who have completed government works but still have to receive those payments. Delayed payments can affect contractors' cash flows, their ability to meet financial obligations, and their ability to get new projects.
#WATCH | Bengaluru | On pending contractor bills, Karnataka State Contractors Association President R Manjunath says, "he pending bills are around Rs 38,000 crore, and we have been suffering for the last four years. They are not maintaining transparency, and they are not… pic.twitter.com/HJs1gYmDIz
— ANI (@ANI) October 1, 2026
Contractor associations in Karnataka have recently voiced their concerns about delayed government payments, particularly in infrastructure and public works. And payment clearing and the procedures used to prioritise bills remain sensitive to contractors and the authorities, the statement says.
Manjunath raised seniority as a major issue. He claimed bills are not being paid in the order in which they are due and questioned the transparency of the payment process. If the association's claims are taken up, the details of pending bills, payment schedules and criteria used for prioritisation may help clarify the situation.
The special LOC mechanism is another important concern for the association. Manjunath’s comments indicate that contractors are looking to follow the 80:20 distribution plan and more clarity regarding the discretionary part of senior engineering officials.
The association’s reference to the 24-contract issue adds another layer to the dispute. Further clarification from the relevant government departments would be needed to establish the details of the contracts involved and how they relate to the pending-payment issue.
For contractors, the biggest concern is the timely clearance of legitimate outstanding bills and the transparency of the payment process. The ₹38,000-crore figure cited by the association is a claim by its president, and an official department-wise breakdown would be needed to independently determine the total amount pending.
The issue is likely to remain significant for Karnataka's contracting sector as contractors seek clarity over payment schedules, seniority-based processing, the special LOC mechanism and the allocation of funds.
