CAG flags funding gaps and poor resource mobilisation in Karnataka’s Smart City Mission

Bengaluru: Smart cities failed to mobilise financial resources and were mainly dependent on mission grants, and four of the seven districts in Karnataka under the project had not maintained the minimum requirement of Rs 200 crore, a report by the Comptroller and Auditor General of India (CAG) has found.

The Union government launched the Smart City Mission (SCM) on June 25, 2015, to achieve “comprehensive development” of the physical, institutional, social and economic infrastructure of 100 cities. In Karnataka, seven districts — Bengaluru, Belagavi, Davangere, Hubballi-Dharwad, Mangaluru, Shivamogga and Tumakuru — were chosen for SCM.

The CAG report on ‘Implementation of Smart City Mission’ has recommended that the smart cities need to tap resources other than government grants, like municipal bonds, pooled finance mechanism, etc, for long-term sustainability of the
projects.  

“Special Purpose Vehicles (SPVs) did not take any action to mobilise additional resources through the National Investment and Infrastructure Fund (NIIF) and leverage borrowings from financial institutions. The state government accepted that smart cities have not proposed mobilisation of
funds under NIIF, and it will be implemented in future projects,” the report notes.

As per the data in the report, the seven districts received a total of Rs 6,781 crore-worth of funds (Rs 3,354.50 crore from GOI and Rs 3,426.5 crore from the Karnataka government). Of this, Rs 5,788 crore has been spent.

While the SCP of the cities aimed to develop smart roads (a road designed to include smooth vehicular flow, prioritise pedestrian movement, integrated essential utilities) project as per the Tender SURE guidelines, cities other than Bengaluru did not provide for certain utility ducts, which resulted in frequent digging up of smart roads for laying/maintenance of utility lines.

The report flagged that the Karnataka Urban Infrastructure Development Corporation (KUIDFC), which is the state-level nodal agency, spent Rs 75 lakh towards activities “not pertaining” to the smart city project.

“The integration of the City Surveillance System implemented by the police and the Traffic Department was yet to be carried out despite several correspondence made with the police department,” the report said. 

“Integration of disaster management systems, environmental sensors, energy meters, digital display boards and smart health kiosk were yet to be accomplished.”