CAG Report No. 11 of 2025 — Implementation of Smart City Mission, Government of Karnataka

15
Chapter III
3.1 Financial Management of SPVs
Prudent financial management of a scheme ensures that the intended benefits of
the schemes reach beneficiaries in time as envisaged in the scheme. The Smart
City Mission was a centrally sponsored scheme and GoI gave financial support
to the Mission on an average ₹100 crore per city per year. An equal amount was
contributed on a matching basis, by the State Government. The release and
expenditure of funds to the smart cities in Karnataka as of June 2024 is detailed
in Table 3.1.
The SPVs could mobilise very few financial resources from
sources other than Government grants defeating the objective of
their formation.
Financial improvement plans submitted by the consultants could
not be implemented as the State Government was yet (June 2024)
to take decision on its suitability for universal adoption in all
Urban Local Bodies (ULBs).
SLNA incurred an expenditure of ₹0.75 crore towards activities
which does not pertain to the Smart City project/cell. Inadequate
verification in respect of payments made to the PMC resulted in
excess payment of ₹2.56 crore.
Though the service provider for Master System Integrator for the
Integrated Command and Control Centre (ICCC) failed to
complete the work as scheduled, SLNA failed to enforce
contractual obligation of levying and collecting penalty for
delayed execution of works. Levy of nominal penalty of ₹2,000
per day lacked justification though specific rate of penalties were
prescribed in the contract.
FINANCIAL MANAGEMENT