Karnataka govt is modifying a law to make public spending more opaque

Transparency advocates are opposing the amendment, by which works worth Rs 2 crore or less can be awarded to contractors without any competitive bidding process.
Bengaluru roads
Bengaluru roads

An amendment to the Karnataka Transparency in Public Procurements (KTPP) Act, which makes the process of awarding government contracts opaque and corruption prone, awaits the nod of Governor Vajubhai Vala. The government has bulldozed the amendment despite objections from the Opposition in both Houses of the state legislature.

On paper, the amendment gives blanket exemption for government departments to give projects of up to Rs 2 crore to Karnataka Rural Infrastructure Development Limited (KRIDL), another government agency, without going through a competitive bidding or tender process.

While KRIDL is itself a government body, apprehensions of corruption arise as KRIDL subcontracts works to private contractors without providing any technical inputs. And for this, KRIDL receives a commission ranging between 3% and 10% depending on the project.

Critics of KRIDL ask why, while all government departments already engage with contractors, KRIDL should be given commission, that too to select private contractors without any standard protocol. Furthermore, although its name indicates rural infrastructure, KRIDL is routinely awarded works within Bengaluru city limits. There have also been multiple instances of KRIDL officials being booked for misappropriation of funds across the state for years now.

Irrespective of the non-transparency allegations, the lack of technical expertise itself had meant that works carried out by KRIDL was of substandard quality, leading to blacklisting by government departments. While the Social Welfare department blacklisted KRIDL in 2018, the BBMP had blacklisted it in 2015.

Speaking to TNM, then Social Welfare Minister and presently opposition MLA Priyank Kharge said, “I took that policy decision as KRIDL was taking a very long time to execute works, and unlike other contractors they don’t start work until the entire money is deposited by the department. In spite of paying full amounts, the projects were still taking forever to finish. So I decided not to give them any more work.”

He added, “This amendment will also be a blow to small contractors who can only bid for smaller projects. Now there won’t be any competition and only those preferred by officials or ministers will get the works.”

Furthermore, until now SC/ST contractors had a quota of around 50% for smaller projects of up to Rs 50 lakh, which will stop due to this amendment, the MLA said.

Until now, KRIDL was given contracts through what activists term a misuse of a clause in the KTPP Act, which gives exception to the tendering process for specific types of procurements that might need some kind of specialisation. While termed an exception per law, activists say this had become routine. Notably, Rs 4,721 crore worth of work has been given to KRIDL without any tender process out of the Rs 10,018 crore worth of ward-level work in Bengaluru alone since 2015. This was revealed through a detailed analysis carried out by the Bengaluru NavaNirmana Party (BNP), a budding political outfit which intends to contest the BBMP polls. But even for this, the government department had to get executive orders for each work on a case by case basis.

Section 4(g) of the KTPP Act states: The provisions of Chapter II (Regulation of Procurement) shall not apply to procurement of goods and services in respect of specific procurements as may be notified by the government from time to time.”

To counter this, pro-transparency activist GR Anil Kumar had even gone to the High Court and managed to successfully stop the blatant misuse of this provision. But now this amendment will effectively bypass the High Court ruling ensuring that there is no competitive bidding for works worth Rs 2 crore and below.

“I’d gone to court as the 4(g) exemption was being misused as a rule rather than an exception and this goes against the principles of the Act itself. By using this loophole, large projects can be divided into smaller work parcels and given via this KRIDL route,” Anil Kumar told TNM.

He added, “Moreover, KRIDL does not have adequate manpower to oversee any of these works. So this is to only benefit politicians and officials.”

His application to counter the amendment has been accepted by the Karnataka High Court and the matter is set to be heard on April 16.

BJP had earlier opposed KRIDL

Subbu Hegde, Governing Council Member of BNP, pointed out that interestingly senior BJP leaders who had opposed giving contracts to KRIDL just about two years back are in favour of it now.

“Thousands of crores of projects given to a single contractor without any tendering process and with a commission leaves a high degree of scope for corruption and misgovernance. This is a gross violation of norms, process and basic principles of governance,” Subbu said.

Deepak CN, General Secretary of KRS party, another new political outfit floated on the anti-corruption plank, said this amendment legitimises “corruption”. “Rather than bringing in this new amendment, why not the government do away with the KTPP Act itself?” he quipped.

SC/ST contractors to approach HC

Other than allegations of corruption, the law will also prove to be a deterrent to SC/ ST contractors. According to present regulations, nearly 50% of all contracts for works below Rs 50 lakh was reserved for them in the state.

But with no transparency mechanism, SC/ST contractors feel that they will lose out on business as they fear the ‘politicians-contractor nexus’ will operate with further impunity.

Mahadeva Swamy, President of the Karnataka State SC/ST Contractors’ Association, said he is going to court over the matter.

“I’m approaching the High Court. The amendment is unconstitutional and against all the norms of the KTPP Act. SC/ST contractors for whom projects below Rs 50 lakhs were reserved will suffer,” he told TNM.

He also feared that if KRIDL is given this blanket exemption, it will lead to the possibility of other government bodies seeking similar exceptions for small works enabling further discretionary choice for officials.

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