Diversion of funds totalling nearly Rs115 crore and ineligible beneficiaries getting benefits were among the several lapses found by CAG in implementation of JNNURM, the Centre's flagship urban infrastructure development scheme.
Government auditor Comptroller and Auditor General (CAG) also said that a few cases of unauthorised and irregular expenditure and even instances of undue favours to contractors have come to light.
In its report on "Performance Audit of Jawaharlal Nehru National Urban Renewal Mission(JNNURM)" tabled in Parliament on Thursday, the CAG said only 22 of the 1,517 housing projects approved under the scheme were completed by the due date of March 2011.
Noting that the Union ministries were "not equipped" to monitor a project of this magnitude, the CAG said the Centre must identify the deficiences in monitoring the sceheme both at the central and state level and address them during the next two years.
The 103-page report with annexures observed that a crucial objective of bringing about reforms in the governance of Urban Local Bodies (ULBs) could not be achieved through the scheme.
"We observed that a total of 1,517 and 1,998 housing and infrastructure projects respectively were approved for implementation between 2005 and 2011. However, as on 31 March 2011, in respect of the housing projects, only 22 of the 1517 approved projects were completed," the CAG report said.
"The status of dwelling units within these housing projects was only marginally better but remained low as only 26 per cent of approved dwelling units had been completed. In respect of urban infrastructure projects, we observed that out of the 1,298 projects approved, only 231 projects (18 per cent) were completed," the report stated.
The report pointed out that there were eight cases of diversion of funds in Urban Infrastructure projects in Andhra Pradesh, Chattisgarh, Haryana, Jharkand, West Bengal and Himachal Pradesh. The amount diverted was Rs 114.68 crore,it said.
The diversion was for purposes other than those admissible under JNNURM and in some cases even for non-JNNURM purposes. In one instance, funds were utilised for payment of salary to the municipal staff.