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

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Chapter IV
Four of the sampled SPVs had not maintained the minimum
requirement of ₹200 crore, against which the actual paid-up capital of
each Smart City stood only at ₹10 lakh, in the absence of which,
compliance to the provisions of the Companies Act could not be
ensured.
Failure to provide full time CEOs for the SPVs impacted their
functioning. Lack of operational independence resulted in dependence
of SPVs on Government for technical approvals and variations which
delayed the projects, wherein, only 45 out of 645 projects were awarded
within stipulated time.
MSI’s appointment to establish centralised Data Centre at KMDS could
not be completed even after five years of awarding contract and
financial progress achieved was ₹19.08 crore only against ₹60.22 crore.
The implementation of CCCC could not be carried out in the absence
of completion of data centre at KMDS. Tweaking of tender condition
resulted in selection of ineligible LSI for implementation of ICCC
project in Shivamogga, which vitiated the tender evaluation process.
Functioning of ICCC was sub-optimal as the integration of line
departments with ICCC is pending either due to non- readiness of local
system at department level or due to security reasons, indicating poor
inter-departmental coordination.
Utility ducts provided for water supply, gas pipelines, electricity lines
etc., could not be utilised due to their non-feasibility for the respective
utility departments.
Non-utilisation of infrastructure created viz., Hospital, Market and
1BHK units for urban poor as the same were kept idle for more than
two years. Entrustment of works without possession of requisite land
and statutory clearances led to shortfall in achieving the intended
benefits in respect of river front works.
IMPLEMENTATION OF PROJECTS AND
MONITORING