The auditing body CAG conducted an inspection of the government's central Smart City program and discovered numerous serious deficiencies. The audit covered projects valued at 10,000 crore rupees between 2015 and 2023, revealing instances of rule violations, misuse of funds, and work carried out without proper authorization.
The report specifically highlights several cities in Tamil Nadu where work was executed deviating from approved plans, leading to the misappropriation of funding.
According to CAG data, changes were made to 52 projects, totaling 1,602.2 crore rupees, ignoring ministry rules that prohibit plan alterations without a valid reason. Furthermore, 44 projects amounting to 623.86 crore rupees were initiated for which no scheme had initially been developed.
Of these projects, 21, valued at 184.71 crore rupees, were constructed outside the planned work zones. Additionally, 5 projects worth 21.42 crore rupees represented only routine daily tasks. Tirunelveli city recorded the highest number of unplanned works, with 15 projects worth 314.62 crore rupees starting without approval.
The report also found that six cities spent 23.83 crore rupees on items whose use was not permitted, including the purchase of vehicles, computers, covering legal expenses, repairing a conference hall, and acquiring an 110-inch television.
In Chennai, 66.58 lakh rupees was spent on government advertising, and 18.44 lakh rupees on other consultants instead of Smart City-related work; moreover, 15.33 crore rupees was allocated for family resettlement. In Erode, 2.59 crore rupees was used for paying salaries to sewage service employees, while Salem transferred a similar amount of 2.95 crore rupees. Madurai allocated 48.36 lakh rupees to pay contractors for other civil works.
According to the report, although the central government provided more than 5,000 crore rupees from its share, the Tamil Nadu government deposited at least 1,127 crore rupees eight times into the personal deposit accounts of state government departments between July and October 2021. In addition, 93 projects were resumed without the necessary permission.
Creating Special Purpose Vehicles (SPVs) requires capital of 200 crore rupees according to the Companies Act of 2013, but they were established with only 10 lakh rupees in capital. With the exception of Chennai, none of the SPVs had a permanent general director, forcing municipal commissioners to manage them personally and creating a conflict of interest. Furthermore, corporations issued limited tenders on behalf of SPVs, which contradicts established rules.