CAG finds SPVs mobilized negligible non-grant funds in Karnataka Smart City Mission

This audit examined the implementation of the Smart City Mission in seven cities in Karnataka (Belagavi, Bengaluru, Davanagere, Hubballi-Dharwad, Mangaluru, Shivamogga, and Tumakuru) for the period from 2015-16 to June 2024.

Government of Karnataka, State Level Nodal Agency (SLNA), and the Special Purpose Vehicles (SPVs) established for the seven selected smart cities.

• Only 68 out of 135 specified goals were achieved; 160 out of 544 planned projects (30%) were dropped contrary to MoHUA instructions.
• Projects worth ₹1,462.67 crore were taken up against an allocation of ₹817.42 crore under Pan City development.
• ₹2.69 crore interest earned on Central Sponsored Scheme grants was not remitted to the concerned government accounts.
• ₹2.56 crore excess payment was made to the Project Management Consultant (PMC) due to inadequate verification.
• ₹0.75 crore was spent by the SLNA on activities unrelated to the Smart City project.
• Four SPVs failed to maintain the minimum paid-up capital of ₹200 crore, with actual capital standing at only ₹10 lakh each.
• Only 45 out of 645 projects were awarded within the stipulated time.
• The Centralised Data Centre project had a financial progress of only ₹19.08 crore against a contract value of ₹60.22 crore after five years.
• Infrastructure worth ₹62.60 crore in Hubballi-Dharwad (including hospital upgradation and market renovation) remained idle for more than two years.
• CAG recommended that SPVs tap non-government resources like municipal bonds, ensure full-time CEO appointments, and integrate all data centers into the Centralised Command and Control Centre.

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