In Bengaluru, new accusations have emerged regarding demands for commissions in the rollout of the Mahatma Gandhi Nagar Vikas Yojana–1. Builders report that go-betweens are requesting 12 to 13 percent cuts to speed up the clearance of substantial unpaid amounts worth crores. The matter has drawn fresh scrutiny as various builders have turned to the judiciary for relief, while the Urban Development Department is under fire for holdups despite court mandates.
Based on records and grievances from the Karnataka State Contractors’ Association, multiple builders involved in the program have claimed that agents are reaching out via calls, offering to hasten settlements for large fees. The group states that no fewer than 30 builders have submitted formal reports on these requests.
This dispute arises shortly after the state administration allocated ₹200 crore on March 27, 2026, to address outstanding obligations under the initiative. Yet, builders contend that rather than efficient distribution, the funding has sparked a shadow system of agents trying to collect fees.
Previously, the Contractors’ Association had highlighted the problem openly, pointing fingers at authorities and agents for misconduct. These charges were firmly rejected by Chief Minister Siddaramaiah, Deputy Chief Minister D.K. Shivakumar, and Urban Development Minister Byrathi Suresh. Nevertheless, a recent communication from the association to the minister on April 1, 2026, has given the opposition new grounds for criticism.
In the correspondence, Association President R. Manjunath restated that builders are facing pressure to offer commissions to obtain their rightful payments. He called on the administration to process disbursements solely according to priority and project completion, eliminating any role for agents. He also requested an immediate meeting with department representatives to resolve the issues.
Introduced in 2019–20 with a budget of ₹1,325 crore, the Mahatma Gandhi Nagar Vikas Yojana aimed to enhance infrastructure in ten municipal areas in Karnataka, such as Mysuru, Kalaburagi, Hubballi-Dharwad, Mangaluru, Belagavi, Davanagere, Ballari, Vijayapura, Tumakuru, and Shivamogga. Funding was planned to come equally from state contributions and borrowed funds from financial entities.
Although the state provided its portion of ₹662.50 crore, challenges in securing loans—due mainly to Reserve Bank of India rules—caused delays in gathering resources. Consequently, numerous projects encountered funding shortages. As of January 2025, 728 projects had been sanctioned, with 347 finished and 381 ongoing. Even with considerable advancements, builders have faced difficulties in getting compensated, resulting in financial strain and court disputes.
Authorities had previously noted that an extra ₹658.22 crore was needed to settle remaining debts, with requests forwarded to the government for inclusion in the 2024–25 budget. Delays continued, however, with several municipal entities reporting unpaid balances. Figures indicate significant arrears in locations like Mangaluru, Hubballi-Dharwad, Kalaburagi, and Ballari. Local administrations have frequently asked the Directorate of Municipal Administration for releases, highlighting demands from builders and halted activities.
In one instance, Mangaluru contractor Anwar Sadath sought judicial intervention for ₹9.50 crore in arrears. On July 16, 2025, the High Court instructed the government to pay within three months. The sum allegedly stayed unsettled, leading to a contempt filing. The Urban Development Department consulted the Finance Department, which recommended withholding funds pending reviews of project order, resource availability, and priorities. It also proposed challenging the ruling. Despite repeated appeals from the contractor and the Mangaluru City Corporation, the payment remains pending. The contempt case is set for review on April 9, 2026.
