18

JAWAHARLAL NEHRU
NATIONAL URBAN RENEWAL
MISSION

MINISTRY OF URBAN DEVELOPMENT AND

MINISTRY OF HOUSING AND URBAN
POVERTY ALLEVIATION

PUBLIC ACCOUNTS
COMMITTEE
2014-2015
EIGHTEENTH REPORT

SIXTEENTH LOK SABHA

LOK SABHA SECRETARIAT

NEW DELHI
 EIGHTEENTH REPORT

PUBLIC ACCOUNTS COMMITTEE

(2014-2015)

(SIXTEENTH LOK SABHA)

JAWAHARLAL NEHRU NATIONAL

URBAN RENEWAL MISSION

MINISTRY OF URBAN DEVELOPMENT

AND
MINISTRY OF HOUSING AND URBAN
POVERTY ALLEVIATION

Presented to Lok Sabha on 29 April, 2015

Laid in Rajya Sabha on 29 April, 2015

LOK SABHA SECRETARIAT

NEW DELHI

April, 2015/Vaisakha, 1937 (Saka)

PAC No. 2049

Price: ` 132.00

© 2015 BY LOK SABHA SECRETARIAT

Published under Rule 382 of the Rules of Procedure and Conduct of Business in
Lok Sabha (Fifteenth Edition) and Printed by the General Manager, Government of
India Press, Minto Road, New Delhi-110 002.
 CONTENTS
PAGE
COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE (2014-15) ........................ (iii)
COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE (2013-14) ........................ (v)
INTRODUCTION ................................................................................................. (vii)

REPORT
PART I
I. Introductory .......................................................................................... 1
II. Allocation of funds and release of additional Central Assistance by
the Central Government ........................................................................ 7
III. Status of the projects ............................................................................ 9
IV. Structure for project implementation and monitoring under JNNURM 12
V. Implementation of reforms ................................................................... 15
VI. City development plans and detailed project reports ........................... 30
VII. Implementation of Housing Projects .................................................... 32
VIII. Implementation of urban infrastructure and renewal projects .............. 46
IX. Financial Management ......................................................................... 60
X. Monitoring and Evaluation ................................................................... 75
XI. States/UTs which have been successful in implementing JNNURM ... 86
XII. Measures which would have ensured better implementation of
JNNURM projects ................................................................................ 88
PART II
Observations and Recommendations .................................................... 91
ANNEXURES
I. List of 65 Mission Cities ...................................................................... 111
II. Glossary of Terms ................................................................................. 114
APPENDICES
I. Minutes of the Eleventh Sitting of The Public Accounts Committee
(2013-14) held on 11.09.2013 ............................................................. 117
 (ii)

II. Minutes of the Fifth Sitting of The Public Accounts Committee

(2014-15) held on 08.10.2014 .............................................................. 120
III. Minutes of the Ninteenth Sitting of The Public Accounts Committee
(2014-15) held on 09.4.2015 ................................................................ 123
 COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE
(2014-15)
Prof. K.V. Thomas — Chairperson
MEMBERS
Lok Sabha
2. Shri S.S. Ahluwalia
3. Shri Sudip Bandyopadhyay
4. Shri Ranjit Singh Brahmpura
5. Shri Nishikant Dubey
6. Shri Gajanan Kirtikar
7. Shri Bhartruhari Mahtab
8. Shri Ramesh Pokhriyal "Nishank"
9. Shri Neiphiu Rio
*10. Shri Dushyant Singh
11. Shri Janardan Singh Sigriwal
†12. Shri Shiv Kumar Udasi
13. Dr. Kirit Somaiya
14. Shri Anurag Thakur
††15. Dr. P. Venugopal
Rajya Sabha
16. Shri Satyavrat Chaturvedi
17. Shri Vijay Goel
18. Dr. Satyanarayan Jatiya
19. Shri Bhubaneswar Kalita
20. Shri Shantaram Naik
21. Shri Sukhendu Sekhar Roy
22. Shri Ramchandra Prasad Singh
SECRETARIAT
1. Shri A.K. Singh — Joint Secretary
2. Smt. Anita B. Panda — Director
3. Shri S.L. Singh — Under Secretary

* Elected w.e.f. 3rd December, 2014 vice Shri Rajiv Pratap Rudy who has been appointed as Minister
w.e.f. 9th November, 2014.
† Elected w.e.f. 3rd December, 2014 vice Shri Jayant Sinha who has been appointed as Minister w.e.f.
9th November, 2014.
††Elected w.e.f. 3rd December, 2014 vice Dr. M. Thambidurai who has been chosen as Hon'ble Deputy
Speaker, Lok Sabha and has since resigned from the membership of the Committee.

(iii)
 COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE
(2013-14)

Dr. Murli Manohar Joshi — Chairman

MEMBERS
Lok Sabha
2. Shri Anandrao Adsul
3. Dr. Baliram
4. Shri Ramen Deka
5. Shri Sandeep Dikshit
6. Dr. M. Thambi Durai
7. Shri T.K.S. Elangovan
8. Shri Jayaprakash Hegde
9. Dr. Sanjay Jaiswal
10. Shri Bhartruhari Mahtab
11. Shri Abhijit Mukherjee
12. Shri Sanjay Brijkishorlal Nirupam
13. Shri Ashok Tanwar
*14. Shri Ajay Maken
15. Shri Dharmendra Yadav
Rajya Sabha
16. Shri Prasanta Chatterjee
17. Shri Prakash Javadekar
†18. Shri Ashwani Kumar
19. Shri Satish Chandra Misra
††20. Dr. V. Maitreyan
21. Shri N.K. Singh
22. Smt. Ambika Soni

* Elected w.e.f. 14th August, 2013 vice Dr. Girija Vyas appointed as Minister of Housing, Urban
Development & Poverty Alleviation w.e.f. 17th July, 2013.
† Elected w.e.f. 3rd September, 2013 vice Dr. V. Maitreyan ceased to be a Member upon his retirement as
a Member of Rajya Sabha w.e.f. 24th July, 2013.
†† Elected w.e.f. 3rd September, 2013 vice Dr. E.M. Sudarsana Natchiappan appointed as Minister of
State for Commerce and Industry w.e.f. 17th June, 2013.

(v)
 INTRODUCTION
I, the Chairperson, Public Accounts Committee (2014-15), having been
authorised by the Committee, do present this Eighteenth Report (Sixteenth Lok Sabha)
on 'Jawaharlal Nehru National Urban Renewal Mission' based on C&AG Report
No. 15 of 2012-13, Union Government (Performance Audit) relating to the Ministries
of Urban Development and Housing & Urban Poverty Alleviation.
2. The Report of the Comptroller and Auditor General of India was laid on the
Table of the House on 4th September, 2012.
3. The Public Accounts Committee (2013-14) and the Public Accounts
Committee (2014-15) took up the subject for detailed examination and report. The
predecessor Committee procured written replies and took evidence of the
representatives of the Ministries of Urban Development and Housing & Urban
Poverty Alleviation on the subject at their sitting held on 11th September, 2013.
4. The subject was subsequently carried forward by the successor Committee
(2014-15) for examination. The Committee took further oral evidence on the subject
on 8.10.2014 and the draft Report which was placed before the Committee was
considered and adopted at their sitting held on 9th April, 2015. Minutes of the sittings
form appendices to the Report.
5. For facility of reference and convenience, the Observations/Recommendations
of the Committee have been printed in thick type and form Part II of the Report.
6. The Committee thank their predecessor Committee for taking oral evidence
of the Ministries of Urban Development and Housing & Urban Poverty Alleviation
and obtaining the requisite information on the subject.
7. The Committee would also like to express their thanks to the representatives
of the Ministries of Urban Development and Housing & Urban Poverty Alleviation
for tendering evidence before the Committee and furnishing information in connection
with the examination of the subject.
8. The Committee place on record their appreciation of the assistance rendered
to them in the matter by the office of the Comptroller and Auditor General of India.

NEW DELHI; PROF. K.V. THOMAS

27 April, 2015 Chairperson,
7 Vaisakha, 1937 (Saka) Public Accounts Committee.

(vii)
 REPORT
PART I
I. Introductory
Cities and towns of India, 7935 in number as per Census 2011, constitute the
world's second largest urban system. They contribute over 50 per cent of country's
Gross Domestic Product (GDP) and are central to economic growth. For these cities
and towns to realize their full potential and become true engines of growth, it is necessary
that focused attention be given to the improvement of infrastructure and basic services
to the poor therein. For achieving this objective, the Jawaharlal Nehru National Urban
Renewal Mission (JNNURM) was launched by the Government of India on
3rd December, 2005. It envisaged a total investment of more than `1,00,000 crore
during a period of 7 years from 2005-06 to 2011-12 with a committed Central
Government share of `66,084.65 crore. JNNURM is a reform driven, fast track
programme to ensure planned development of identified cities with focus on efficiency
in urban infrastructure/service delivery mechanisms, and through community
participation and enhanced accountability of Urban Local Bodies (ULBs)/Parastatal
agencies towards citizens.
2. The Mission was conceived against the background of the fact that most
cities and towns were severely stressed in terms of infrastructure and service availability
and their growth and development was constrained by indifferent implementation of
the Constitution (Seventy-Fourth) Amendment Act, 1992, and continuation of statutes,
systems and procedures that impeded the operation of land and housing markets. It
was also felt that in order to make cities work efficiently and equitably, it was essential
to create incentives and support urban reforms at State and city levels; develop
appropriate enabling and regulatory frameworks; enhance the creditworthiness of
municipalities; and integrate the poor with the service delivery system.
3. JNNURM consisted of two sub-missions: the 'Urban Infrastructure and
Governance (UIG)' (Sub-mission I) and the 'Basic Services to the Urban Poor' (BSUP)
(Sub-mission II) for 65 identified Mission Cities (Annexure I) which comprise
35 cities with million plus population and 30 other State capitals and cities of heritage
and tourism importance across the country. The main thrust of UIG was on infrastructure
projects relating to water supply and sanitation, sewerage, solid waste management,
road network, urban transport and redevelopment of old cities whereas that of BSUP
was on integrated development of slums through projects for providing shelter, basic
services and other related civic amenities. In respect of other cities and towns, there
were two components namely: (i) 'Urban Infrastructure Development Scheme for Small
and Medium Towns (UIDSSMT)' and (ii) 'Integrated Housing and Slum Development
Programme' (IHSDP) with the same broad objectives as envisaged in UIG and BSUP.
The Ministry of Urban Development (MoUD) is the nodal Ministry for UIG and
 2

UIDSSMT while the Ministry of Housing Urban and Poverty Alleviation (MoHUPA)
is the nodal Ministry for BSUP and IHSDP.
i. Objectives and Expected Outcomes of the Mission
4. The objectives of JNNURM were as under:—
(a) Focused attention to integrated development of infrastructural services in
the cities covered under the Mission;
(b) Establishment of linkages between asset-creation and asset-management
through a slew of reforms for long-term project sustainability;
(c) Ensure adequate funds to meet the deficiencies in urban infrastructural
services;
(d) Planned development of identified cities including peri-urban areas,
outgrowths and urban corridors leading to dispersed urbanization;
(e) Scale-up delivery of civic amenities and provision of utilities with emphasis
on universal access to the urban poor;
(f) Special focus on urban renewal programme for the old city area to reduce
congestion; and
(g) Provision of basic services to the urban poor including security of tenure
at affordable prices, improved housing, water supply and sanitation and
ensuring delivery of other existing universal services of the government
for education, health and social security.
5. The expected outcomes to be achieved by ULBs and Parastatal agencies on
completion of the Mission period were as under:—
(a) Modern and transparent budgeting, accounting and financial management
systems will be designed and adopted for all urban services and governance
functions.
(b) City-wide framework for planning and governance will be established
and become operational.
(c) All urban residents will be able to obtain access to a basic level of urban
services.
(d) Financially self-sustaining agencies for urban governance and service
delivery will be established through reforms to major revenue instruments.
(e) Local services and governance will be conducted in a manner that is
transparent and accountable to citizens.
(f) E-governance applications will be introduced in core functions of ULBs/
Parastatal agencies resulting in reduced cost and time of service delivery
processes.
 3

(ii) Audit Review

6. A Performance Audit of the implementation of the JNNURM for the period
2005-06 to 2010-11 was conducted by the C&AG of India in 25 States and five Union
Territories between April 2011 and November 2011. It covered the audit of MoUD
and MoHUPA and interaction with other stakeholders like the Ministry of Finance,
the Ministry of Home Affairs and Planning Commission at the Government of India
level and the audit of State Government Departments, State Level Nodal Agencies
and Urban Local Bodies/Parastatal agencies at the State Level. The audit sample
comprised 216 projects in 39 Mission Cities and 46 cities and towns other than Mission
Cities. Out of these 216 projects, there were 82 housing projects and 134 urban
infrastructure projects.
7. The performance audit has highlighted various shortcomings/lapses in the
implementation of the Mission. The gist of the Audit's main findings are enumerated
below:—
(i) Against an allocation of `66,084.65 crore by the Planning Commission
envisaged for JNNURM during the Mission period 2005-06 to
2011-12, a budgetary allocation of `45,066.23 crore was made during this
period. Against this allocation, only `40,584.21 crore had been released
in respect of UIG, UIDSSMT, BSUP and IHSDP, up to 2011-12.
(ii) The time granted for completion of the projects, on an average, was
around two years. However, out of 2815 projects approved up to
31 March 2011, only 253 projects (8.9 per cent) could be completed
by 31 March 2011.
(iii) Though urban renewal i.e. re-development of inner (old) cities area to
reduce congestion was an objective of JNNURM, only 11 out of 532
projects and 10 out of 766 projects for urban renewal were approved
by MoUD under UIG and UIDSSMT respectively up to 2010-11.
(iv) The PMUs were not even established in nine States/UTs including the
National Capital, Delhi. In the States/UTs where PMUs had been set
up, it was observed that they were not performing the multifarious
functions assigned to them in their entirety. There were also vacancies
in technical and other post(s) in States like Jharkhand, Uttarakhand
and Odisha.
(v) The PIUs had not been established in 10 States viz. Arunachal Pradesh,
Bihar, Chandigarh, Delhi, Gujarat, Himachal Pradesh, Jammu and
Kashmir, Odisha, Puducherry and Sikkim. Even where the PIUs were
established, they were not working efficiently. There were vacancies in
the PIUs.
(vi) In six States, election for ULBs had not been held regularly. Similarly,
it was observed that as per data of the MoUD, only 11 out of 31 States/
UTs were said to have transferred all 18 functions to the ULBs as
mandated by reforms. In the remaining States, the number of functions
 4

transferred to the ULBs varied. Even the transfer of city planning

function could not be implemented in 16 States/UTs.
(vii) It was observed that out of the 66 ULBs/Parastatals, who had committed
to implement the reform to shift to accrual based double entry
accounting by 2010-11, 44 ULBs/Parastatals had implemented the
reform.
(viii) Only 27 out of 51 ULBs/Parastatal had implemented the reform of
85 per cent coverage of property tax by 2010-11. Similarly, only
10 (Vijaywada, Hyderabad, Visakhapatnam, Chandigarh, Faridabad,
Bangalore, Mumbai, Pune, Shillong and Lucknow) out of 39 selected
cities had reported 90 per cent or more collection efficiencies. On the
front of collection of user charges, out of 39 Mission Cities selected
for audit scrutiny, mechanism for collection of user charges for water
supply and solid waste management was reportedly established in
7 and 5 cities respectively.
(ix) Only 20 States/UTs implemented the reform of enactment of Public
Disclosure Law. Out of 62 ULBs/Parastatals committing to implement
e-governance by 2010-11, 27 achieved this reform. None of the cities
implemented property title certification system. As regards revision of
building bye laws for streamlining the approval process, 21 ULBs which
had committed to implement the reform by 2010-11, did not implement
it. Further, only 49 out of the committed 63 ULBs/parastatals
implemented the computerized registration of land and property as
envisaged in the reforms.
(x) In respect of State level mandatory reforms, 16 States which had
committed to implement the reform "Amendment of rent control laws"
by 2010-11, did not implement it by then. Similarly, in 13 States/UTs
rate of stamp duty continued to remain over five percent.
(xi) In many cases, the DPRs of individual projects had no co-relation with
the CDPs. There were other deficiencies in the DPRs like lack of details
about availability of land, incomplete DPR etc.
(xii) Out of the 1517 projects under BSUP and IHSDP, 82 projects were
selected for audit scrutiny out of which 53 were under BSUP and
29 were under IHSDP. It was seen that seven of these selected projects
had not even been started and one project was abandoned. Only one
selected project i.e. Housing for Urban Poor at Bawana, Narela and
Bhoragarh, BSUP, Delhi sanctioned in 2007-08 was reported complete.
The remaining 73 projects were still incomplete.
(xiii) Out of 16.07 lakh dwelling units approved, only 4.18 lakh dwelling
units (26 per cent) were completed by 31 March, 2011. Out of the
completed dwelling units, only 2.21 lakh dwelling units (53 per cent)
were occupied.
 5

(xiv) There had been 11 instances of deficiencies in identification of

beneficiaries. For example, under BSUP, Kochi Phase-II - Individual
Houses, Kerala, beneficiaries of three colonies were Corporation
employees with regular source of income who were not eligible for
assistance admissible under the scheme of BSUP.

(xv) A major reason for projects not being taken up at all and delays in
progress was due to non-availability of land in time. In some cases,
land was made available only partly. Thus, all the proposed dwelling
units could not be constructed. In some States/UTs, it was also seen
that the land identified was already occupied by others and therefore
not available. Audit came across cases where delay in land acquisition
was the reason for delayed completion of housing projects.
(xvi) In some States/UTs, the beneficiary contribution had not been collected
or was proposed to be collected in deviation from JNNURM guidelines.
(xvii) There were cases where funds were diverted for purposes other than
those admissible under JNNURM and in some cases even for non-
JNNURM purposes.

(xviii) Audit scrutiny of selected 97 out of 532 projects under UIG and 37 out
of 766 projects under UIDSSMT revealed that in UP, not even a single
urban infrastructure project had been completed in seven Mission Cities
whereas in Delhi, only four projects out of 28 sanctioned were
completed. Comparatively, sizeable number of projects had been
completed in Gujarat (33 out of 71 projects), Karnataka (16 out of 46
projects) and Andhra Pradesh (17 out of 50 projects).
(xix) In 37 selected water supply projects (21 projects under UIG and
16 projects under UIDSSMT), 5 had not even been started and 1 project
was withdrawn. Only 3 selected projects were complete. As the projects
remained incomplete, the machineries/equipments purchased for
implementation of water supply projects remained idle.
(xx) In 11 selected solid waste management projects (6 projects under UIG
and 5 projects under UIDSSMT), 2 had not even been started and the
remaining 9 projects were not complete. In 4 cases funds of
`3.41 crore remained blocked due to purchased of machinery and,
equipment in advance for implementation of solid waste management
projects. In Rohtak, Haryana, there was wasteful expenditure of `1.76
crore incurred on solid waste management project due to change of
site of the project by the State Government.

(xxi) In 56 selected sewerage projects, 3 had not even been started, 1 project
was abandoned and 5 projects were deferred. Only 4 selected projects
were complete. Audit also found that `26.15 crore was paid as
mobilization advance to 2 contractors in Sanitary and Sewerage System
 6

for Bilaspur and sewerage treatment plant though mobilization advance

was not to be paid as per the terms of contracts.
(xxii) In 19 selected MRTS, roads & flyovers and other transport projects
(10 under UIG and 9 under UIDSSMT), 1 project was abandoned and
2 projects were withdrawn. Only 3 projects were completed.
(xxiii) The guidelines did not specify any timeframe within which releases
were to be made after the project was approved. The scrutiny of physical
and financial progress report (up to 31.03.2011) as seen from records
of MoHUPA, revealed that there were delays in release of funds from
the Central Government to the respective SLNAs.
(xxiv) There were delays in releasing the matching share to implementing
agencies by some State Governments. Similarly, Audit found shortfalls/
delays in release of the matching share of the ULBs towards execution
of projects.
(xxv) Revolving Fund had not been created by the SLNAs in 25 States/UTs.
In 3 States (Andhra Pradesh, Tamil Nadu and West Bengal), it was
created partially. In two states (Assam and Uttar Pradesh), though it
was created, it was utilized for meeting the expenses for preparation of
DPRs/Project Management Consultancy Charges and execution of roads
respectively.
(xxvi) In several cases, the funds were parked by SLNAs or ULBs.
(xxvii) There were no specific instructions regarding utilization of interest
earned on the amount deposited into Bank. 22 out of 30 States/UTs
selected for audit, earned the interest on the amount deposited into
Bank to the tune of `210.35 crore up to 31st March 2011.
(xxviii) Utilization Certificates of `2436.78 crore (UIG) `2036.66 crore
(UIDSSMT), `3054.05 crore (BSUP) and `2504.64 crore (IHSDP) as
of May 2012, March 2011, March 2012 and March 2012 respectively
were outstanding in MoUD and MoHUPA from the States/UTs.
(xxix) At the time of setting up the JNNURM Directorate, no additional staff
was created (as the staffing pattern was not worked out) and the staff in
the Directorate had been posted by way of internal adjustment in MoUD.
(xxx) As per the Ministry's record, 105 projects under UIG had been
completed up to 2010-11 whereas completion certificate from 3 States/
UT (Delhi, Maharashtra and Madhya Pradesh) for 10 projects only
were received in the Ministry (May 2010).
(xxxi) Against 61 meetings required to be held during March 2006 to March
2011, only 37 meetings were held by TAG.
(xxxii) Only 27 States/UTs had appointed IRMA for third party monitoring of
the projects. Similarly, TPIMA had been appointed by 21 out of
 7

30 States/UTs as of February 2012. The same had not been appointed

in Arunachal Pradesh, Bihar, Dadra & Nagar Haveli, Daman & Diu,
Jharkhand, Meghalaya, Punjab and Sikkim.
8. Against the above backdrop, the Committee selected the subject for
examination and report based on Report No. 15 of 2012-13 (Performance Audit) of
the C&AG of India. In the process, the Committee obtained the requisite information/
material/written reply from the MoUD and the MoHUPA. The Committee also took
oral evidences of the representatives of these Ministries on 11.09.2013 and 08.10.2014.
Based on the information gathered from these Ministries and the Audit inputs, the
Committee have dealt with the Audit findings and other relevant issues in detail in the
succeeding paragraphs.
II. Allocation of funds and release of additional central assistance by the Central
Government
9. Audit has pointed out that against an allocation of `66,084.65 crore envisaged
by the Planning Commission for JNNURM during the Mission period 2005-06 to
2011-12, a budgetary allocation of `45,066.23 crore was made during this period.
Against this allocation, only `40,584.21 crore had been released in respect of UIG,
UIDSSMT, BSUP and IHSDP up to 2011-12. In the case of UIG, the shortfall was as
high as 94.86 per cent in Goa and there were 14 States/UTs where the releases were
short by more than 50 per cent. Similarly, in case of BSUP Projects, there were shortfalls
in all States with Bihar (85.29 per cent), Goa (89.94 per cent), Himachal Pradesh
(76.45 per cent), Jharkhand (76.59 per cent), Punjab (94.06 per cent) and Rajasthan
(77.67 per cent) showing shortfalls of more than 75 per cent. There were considerable
shortfalls in IHSDP releases also with no release in respect of Goa and Lakshadweep.
10. In the above context, the Committee enquired about the reasons for the
significant shortfall in release of Additional Central Assistance (ACA) as envisaged
by the Planning Commission during the period 2005-06 to 2011-12. In their reply, the
MoUD inter-alia stated as under:—
"Release of funds to State Governments depends on physical progress of projects,
utilization of ACA already released and submission of UCs. These are insisted
upon for release of ACA. Local self-Government being a State subject MoUD's
intervention is limited to monitoring which is done vigorously to expedite
completion of projects. JNNURM is also a reform linked infrastructure
development programme. Some of the States could not claim 2nd Installment of
ACA for the projects due to non- completion of reforms".
11. The MoHUPA in their reply submitted as under:—
"(a) In the initial years, due to lack of State capacity to develop plans and
prioritize projects, some States were slower in bringing the new projects.
Therefore, there were gaps between the allocation and actual release for
few States.
(b) Non-submission/non-acceptance of utilization certificates, which may be
due to unutilized central funds, poor physical progress, inability of
 8

States/UTs to raise matching shares and lack of compliance with reforms

or other conditions of the scheme.
(c) Presently ACA is recommended by the MoHUPA and is released by the
D/o Expenditure. Thus, there are instances of procedural delay".
12. In this regard, the Secretary, Urban Development deposed in evidence as
under:—
"On the front of reform achievement, Sir, substantial progress has been shown
by the States in the later half of the Mission. As all the reforms were not achieved
during the given period, the Government has decided to withhold 10 per cent of
the ACA, which will be released once the reforms are achieved by them. The
Government has also appointed the Reform Appraisal Agencies, which monitor
the progress of the reforms and submit their reports periodically to the Ministry."
13. Enquired about the steps taken to ensure timely release of ACA, the MoUD
in their reply inter-alia apprised as under:—
"Subsequently, on 01-12-2010, the Cabinet approved relaxation on achievements
of reforms and allowed release of funds subject to withholding of 10% of ACA
under UIG. The States have been repeatedly requested through communication
and on various forums to expedite submission of UCs claiming second installment
of ACA for the projects and complete the projects".
14. In their reply, the MoHUPA stated as under:—

"To mitigate the capacity constraints, this Ministry took up various measures to
facilitate States/UTs in setting up technical support structure for successful
implementation of JNNURM. The Government of India is extending financial
support for establishment of Programme Management Unit (PMU) at the State
level and Project Implementation Unit (PIU) at ULB level. The MoHUPA has
also conducted a number of Capacity Building Programmes so that the State/
parastatal/local body officials are trained in project formulation, design,
implementation and monitoring. To avoid procedural delays, it is now proposed
to release the Central assistance by the Ministry directly w.e.f. 2014-2015."

15. On being asked to state the latest position of release of funds in respect of
UIG and UIDSSMT, the MoUD in their reply informed that 539 UIG projects
amounting to `60,811.32 crore with an ACA of `27,893.45 crore had been sanctioned.
As on 30.09.2013, `20,040.49 crore had been released for these 539 projects. However,
in response to another query from the Committee, the MoUD provided the figure of
`21,732.13 crore as the total amount released for UIG. Further, 806 UIDSSMT projects
amounting to `14,010.79 crore with an ACA of `11,313.60 crore had been sanctioned.
As on 30.09.2013, `9,708.59 crore had been released for these 806 projects.

16. As regards BSUP and IHSDP Projects, the MoHUPA submitted as under:—

"As on 15th September 2014 `17,639.6 crores has been released out of
`20,169.32 crore ACA committed for JNNURM (BSUP & IHSDP) projects".
 9

III. Status of the Projects

17. Audit highlighted that the time granted for completion of the projects, on an
average was around two years though the Ministry stated that there was no specific
stipulation of the time period for completion of a project and it varied from project to
project. Of the 2815 projects approved up to 31 March 2011, 2482 projects
(approximately 88 per cent) had been approved up to 31 March 2009. However, only
8.98 per cent of the total projects could be completed as on 31 March 2011 as could be
seen from the table below:

Component Status of Projects

Total Not Started Under Completed
Progress (Percentage)
UIG 532 65 362 105 (19.73)
UIDSSMT 766 42 598 126 (16.44)
BSUP 499 84 407 8 (1.60)
IHSDP 1018 91 913 14 (1.37)

Total 2815 282 2280 253 (8.98)

18. In the above context, the Committee desired to know the reasons for
completing only 8.98 per cent of the projects by March 2011. In their written reply,
the MoUD provided the subsequent position and explained as under:
"217 out of 539 projects sanctioned under UIG and 403 out of 806 projects
sanctioned under UIDSSMT have been reportedly completed as on 30.09.2013;
which is about 46% taking into account both the components. The other projects
are at various stages of implementation. The States have been asked to complete
all the projects at the earliest and in any case before 31st March 2014.
The delay in completion of projects as indicated by States are due to various
constraints such as (i) delay in claiming second installments by States for non-
implementation of urban sector reforms; (ii) due to litigation on land availability;
(iii)NOCs from various departments such as National Highways, Environment
Department, Defence, Railways etc.; (iv) Cost over runs and escalations due to
SOR differences; (v) Non availability of technical manpower at ULBS and also
good contractors at some towns; and (vi) Changes in site location due to ground
conditions".
19. In his deposition before the Committee, the Secretary, Urban Development
further submitted as under:—
"The main reasons for delay in execution of the remaining projects have been
mainly attributed to land acquisition issues, litigation matters, shifting of utilities
and statutory permission from Defence, Railways, Environment & Forest and
other regulatory Departments."
 10

20. Subsequently, the MoUD stated that a total of 539 UIG projects had been
approved during the Mission period (2005-12) and 33 projects had so far been
withdrawn. Further, a total of 806 UIDSSMT projects had been approved during the
Mission period (2005-12) and 15 projects had so far been withdrawn. Out of these,
247 UIG projects and 454 UIDSSMT projects had been completed as on
31st August, 2014.
21. The MoHUPA in their reply apprised that they had all along been monitoring
the progress of the project in terms of completion of Dwelling Units (DUs). As on
15th September, 2014, out of 14,41,231 DUs sanctioned 8,44,062 DUs (58.6%) had
been completed under the BSUP & IHSDP components of JNNURM. In 355 projects
all the 2.99 lakh DUs had been completed.
22. According to the MoHUPA, the reasons for slow progress were as under:—
"Projects have witnessed large cost escalations, due to rising prices of steel and
cement amongst other factors, States and Urban Local Bodies are not able to
meet such cost escalation. Government of India, under the JNNURM Scheme
has decided not to fund any cost escalations. In IHSDP component, cost ceiling
was artificially imposed at `80,000 per Dwelling Unit which was revised in
2009 to `1 lakh per DU effective from 1.4.2008. This ceiling translated to a
heavier burden on the States/ULBs resulting in stalling of projects. Instead actual
cost under IHSDP was also higher than `1 lakh and this coupled with large cost
escalation, has very adversely affected the progress of IHSDP projects especially
in the States/ULBs which are not able to fund the enhanced cost. Difficulties in
making slum residents temporarily relocate in the case of in situ projects; Inability
of beneficiaries to contribute their share; and Lack of availability of litigation-
free land".
23. Asked to state the steps/efforts taken to ensure timely completion of JNNURM
projects, the MoUD in their reply informed that completion of projects was being
constantly monitored through meetings, correspondence and reviews.
24. During evidence, the Secretary, UD elaborated the efforts made for expediting
projects as under:—
"The Ministry has been pursuing with the States for expediting the completion
of the remaining projects. In order to achieve this, the Ministry continuously
engages with the States and Municipalities for review of these projects through
review meetings, various communications, video conferencing, Independent
Review and Monitoring Agencies, and so on. We have held a series of Workshops
— Regional Workshops, State level Workshops and National Workshops. The
Mission period has been extended up to March, 2014 for completion of the
projects and achievement of reforms."
 11

25. In their reply, the MoHUPA apprised as under:—

"States have been advised during the course of numerous CSMC/CSC meetings
and Review meetings at Central/Regional and State level to:—
(i) Start the non-starter projects and take action to complete projects and
ensure occupancy of completed houses according to a time-bound action
plan;
(ii) To drop the projects which cannot be started even after reasonable
efforts made;
(iii) Achieve the completion of DUs within the Mission period and as early
as possible;
(iv) Provide additional State Share to implementing agencies to meet cost
escalation; and
(v) For non-starter projects under IHSDP, which got struck up due to
artificial ceiling, this Ministry did make efforts for enhancement in the
ceiling cost from `1 lakh/DU to `1 .75 lakh/DU (w.e.f. 1.4.2010).
However, the proposal did not find favour with the M/o Finance and
Planning Commission."
26. The MoHUPA further stated as under:—
"173 projects which have not started have been cancelled. In 526 projects, DUs
have been curtailed to the extent of them remaining non-started till date. Now
3,49,014 houses are under progress."
27. When asked whether any target date had been set to complete the projects,
the MoUD replied as under:—
"Government of India has extended the Mission by a period 2 years i.e. upto
March, 2014 for completion of all on- going projects sanctioned till March, 2012
and achievement of committed reforms etc. States have been requested to complete
all these projects at the earliest and in any case before 31st March, 2014."
28. The MoHUPA in their reply submitted as under:—
"The Government of India has now extended the Mission period upto March,
2015 for completion of projects sanctioned under BSUP and IHSDP components
of JNNURM."
29. The Committee desired to know about the adverse impacts emanating from
the non-completion of various JNNURM projects. The MoUD in their reply submitted
that due to non-completion of various urban infrastructure projects the following adverse
impacts had surfaced:—
“a. There has been cost escalation in view of time overrun. This extra financial
burden has to be borne by the ULBs/lAs/State.
b. The service delivery levels which would have increased upon completion
of projects have remained stagnant.
c. Inconvenience and hardships to general public during course of
implementation.”
 12

30. About the cost escalation, the Secretary, Urban Development deposed in
evidence as under:—

"The position is that we discount the inflation related escalation in the cost. In
the guidelines, all cost escalations are to be borne by the State Governments. We
do not take note of it."

IV. Structure for Project Implementation and Monitoring under JNNURM

Project Management Units and Project Implementation Units

31. According to Audit, the Programme Management Units (PMUs) were to be

established to assist the State Level Nodal Agency (SLNA) in discharging their roles
and responsibilities of appraisal of projects submitted by Urban Local Bodies (ULBs)
/Parastatal agencies, monitoring physical and financial progress of projects, monitoring
implementation of reforms, to enhance capacity of SLNA by extending technical and
advisory support etc. However, the PMUs were not even established in 9 States/UTs.
Regarding the functioning of the PMUs in the States/UTs where they had been set up,
it was observed that they were not performing the multifarious functions assigned to
them in their entirety. There were also vacancies in technical and other post(s) in
States like Jharkhand, Uttarakhand and Odisha.

32. Similarly, Project Implementation Units (PIUs) were to be created as operative

units to supplement and enhance the skill mix of the ULBs. As per the Audit report, in
10 States, the PIUs had not been established. Even where the PIUs were established,
they were not working efficiently. There were vacancies in the PIUs. In Jharkhand, the
functions performed by majority of the PIU personnel did not match with their scope
of work. The PIU personnel were also engaged by Ranchi Municipal Corporation/
Dhanbad Municipal Corporation in assignments/tasks other than those stipulated in
their scope of work. In Gwalior, Madhya Pradesh, PIU members visited project sites
thrice but no guidance/ reports in respect of implementation of project were given by
them. In Jammu and Kashmir, despite release (March, 2009) of `0.82 crore by the GoI
for establishment of one PMU (`0.20 crore) and PIUs (`0.62 crore), it was seen that
the PMU and PIUs had not been established.

33. While the MoUD accepted (April, 2012) that the States had been slow in
appointment of PMU, the MoHUPA replied (April, 2012) that JNNURM started in
December, 2005 and during the course of Mission itself, various support structures
were envisaged as per guidelines. Framing of structures, guidelines and toolkit for
these support structures took time and finally the Ministry came up with the guidelines
of PMU in 2007. As per the guidelines, the support was for 3 years. After the toolkit
came into existence, States started to set up the PMUs. Since the support was for only
3 years, many States found it difficult to hire manpower from the market when there
was no certainty about continuity of such structures/support beyond 3 years. All these
factors coupled with lack of capacity at the State level or ULB level to establish such
structure resulted in delays and inadequate manpower in PMUs.
 13

34. During the evidence, the Secretary, Urban Development admitted the delay
in establishment of the PMUs and PIUs as under:—
"Considering the constraints prevailing in the local bodies, provision was made
under the guidelines that the States and the Municipalities may set up the
Programme Management Unit (PMU) and the Project Implementation Unit (PIU)
in the cities, for which the Government of India reimburses the cost incurred on
these agencies fully. There has been some delay on the part of some States in
setting up the PMUs and PIUs. Sir, I would like to submit that the execution and
implementation of the projects are done by the State Governments following
their own tendering and procurement procedures. Till now, about 45 per cent of
sanctioned projects have been completed."
35. In the above context, the Committee desired to know the reasons for the
failure of the established PMUs in the States/UTs to perform their multifarious functions
and the delay in establishment/non-establishment of PMUs and as well as the remedial
measures taken in the matter. In their reply, the MoUD explained as under:—
"Establishment of PMU is an enabler provision for the States. The responsibility
for establishment of PMU lies with the State Government/SLNA. The Ministry
has already issued Toolkit and advisories for setting up of PMU. The
establishment of PMUs was approved by the Ministry based on proposals sent
by the State/UTs. So far the Ministry has approved 21 PMUs based on the
requirement of States/UTs. The delay in the establishment is not in hand of the
Ministry. It was due to persuasive action on the part of the Ministry, the States/
UTs came forward with the proposal for establishment of PMUs which were
considered and approved by the CSMC. The setting up of PMU is constantly
monitored during the sanction/ releasing of 2nd or subsequent installment of
ACA. This has been noted for compliance in a better manner during the next
phase of JNNURM".
36. The MoHUPA in their reply stated as under:—
"Establishment of PMU in States was an important step for implementing the
scheme. Ministry pursued with the States for establishing the PMUs. PMU
performs as assistant to State Level Nodal Agency to monitor the projects and
various tasks related to the implementation of the project. It is not as if that
PMU did not perform their multifarious functions. Ministry continuously carried
out capacity building tasks to upgrade the skills of SLNA and PMU. Out of
29 PMUs sanctioned by the Ministry, 26 States set up the PMUs with the
pursuance of the Ministry. PMUs in Arunachal Pradesh, Nagaland and Mizoram
were withdrawn subsequently due to very few projects there and lack of resources".
37. On being asked about the deployment of inadequate manpower in support
structures in the States/UTs and the steps taken to fill up the vacancies therein the
MoUD in their reply apprised as under:—
"Deploying adequate manpower as per the toolkit is the mandate of the State
Government/ SLNA. The MoUD has also impressed upon all States/UTs for
 14

constitution of a Municipal Cadre. The Ministry has issued Toolkits for

establishment of PMUs & PIUs and various advisories for these establishments,
in which mandatory key personnel have been suggested. Some are kept by the
State Governments/SLNA on their felt needs. The Ministry under JNNURM
only approves the proposal for establishment of PMUs and PIUs as submitted
by the States. The selection of the personnel is to be done by the respective
States in compliance with their codal formalities. However, to facilitate the States
in establishment of PMUs and PIUs, the Ministry had also revised the
remuneration for the key personnel."

38. The MoHUPA in their reply submitted as under:—

"The establishment of PMU and staffing it with adequate manpower was directly
done by the State and State established them as per their requirement. Several
States / Cities already had existing manpower which was capable of carrying
out work as envisaged by PMU. Thus, the States have established PMU/PIU as
per their need. As of now, a total of 26 PMUs have been established all over
India. Many a times, establishment of PMU/PIU got affected because of
non-availability of adequate professional in concerned State/City. In cases where
PMU/PIU were not established, States /cities' existing manpower shouldered
the responsibility as envisaged to be carried out by the PMU/PIU under the
scheme."

39. To a pointed query as to why the PIU personnel were assigned tasks other
than those stipulated in their scope of work in Jharkhand, the MoUD replied as under:—

"It is submitted that the Ministry has no such reports. It is the responsibility of
the ULBs to use services of PIU personnel only for the stipulated tasks. This
could be an exceptional case. However, the Ministry has noted the irregularity
and needful would be done."

40. The MoHUPA in their reply stated as under:—

"As explained earlier these PMUs and PIUs were set up by the State and City
Governments for assisting them in carrying out scheme related works. Since
they are working closely with States and Cities, in few cases there might be
some incidence of them carrying out the task not related to JNNURM. Audit has
only pointed out example of Ranchi and Dhanbad. In the next phase of the RAY
scheme, GoI has sanctioned such units on the shareable expenditure basis where
State is contributing its share. As such it is acceptable for the PMU/PIU to assist
the State and Cities in other related works in addition to the work related to the
scheme".

41. When asked about the failure of the visiting PIU members to give guidance/
reports in respect of implementation of projects in Gwalior both the Ministries of
Urban Development and Housing and Urban Poverty Alleviation could not furnish
any reply.
 15

42. The Committee further enquired about the reasons for non-establishing of
one PMU and PIUs in Jammu and Kashmir despite release of `0.82 crore by the
Central Government. The MoHUPA in their reply stated as under:—

"As explained earlier the responsibility of establishing PMU and PIU lies with
the State Government and City Government. Government of India has approved
one PMU and four PIUs in J&K. 1 PMU and 1 PIU have been approved in
Jammu & Kashmir on 10/02/2009".
V. Implementation of Reforms
43. JNNURM has a reform driven approach and the States and Municipalities
were expected to achieve 23 governance reforms in line with the Constitution (Seventy-
Fourth) Amendment Act, 1992 such as transfer of functions to the Municipalities,
e-governance, property tax reforms, rationalization of stamp duty, levy and collection
of user charges, improvement of Municipal accounting system, administrative Reforms,
community participation law, etc.

(i) Conduct of Election in ULBs

44. As per article 243U of the Constitution, election to ULBs once in every five
years is mandatory. If a Municipality is dissolved, the election to constitute a new
Municipality is required to be held "before the expiry of a period of six months" from
the date of its dissolution. This provision in the constitution was a mandatory reform
under JNNURM. Audit observed that in 23 out of 30 selected States/UTs, elections
were held timely. In six States (Arunachal Pradesh, Assam, Jammu and Kashmir,
Jharkhand, Meghalaya and Nagaland) elections had not been held regularly. In Sikkim,
elections were held for the first time in 2010. The MoUD in their reply (April, 2012)
stated that even holding of elections in Jharkhand, Sikkim, Mizoram, Manipur, etc.
was an achievement of JNNURM and it might not have happened otherwise.
45. In the above context, the Committee enquired about the reasons for failure
to hold regular elections in ULBs in 6 States and the efforts made to ensure regular
elections in ULBs in all the States/UTs. In reply, the MoUD explained as under:—

"Municipal elections come under the purview of the State. However, the MoUD
has been constantly stressing upon States/UTs on elections of ULBs. The details
regarding holding of Municipal Elections, as reported by these States, are as
follows:—
Jharkhand: Elections were held in 2008.
Arunachal Pradesh: Arunachal Pradesh Municipal Election Act was constituted
in 2009 and Municipal Elections Rules framed in 2011 and the Municipal
elections were held in May, 2013.

Assam: Due to legal obstacles, elections were initially delayed. But later the
elections to the Guwahati Municipal Corporation (GMC) were held in the month
of June, 2013.
 16

Nagaland: First municipal elections were held in December, 2004. As reported

by the State, subsequent Municipal elections could not be held due to a dispute
regarding 33% reservation for women. The State Government has informed that
elections would be held early.
Meghalaya: Elections in 4 municipal boards were scheduled to be held on by
end of September, 2011, but could not be held due to local disturbances. However,
State Government has reported that it has exercised its right to constitute
Municipal Boards for 1 year in 4 Municipal Boards.
Jammu & Kashmir: The State Government has reported that elections to urban
local bodies in J&K were delayed on account of revision of electoral rolls, which
have been completed. Accordingly, memorandum for holding of elections to
ULBs is under consideration.
Elections were held in States like Sikkim, Mizoram, Manipur, Arunachal Pradesh,
etc., on persistent insistence by MoUD to the States to adhere to achieve the
reform stipulation under JNNURM".
(ii) Transfer of 12th Schedule functions
46. The Constitution (Seventy-Fourth) Amendment Act provided for transfer of
18 functions in respect of planning, regulation, provision of infrastructure and services,
etc. listed in the 12th Schedule to ULBs. These 18 functions are:—

(i) Urban planning including town planning.

(ii) Regulation of land-use and construction of buildings.
(iii) Planning for economic and social development.

(iv) Roads and bridges.

(v) Water supply for domestic, industrial and commercial purposes.
(vi) Public health, sanitation conservancy and solid waste management.

(vii) Fire services.

(viii) Urban forestry, protection of the environment and promotion of
ecological aspects.
(ix) Safeguarding the interests of weaker sections of society, including the
handicapped and mentally retarded.

(x) Slum improvement and upgradation.

(xi) Urban poverty alleviation.
(xii) Provision of urban amenities and facilities such as parks, gardens,
playgrounds.

(xiii) Promotion of cultural, educational and aesthetic aspects.

 17

(xiv) Burials and burial grounds; cremations, cremation grounds and electric
crematoriums.
(xv) Cattle pounds; prevention of cruelty to animals.
(xvi) Vital statistics including registration of births and deaths.
(xvii) Public amenities including street lighting, parking lots, bus stops and
public conveniences.
(xviii) Regulation of slaughter houses and tanneries.
47. All the reforms for delegation of powers and responsibilities to ULBs were
to be implemented at State level. It was observed from the data provided by the MoUD
that 11 out of 31 States/UTs transferred all 18 functions to the ULBs. These were
Andhra Pradesh, Bihar, Chhattisgarh, Gujarat, Kerala, Karnataka, Madhya Pradesh,
Maharashtra, Tamil Nadu, Tripura and West Bengal. In the remaining States, the number
of functions transferred varied. In Arunachal Pradesh, Jammu and Kashmir and
Meghalaya not a single function was transferred. In Himachal Pradesh, eight functions
were transferred, in Manipur three functions were transferred, while in Sikkim and
Nagaland only one function was fully transferred.
48. The MoUD replied (May, 2012) that the States are either assigning all the
functions to ULBs or have evolved a mechanism for ULBs to be associated with the
concerned Parastatal agencies. It further stated that mostly second option has been
exercised due to the lack of capacity of the ULBs to perform the functions such as
urban planning, urban forestry and fire services. The MoUD also stated (May, 2012)
that the State Governments have been advised to ensure implementation of reforms in
letter and spirit.
49. In the above context, the Committee desired to know why all the 18 functions
listed in the 12th Schedule could not be transferred to the ULBs in all the States/UTs.
In reply, the MoUD submitted as under:—
"According to Article 243W, incorporated by the 74th CAA, States may, by law,
endow, transfer 12th Schedule functions to the ULBs. In view of the above
provision, Urban Development is a State subject; the States are either assigning
all the functions to ULBs or have evolved a mechanism for ULBs to be associated
with the concerned Parastatal agencies for carrying out some of the functions.
However, some States have reported their inability to transfer a few of the function
to ULBs since the ULBs are not in a position to perform functions such as
Urban Planning, Urban Forestry and Fire Services due to lack of capacities. To
improve the capacity of Municipal staff, Government of India has advised States/
UTs to expedite formulation of Municipal Cadre."
50. The Ministry also made available to the Committee their Advisory Note on
Municipal Cadre sent to all State Governments in November, 2012, which stated that
14 States have constituted Municipal Cadre. It also stated that in some States, while
legislation has been enacted, rules were still being framed.
 18

51. On being enquired about the status of transfer of functions to the ULBs in
the remaining 20 States/UTs and the reasons for variation in this regard, the MoUD
stated in their reply as under:—
"The States are either assigning all the functions to ULBs or have evolved a
mechanism for ULBs to be associated with the concerned Parastatal agencies.
Due to capacity constraints, at the ULB level, several ULBs are not in a position
to perform some of the functions such as urban planning, urban forestry and fire
services, etc. Consequently, all the State Governments did not transfer all the
12th Schedule functions to ULBs uniformly to ULBs. Remaining 20 States/UTs
are at various stages of transferring the functions."
52. Further asked to state the reasons for failure to transfer even a single function
in Arunachal Pradesh, Jammu & Kashmir and Meghalaya, the MoUD replied as under:—
"Constitution of ULB was not done at the time of conducting the Audit in
Arunachal Pradesh. Consequently, transfer of 12th Schedule functions had not
taken place in this State. In Arunachal Pradesh, ULBs were established very
recently, i.e., in May, 2013 and the process of transfer of functions to ULB has
been initiated by the State Government. Due to capacity constraints, J&K and
Meghalaya were not in a position to perform some of the functions such as
urban planning, urban forestry and fire services, etc. As on date, J&K State has
reported transfer of functions to Municipalities. In Meghalaya, State has reported
16 functions transferred to ULBs. Fire services and Urban Forestry functions
are not transferred to ULBs due to capacity constraints in ULBs."
(iii) Transfer of City Planning Functions
53. JNNURM reform agenda sought to implement Article 243W of the
Constitution by transferring the city planning function from the State to the ULBs.
However, this reform was not implemented in 16 States/UTs (Arunachal Pradesh,
Bihar, Chandigarh, Delhi, Goa, Jammu and Kashmir, Jharkhand, Manipur, Meghalaya,
Mizoram, Nagaland, Puducherry, Punjab, Sikkim, Uttarakhand and Uttar Pradesh).
The MoUD in their reply (April/May, 2012) provided the status of some of the States.
In Meghalaya, city planning functions are being performed by ULBs, as per review
meeting with State in February, 2012. City planning functions in Puducherry were
also stated to be transferred as per December, 2011 quarterly progress report. Further,
in Tamil Nadu elected ULBs were also stated to be associated/integrated with city
planning functions as of September, 2011.
54. In the above context, the Committee enquired as to why the transfer of city
planning function could not be accomplished in 16 States/UTs. In reply, the Ministry
stated as under:—
"Due to capacity constraints, several ULBs are not in a position to perform
some of the functions such as urban planning, urban forestry and fire services,
etc. Consequently, all State Governments have not transferred the city planning
functions to ULBs. As on date, 12 States/UTs have reported transfer of city
planning functions to ULBs."
 19

(iv) Accounting System

55. JNNURM reform conditionalities called for "improved municipal accounting,

with the objective of having a modern accounting system based on double entry and
accrual principles, leading to better financial management, transparency and self
reliance", as a mandatory reform for local bodies. As per Ministry's data, out of the
66 ULBs/Parastatals which had committed to implement the reform to shift to accrual
based double entry accounting by 2010-11, 44 ULBs/Parastatals had implemented the
reform. The MoUD in their reply (May, 2012) stated that reviews of cities which had
not implemented reforms were carried out from time to time and States had been
advised to expedite the reforms.

56. In the above context, the Committee enquired about the reasons for
non-implementation of the reform to shift to accrual based double entry accounting by
2010- 11 by 22 ULBs/ Parastatals which had committed to implement the reform. In
reply, the MoUD apprised as under:—

"Eight years of implementation of JNNURM has exposed major lacunae within

the ULBs in terms of capacity and resources which are highly inadequate to
implement urban reforms. Enormous challenges are involved in migration from
cash based accounting towards accrual based double entry system, which require
advance technical skills. Several ULBs lack the capacity to implement this reform.
To overcome this, the Ministry has asked each State/UT to constitute a Municipal
Cadre including accounts cadre. Some States like Madhya Pradesh, Gujarat,
Chhattisgarh, Orissa and West Bengal have taken active steps for creation of
municipal cadre. MoUD regularly reviews the reform implementation status
and issues faced by cities which are slow in progress. Further, States have been
advised to expedite the implementation of reforms. Currently, 32 ULBs are able
to shift to DEAS."

57. On being asked about the remedial action taken in this regard, the MoUD in
their reply stated as under:—

"The achievement of reforms as this is a dynamic process. There has been greater
stress on making the reforms measurable. For this, the Ministry has also brought
out a calibrated score of reforms and circulated it to all the States on
14th November, 2012. This would make analysis of achievement of reforms
more measurable and objective. The Ministry has also appointed Reform
Appraisal Agencies (RAAs) to review the implementation of Reforms in the
States. These RAAs bring out the implementation of reforms and their effects at
the field level. As stated earlier in para 26, migration from cash accounting
towards accrual based double entry system require advance technical skills. In
order to overcome the capacity constraints faced by ULBs, MoUD is supporting
capacity building of States/UTs and ULBs through a development of Training
Manual and comprehensive Capacity Building Programme. Furthermore, States
have been asked to constitute municipal cadre."
 20

(v) 85 Per cent Coverage of Property Tax

58. Property tax is the single most important tax revenue source available to a
ULB. Thus, reform of the property tax systems is one of the mandatory reforms under
JNNURM. The guidelines emphasized the need for the following:—
(a) Proper mapping of properties using a Geographic Information System
(GIS) so that the ULB is able to have a full record of properties in the city
and bring them under the tax net.
(b) Making the system capable of self-assessment (that is a system which is
formula driven and where the property owner can calculate the tax due).
(c) Achieving coverage efficiency of at least 85 per cent of property tax along
with achieving 90 per cent of collection efficiency of the same.
59. During audit in the States/UTs, out of 39 Mission Cities selected for audit
scrutiny, GIS database was put in effect in only 7 cities (Ranchi, Bangalore, Indore,
Pune, Shillong, Kanpur and Lucknow). The MoUD stated (May, 2012) that the point
had been noted.
60. As per the MoUD's data, out of the 51 ULBs /Parastatals which had committed
to implement the reform of 85 per cent coverage of property tax by 2010-11, 23 ULBs/
Parastatals had implemented the reform. It is pertinent to mention that 4 ULBs/
Parastatals though not committed to implement had implemented this reform before
target year. However, 28 ULBs (Guwahati, Patna, Bodhgaya, Chandigarh, Delhi,
Faridabad, Shimla, Ranchi, Kochi, Bhopal, Indore, Jabalpur, Ujjain, Nagpur, Amritsar,
Ludhiana, Bhubaneswar, Puri, Jaipur, Ajmer, Agartala, Dehradun, Haridwar, Kanpur,
Lucknow, Mathura, Meerut and Varanasi) which had committed to implement this
reform by 2010-11, could not implement it.
61. The MoUD in their reply (May, 2012) intimated that Hyderabad had achieved
property tax reform, as per first cycle report of Reform Appraisal Agency. However,
Chandigarh, Nagpur, Ludhiana, Dhanbad, Haridwar and Nainital had not achieved
85% coverage, as per reports available with Mission Directorate.
62. In the above context, the Committee asked the Ministry to explain the reasons
as to why 28 ULBs which had committed to implement the reform of 85 per cent
coverage of property tax by 2010-11 could not implement it. In reply, the MoUD
informed as under:—
"Article 243X of 74th CAA states that — ‘Legislature of a State may, by law-
authorise a Municipality to levy, collect and appropriate such taxes, duties, tolls
and fees in accordance with such procedure and subject to such limits’. In view
of the above provision, the above activity comes under the purview of the State.
This reform involves putting in place a comprehensive property database () to
ensure complete property mapping and bringing all properties under the tax net
including online systems, which will make payment of taxes hassle free. These
above activities consume a considerable amount of time. Most of the ULBs
have taken several steps to implement this reform and are in the process of
 21

achieving the 85% coverage area of property tax. The Ministry has circulated a
toolkit and also provides handholding support, conducts workshops and training
to enhance capacities. As on date, based on the information available with the
Mission Directorate, 42 ULBs (UIG) have achieved this reform completely.
52 ULBs reported more than 50% collection efficiency."

63. On being asked about the remedial measures taken to achieve the reform,
the MoUD in reply stated as under:—
"The Ministry is supporting the ULBs in implementing this reform by providing
handholding support, conducting workshops, trainings to enhance the capacity
etc...."
(vi) 90 Per cent Property Tax Collection Efficiency

64. The guidelines emphasized the need to implement the reform of 90 per cent
collection efficiency of property tax. As per the MoUD's data, out of the 42 ULBs /
Parastatals which had committed to this reform, 19 ULBs/ Parastatals had implemented
the reform. Four ULBs/Parastatals though not committed to implement had
implemented this reform before the target year. Audit observed that 10 (Vijaywada,
Hyderabad, Visakhapatnam, Chandigarh, Faridabad, Bangalore, Mumbai, Pune,
Shillong and Lucknow) out of 39 selected cities had reported success in implementation
of this reform. In respect of five cities (Ahmedabad, Cochin, Indore, Rajkot and Raipur),
collection efficiency of property tax was reported as more than 75 per cent.
65. The MoUD in their reply (May, 2012) stated that in Faridabad, collection
efficiency was 58.71 per cent, as communicated by the State, Bangalore had achieved
91 per cent collection ratio in the Bruhat Bengaluru Mahanagara Palike area, as per
June, 2011 Quarterly Progress Report (QPR). However, collection efficiency figure in
whole Municipal area was not reported. The Ministry also reported that Ahmedabad
and Rajkot had achieved 90 per cent collection efficiency, as per cycle 4 of Reform
Appraisal Report.
66. In the above context, the Committee desired to know the reasons for the
failure of 29 selected cities to assure 90 per cent or more collection efficiencies and
the Ministry's plan to ensure successful implementation of this reform in all the selected
cities. In reply, the MoUD stated as under:—

"Most of the ULBs have taken several steps to implement this reform and are
in the process of achieving the 90% collection efficiency in property tax.
Further, MoUD is supporting the ULBs in implementing this reform by
providing handholding support, conducting workshops, trainings to enhance
the capacity. The Mission Directorate is also providing human resource support
through Project Management Unit (PMU), Project Implementation Unit (PIU)
for speedy implementation of reform. As on date, based on the information
available with the Mission Directorate, 29 ULBs of UIG have achieved this
reform completely. 52 ULBs have reported more than 50% collection
efficiency."
 22

67. Subsequently, the Ministry submitted as under:—

"As stated above, the Ministry has been constantly making efforts for achievement
of pending reforms in all ULBs. However, this being a complex reform, the
ULBs are also being provided handholding support for achievement of reforms.
As on date, based on the information available with the Mission Directorate,
30 ULBs have achieved this reform. 49 ULBs have reported more than
50% collection efficiency."
(vii) Introduction of Property Title Certification System in ULBs
68. JNNURM recognized the adverse effects of the manual system of registration.
The objective of the reform on introduction of property title certification system in
ULBs was to enable the cities in moving towards guaranteed title systems. It sought to
create a public record of titles which would truly describe the property as well as the
title and has a system for reflecting any transaction in real time. As per the MoUD
records, none of the cities had achieved this reform. The MoUD replied (May, 2012)
that this was one of the complex reforms, more so as land is a State subject. The
Ministry further stated that the Department of Land Resources, Ministry of Rural
Development, which were responsible for the matter had taken steps to facilitate this
reform.
69. In the above context, the Committee enquired about the reasons for
non-implementation of 'Property Title Certification System' in any of the cities.
Considering that this was a complex reform and land is a State subject, the Committee
further asked about the perspective with which this reform was envisaged to be
implemented. In reply, the MoUD stated as under:—
"Most of the States have a revenue land record systems in place. Land being a
State subject, Mission has clarified milestones such as, arrangement for reflecting
property titles in a legal framework, Arrangement for adjudication for property
title dispute, Notification of rules for smooth implementation and setting up
administrative system/process. The MoUD has been constantly engaging the
States/ULBs' for better management of land records & transparency in the same."
(viii) 100 Per cent Cost Recovery of Water Supply and Solid Waste Management
Projects
70. A mandatory reform to be undertaken at the local body/city level was the
levy of reasonable user charges by the ULBs and Parastatals with the objectives that
the full cost of Operation and Maintenance (O&M) or recurring cost is collected within
the next 7 years. It was, observed in audit that out of 39 Mission Cities selected for
audit scrutiny, the mechanism for collection of user charges for water supply with the
objective to meet the cost of operation and maintenance was reportedly achieved in
7 cities (Visakhapatnam, Ahmedabad, Pune, Imphal, Raipur, Lucknow and Haridwar)
only. It was further observed that the mechanism for collection of user charges for
solid waste management with the objective to meet the cost of operation and
maintenance was reportedly achieved in 5 cities (Ahmedabad, Indore, Nagpur, Pune
and Lucknow) only.
 23

71. The Committee enquired about the reasons for establishing the mechanism
of collection of user charges for water supply and solid waste management only in
7 and 5 cities respectively out of the 39 Mission Cities. In reply, the MoUD elaborated
as under:—
“Ministry has envisaged reforms in institutional, financial and structural
governance structure of the ULBs to make them efficient, accountable and
transparent. However, reforms implementation had been a challenge. Besides,
most of the smaller cities have inadequate capacity in terms of finance and human
resource, which has led to slow achievement of reforms. The larger cities have,
by and large, managed to shift to a more professional work orientation for better
implementation of reforms. 100% O&M cost recovery in water supply & SWM
is a dynamic process to be achieved every year. Most of the ULBs have taken
several steps such as formulation of user charge policy, introduction of volumetric/
telescopic tariff and revision of tariff in the process of achieving 100% O&M
cost recovery. Moreover, this aspect being in the purview of State, the leadership
of the State/UT Governments and the political will is extremely important to
undertake this reform. Most of the ULBs have already established a mechanism
of collection of user charges.”
72. On being asked about the present position of establishing the aforesaid
mechanism in the remaining cities, the MoUD intimated as under:—
"Most of the ULBs have been collecting user charges for water supply based on
flat rate basis or on ferrule basis. On persistent insistence by MoUD, the States
and ULBs have taken several steps such as formulation of User charge policy,
introduction of volumetric/telescopic tariff and revision of tariff to implement
this reform. In some of the cities/towns where projects have been undertaken in
water supply or solid waste management sector, the ULB has proposed to impose
user charges after completion of this project. In view of the same, most of ULBs
have improved O&M cost recovery. As on date, 40 and 23 ULBs have achieved
more than 50% O&M cost recovery in water supply & SWM respectively."
(ix) Enactment of ‘Public Disclosure Law’
73. One of the State level mandatory reforms was the enactment of Public
Disclosure Law. The goal of public disclosure is to institute transparency and
accountability in the functioning of municipalities through publication of information
pertaining to various facets of municipal governance, namely, personnel, particulars
of administrative structure, finances and operations. JNNURM envisaged the enactment
of a Public Disclosure Law (PDL) to ensure release of quarterly performance
information to all stakeholders. As per the MoUD's data, there were 31 States/UTs
which had committed to implement this reform, 20 States/UTs had implemented the
reform by 2010-11. The nature and mode of implementation also varied in the States.
74. The MoUD replied (May 2012) that the Mission primarily focuses on the
notification of the law. In Nagaland, Sikkim, Chhattisgarh, Delhi and Uttarakhand,
PDL had been implemented as per the Reforms Appraisal reports. In Bihar, executive
orders had been issued by the State Government. In Puducherry — Amendment to
 24

Municipal Act for enactment of PDL was approved on 21 February 2011 and notified
in the Gazette of Puducherry vide No. 11 dated 10 March 2011. Moreover, all the
ULBs/States were also covered under the RTI Act, 2005. The MoUD further stated
that the advisory had been issued to the States.
75. In the above context, the Committee enquired about the reason for the
enactment of Public Disclosure Law only in 20 out of 31 States/UTs, which had
committed to implement it. In reply, the MoUD stated as under:—
“Most of the States/UTs have taken steps to implement this reform. In few of the
States, due to administrative exigencies, draft bills are still pending at the State
Cabinet for approval. As on date, 26 out of 31 States/UTs have implemented
this reform in full. All the States/UTs have reported more than 50% achievement
of this reform. Further, all the States/UTs have reported implementation of RTI
Act.”
(x) e-Governance
76. Out of 62 ULBs / Parastatals which had committed to implement this reform
by 2010-11, only 27 ULBs/Parastatals had implemented this reform. It was observed
in audit that out of 39 Mission Cities selected for audit scrutiny, e-governance was not
put into effect in 14 cities (Vijayawada, Ludhiana, ltanagar, Patna, Faridabad, Jammu,
Dhanbad, Nagpur, Imphal, Kohima, Thiruvananthapuram, Kochi, Puducherry,
Gangtok). In 14 other cities (Hyderabad, Visakhapatnam, Raipur, Delhi, Shimla, Ranchi,
Shillong, Bhubaneshwar, Madurai, Chennai, Nainital, Haridwar, Kolkata, Asansol). It
was being implemented partially. e-governance was put into practice only in 11 cities
(Chandigarh, Bangalore, Indore, Mumbai, Pune, Ajmer-Pushkar, Lucknow, Kanpur,
Ahmedabad, Guwahati and Rajkot).
77. The MoUD replied (April 2012) that Vijaywada, Hyderabad and
Visakhapatnam had achieved e-governance reform completely as per the reform
appraisal report. It also stated that Faridabad had implemented all the eight modules
of e-governance reform and Delhi and Bhubaneswar had achieved e-governance reform
as communicated during review meetings in February 2012. The Ministry further replied
that Madurai and Kolkata achieved the reform as per September 2011 QPR and by
June 2012, 35 ULBs had achieved this reform.
78. In the above context, the Committee enquired about the failure of 35 ULBs/
Parastatals which had committed to implement the e-governance by 2010-11 failed to
achieve the feat. In reply, the MoUD explained as under:—
“Following services are to be covered under this reform:
•Basic citizen services: Birth and death registration and health programmes.
•Revenue earning services: Property tax and licenses.
•Development services: Water supply and other utilities, building plan approval.
•Efficiency improvement services: Procurement and monitoring of projects.
•Back office improvements: Accounting and personnel management system.
•Monitoring: Citizen Grievance redressal.
 25

All the ULBs have initiated the processes to achieve this reform but due to
capacity constraints, at the Municipal level, several ULBs were not in a position
to implement this reform fully. However, as on date, based on the information
available with the Mission Directorate, 26 ULBs have achieved this reform in
full. As on date, 53 ULBs have implemented 4 of the suggested 8 e-governance
modules."
79. On being asked to explain why e-governance was not put into effect in
14 cities out of 39 Mission Cities selected for Audit scrutiny, the MoUD in their reply
stated as under:—
“Presently, all these 14 cities are able to implement several modules like Birth
& Death Certification, Citizens' Grievance Monitoring, water supply & other
utilities, e-procurement, etc. However, due to capacity constraints and complexity
of some modules, the implementation of remaining modules is still in progress.
As reported, 3 (Nagpur, Thiruvananthapuram and Kochi) out of 14 cities, have
achieved all the modules of e-governance reform.”
(xi) Revision of Building Bye-Laws for Streamlining the Approval Process
80. Revision of building bye-laws for streamlining the approval process was
required as one of the reforms to be undertaken by States/cities to establish a simple,
transparent and lesser time-consuming process that encourages development. As per
the Ministry's data, out of the 63 ULBs /Parastatals which had committed to implement
the reform for revision of building bye-laws for streamlining the approval process by
2010-11, 42 ULBs/Parastatals had implemented the reform. Analysis of information
furnished by the MoUD, revealed that 21 ULBs (Chandigarh, Delhi, Panaji, Faridabad,
Shimla, Jammu, Srinagar, Dhanbad, Ranchi, Aizawl, Puducherry, Gangtok, Dehradun,
Haridwar, Nainital, Agra, Allahabad, Lucknow, Mathura, Meerut and Varanasi) which
had committed to implement the reform by 2010-11, did not implement it.
81. In the above context, the Committee desired to know the reasons for non-
implementation of the reform by 21 ULBs which had committed to implement the
reform. In reply, the MoUD informed as under:—
“Most of the States/UTs have taken steps to implement this reform and revised
building laws are prepared. In a few States as reported by them, due to
administrative exigencies, draft bills are still pending at various stages. As on
date, 58 out of 65 ULBs have, as reported, achieved this reform."
(xii) Introduction of Computerised Process of Registration of Land and Property
82. JNNURM inter alia aimed at computerization of the process of registration
of land and property, so as to deliver efficient, reliable, speedy and transparent services
to citizens. The States/cities were therefore required to undertake steps to introduce
computerized process of registration to bring in an efficient real estate market where
transactions, i.e. sale and purchase of properties, can take place smoothly, without any
barriers, and in a transparent manner. As per the MoUD data, out of 63 ULBs/Parastatals
who had committed to implement the reform by 2010-11, 49 ULBs/Parastatals had
implemented this reform.
 26

83. The Committee enquired about the failure of the 14 ULBs/Parastatals which
had committed to implement the computerized registration of land and property as
envisaged in the reforms to achieve the feat. In reply, the MoUD stated as under:—
‘‘Land is a State subject. Registration of property is done in different manners in
different states as per their extant rules. Further, the Department of Land
Resources, Ministry of Rural Development which is responsible for the matter
has taken steps to facilitate this reform. As on date, 52 out of 65 ULBs have
reported achievement of this reform.’’
(xiii) Reform of Rent Control Laws
84. Amendment of rent control laws is one of the mandatory reforms. States
were expected to implement the reform within the Mission period. Reform in the rent
control laws were needed to meet the following objectives:—

(i) Promoting supply of rental housing.

(ii) Establishing a better balance between the interests of landlords and
tenants.
(iii) Reducing litigation under the rent control act.

(iv) Making rent control act more effective to protect the legitimate interests
of tenants.
(v) Reducing complexity of the act.
85. Recognizing the negative impact and social tensions created by the rent
control laws, the Government of India (GoI) came out with a Model Rent Legislation
(MRL) in 1992. Analysis of information furnished by the MoUD revealed that
16 States/UTs (Andhra Pradesh, Assam, Bihar, Chhattisgarh, Goa, Haryana, Himachal
Pradesh, Jammu and Kashmir, Jharkhand, Meghalaya, Puducherry, Punjab, Sikkim,
Tamil Nadu, Tripura and Uttarakhand), which had committed to implement the reform
by 2010-11, failed to implement it.
86. When the Committee enquired about the failure of these 16 States to
implement the reform of ‘‘Amendment of Rent Control Laws’’ by 2010-11, the MoUD
replied that 21 out of 31 States/UTs have achieved this reform as of March, 2014,
Delhi had been exempted from this reform and the remaining 9 States were in a process
to achieve this reform. According to the Ministry, some of them (excepting Maharashtra,
Manipur and Odisha) had already achieved few milestones under this reform.
(xiv) Rationalization of Stamp Duty to 5 Per cent
87. JNNURM required the rates of stamp duty to be brought down to 5 per cent
or less (including the surcharge that ULBs levy in several States) within the Mission
period. It was expected that a reduction in the rate would help to develop a healthy
real estate market, by providing boost to the economy, and reduce the size of the black
money. It was also expected that reduction in stamp duty rates would lead to an increase
in revenues both for the States as well as the ULBs.
 27

88. However, out of 30 States/UTs selected for audit scrutiny, only 16 States/
UTs (Andhra Pradesh, Chandigarh, Gujarat, Himachal Pradesh, Jharkhand,
Madhya Pradesh, Maharashtra, Meghalaya, Nagaland, Odisha, Punjab, Puducherry,
Rajasthan, Sikkim, Uttar Pradesh, Dadra & Nagar Haveli) brought down stamp duty
rates to 5 per cent. In Dadra and Nagar Haveli, the rate of stamp duty was even lower
than the envisaged five percent i.e. one per cent. In the remaining 13 States/UTs, rates
continued to remain over 5 per cent (Arunachal Pradesh, Assam, Bihar, Delhi, Jammu
& Kashmir, Karnataka, Uttarakhand, West Bengal, Chhattisgarh, Daman & Diu, Kerala,
Manipur and Tamil Nadu). In Haryana, stamp duty was 7 per cent (5 per cent plus
2 per cent ULB surcharge) for men and 5 per cent (three per cent plus two per cent
ULB surcharge) for women in urban area.
89. The MoUD stated that in Arunachal Pradesh and Manipur, rationalization of
stamp duty to 5 per cent had been achieved as per the reform appraisal agency report.
The Ministry further intimated that in Uttarakhand, stamp duty was reduced to
5 per cent for men and 3.75 per cent for women in May 2011. Also in Puducherry,
rationalization of stamp duty to 5 per cent has been done with effect from 30 October,
2011. In respect of Delhi, stamp duty is 4 per cent for women and 6 per cent for men
and thus average of 5 per cent is as per Mission guidelines. This was not acceptable to
Audit as it was to be reduced to 5 per cent in general and there was no such requirement
of average reduction.
90. On being asked as to why the rate of stamp duty continued to remain over
5 per cent in 13 States/UTs, the MoUD in their reply stated as under:—
‘‘The revenue from stamp duty is a major source of revenue for the State
Government; therefore, many States are reluctant to reduce the stamp duty rates
to 5% level, apprehending a fall in the State's revenue on reducing the rate of
stamp duty. As on date, 18 out of 31 States/UTs have implemented this reform."
91. To a specific query as to why did the Ministry include this reform for
implementation in view of the fact that revenue from stamp duty was a major source of
revenue for the State Governments, the MoUD in their reply intimated as under:—
‘‘High rates of stamp duty lead to undervaluation of properties, resulting in
substantial loss of revenue to the States and ULBs. High stamp duty rates also
hamper development of the economic system, and adversely affect growth.
Reduction in stamp duty rates motivates public to show right valuation of
properties. It also motivates more and more people to register their properties,
which in turn enhances State's revenue.’’
(xv) Response of the MoUD on the Implementation of Reforms
92. The MoUD in their reply (May 2012) acknowledged that the requirement of
implementation of each of 23 reforms by ULBs and States, big or small, in 7 years had
been too ambitious, particularly with the varying capacities of the ULBs. The MoUD
explained that one must acknowledge and appreciate the fact that States and cities
made concerted efforts to achieve these reforms. It was stated that 7 years of
implementation of JNNURM has exposed major lacunae within the ULBs in terms of
 28

capacity and resources which are highly inadequate to implement urban reforms. It
was also stated that the Ministry had embarked upon a number of capacity development
initiatives to bridge this gap. The Mission Directorate has undertaken a Rapid Training
Program (RTP) on Governance and Reforms, extended assistance for preparation of
DPRs and supervision and monitoring of project implementation. More than 1800
staff of ULBs and Parastatals and over 2000 elected representatives had undergone
training across various cities.
93. In addition to the above, the States have been advised to implement various
reforms in both letter and spirit in order to ensure that the benefits envisaged out of
implementation of the reforms are fully realized. The present tenure of the Mission
was over on 31 March, 2012. The Government had given 2 years extension, i.e. upto
31 March, 2014 for achievement of the reforms. The States have been advised to
achieve the pending reforms within the extended period.
94. The MoUD (April and May, 2012), also stated that the Ministry had envisaged
reforms in institutional, financial and structural governance structure of the ULBs to
make them efficient, accountable and transparent. The Ministry explained that though
they laid a great emphasis on implementation of 23 reforms, the implementation was
a huge challenge. Besides, most of the smaller cities have inadequate capacity in terms
of finance and human resource, which has led to slow achievement of reforms. The
larger cities have, by and large, managed to shift to a more professional work orientation
for better implementation of reforms. The Ministry also felt that for implementation
of reforms, the leadership of the State/UT Governments and political will is extremely
important. The fact that no provision was made for funding of implementation of
reforms has also had an adverse impact.
95. In the above context, the Committee enquired about the reasons for non-
implementation of reforms according to timeline committed in the Memorandum of
Agreement (MoA) by the States. In reply, the MoUD apprised as under:—
‘‘Reforms implementation has been a challenge. Besides, most of the smaller
cities have inadequate capacity in terms of finance and human resource, which
has led to slow achievement of reforms. The larger cities have, by and large,
managed to shift to a more professional work orientation for better
implementation of reforms. Reforms such as Rent Control Law, Transfer of
12th Schedule functions under 74th CAA and Community Participation Law
have been difficult to implement. At ULB level, reforms relating to
e-governance, property tax and 100% O&M cost recovery of services are
complex to implement. Due to these constraints, States/UTs/ULBs have taken
more than committed time.’’
96. When asked about the latest status of the implementation of each of the
reforms, the MoUD in their reply submitted as under:—
‘‘Reform appraisal agencies submitted their appraisal report as on March 31,
2014. Significant progress was noted in State level reforms, where most of the
commitments were achieved. It was found that 86% of the State level reforms
and 84% of the optional reforms committed had been completed. In terms of
 29

ULB level reforms, the figure is slightly lower at 79%. The overall state
achievement is 83%."

97. The information furnished by the Ministry indicated that the progress of
some reforms like Solid Waste Management, Water Supply, Reform in Rent Control
etc. was low. Asked about the steps taken by the Ministry for achievement of these
reforms within the extended period, the MoUD replied as under:—
‘‘The Ministry have also taken initiatives to encourage States/ULBs to implement
the reforms. Hon'ble Minister of Urban Development and Housing and Urban
Poverty Alleviation, Government of India has sent a reminder (dated 14th August,
2014) to all the Chief Ministers of the States which have not completely
implemented the ' Constitution (Seventy-Fourth) Amendment Act'. This reform
includes 4 Milestones, i.e., Constitution of Municipalities and Elections, transfer
of 12th Schedule functions (18 Functions) to ULBs, Constitution of DPC and
Constitution of MPC.’’
98. Further, the Committee desired to know about the steps initiated to expedite
implementation of reforms as envisaged in JNNURM such as considering suitable
incentives to be given to those States which are implementing reforms. In reply, the
MoUD informed as under:—

‘‘The MoUD has constantly engaging with the States/UTs and ULBs for
achievement of Reforms. It has also constantly evaluated and updated the progress
of reforms through different mechanisms like review meetings, appointment of
RAAs, workshops and conferences and other CB measures. Reform achievement
is dynamic process and through the years there has been perceptive improvement
as shown in the chart below.’’
‘‘No provision was made under the Mission for funding of expenditure for
implementation of reforms. The Guidelines of JNNURM don't provide for
incentivisation on achievement of reforms. The Guidelines were approved in
2005; each State/UT has reported different status of preparedness of reforms
keeping in view their cultural, administrative and legislative challenges.’’
99. On being asked about the action taken by the Ministries against the States/
UTs which did not implement reforms as per timeline committed in the Memorandum
of Agreement, the MoUD in their reply stated as under:—

"Many reforms to be achieved by States/ULBs need ratification by

State Government and Legislature. Thus achievement of reforms has been
found to be complex and challenging, depending upon the Legislative
approvals in the States. Eight years of implementation of JNNURM has
exposed major lacunae within the ULBs in terms of capacity and resources
which are highly inadequate to implement urban reforms. The Ministry has
embarked upon a number of capacity development initiatives to bridge this
gap. The MoUD has also stressed upon the States/UTs for having a
professionally skilled municipal cadre."
 30

VI. City development plans and detailed project reports

100. One of the objectives of JNNURM was the planned development of
identified cities including peri-urban areas, outgrowths and urban corridors so that
urbanization takes place in a dispersed manner and to have integrated development
of infrastructural services in the cities. To achieve these objectives, a City
Development Plan (CDP) was to be prepared by State/UT/ULB or Parastatal for
every identified Mission City which was to be a comprehensive document for the
planned urban perspective framework for a period of 20-25 years (with 5 yearly
updates) within which projects were to be identified. The next step was to prepare
Detailed Project Reports (DPRs) for undertaking projects. During appraisal of
projects at Central level, DPR was to be scrutinized together with CDP. It was also
envisaged that owing to the importance of CDP, DPRs were not to be entertained
without it. Thus, the CDP and DPRs were required to be prepared before the city
could access Mission funds.
101. The DPRs for the proposed projects were required to be prepared in great
detail, depicting all relevant information, detailed drawings, topographical survey and
soil investigation; economic and financial analysis; planning and design criteria;
environmental impact assessment; map of city showing existing and proposed flyovers,
road network; schedule of rates, detailed measurement and basis of adoption of rates,
operation and maintenance cost; phasing of expenditure etc. The MoUD had also
developed toolkits for preparation of CDPs and DPRs. Audit scrutiny has, however,
revealed that in the selected States/UTs, the CDPs and DPRs were not always
comprehensive and complete and in some cases the DPRs of individual projects had
no co-relation with the CDPs. Other deficiencies like lack of details about availability
of land, incomplete DPR etc. were also noticed.
102. The MoUD replied (May, 2012) that most of the States and cities had
included detailed investment plan emerging out of the CDP in which they had also
prioritized the areas and sectors in which projects were to be taken up. However, as
preparation of DPR was capital intensive, many States and cities had not prepared
DPR. Further, allocation within the JNNURM was not sufficient for these works to be
taken up. Within the framework of the CDP, the prioritization of the projects was the
prerogative of the State Government. The Government of India considers projects
based on the recommendation of the State Government within the overall allocation of
the State. The MoUD during exit conference stated that steps had been taken for
empanelment of consultants for preparation of revised CDPs.
103. In the above context, the Committee enquired about the reasons for
approving deficient DPRs which did not have co-relation with CDPs and lacked critical
details such as availability of land etc. In reply, the Ministry submitted as under:—
‘‘The DPRs are prepared by the ULBs or the respective Implementing Agencies
and approved by the City/Town Council. Thereafter the DPRs are appraised and
approved by State Level Sanctioning Committee (SLSC). The technical appraisal
is done by the Central appraisal agencies in Government of India and DPRs are
proposed before CSMC or CCEA for consideration and approval. Based on
 31

learning's of the Mission, there it is the effort of the Ministry to ascertain land
availability before sanction of a project.’’
104. The Ministry further stated that they considered DPRs which have
co-relation with CDPs in major aspects of the projects and the issue of availability of
land was also ensured while releasing instalments.
105. When asked to explain the procedure of approving DPRs in this regard, the
Minister of Urban Development in their reply apprised as under:—
‘‘Para 18.6 of the UIG guidelines provide for enablement of preparation of city
development plans and the detailed project reports. The JNNURM was the first
large-scale intervention in the urban sector by the Government of India. Keeping
all this in view, a tool-kit for preparation of CDP was prepared to facilitate and
assist the States Capacity Building Activities were also initiated. In response to
this CDPs of 65 Mission Cities towns were prepared. The DPRs have to emerge
from the CDPs for the UIG Mission towns. The DPRs are prepared by cities and
States and approved by the Urban Local Bodies. These are considered in the
MoUD.’’
106. To a pointed query as to what level the incomplete DPRs were approved,
the MoUD in their reply stated as under:—
‘‘The technical appraisal is done by the appraisal agencies in Government of
India and DPRs recommended by States/ UTs are proposed before CSMC or
CCEA for consideration and approval.’’
107. As measures for having city development plans, the Secretary,
Urban Development apprised the Committee during evidence as under:—
‘‘Sir, it is just by way of clarification. What you are saying, in spirit, is
100 per cent correct, and I can assure you that we are alive to the situation. We
have empanelled consultants now, having realised that States are having shortage
of manpower and so on and so forth. We have empanelled something like
80 consultants for preparation of City Plans. We have given them training, and
we have got the CDP toolkit and guidelines. The toolkit is a hands-on document
about preparation of Plan. We have given them training. We have released their
list on the website as well as written to the States to make use of their services.’’
108. On being asked whether there exist any mechanism in the Ministry where
the authority/person responsible for formulation of City Development Plan ensure its
formulation during his/her tenure, the MoUD in their reply intimated as under:—
"Urban Development is a State Subject. The CDP is prepared by the ULB and
tenure of the Officers working for ULB is decided by the State Government."
109. Asked whether any responsibility had been fixed on the erring officials, the
MoUD replied as under:—
‘‘Action for fixing responsibilities have to be taken by the respective States/UTs
have given reply in this regard.’’
 32

VII. Implementation of Housing Projects

(i) Status of Housing Projects
110. From the 1517 projects (499-BSUP for 65 Mission Cities and 1018-IHSDP
for the remaining cities/towns), 82 projects were selected for audit scrutiny out of
which 53 were under BSUP and 29 were under IHSDP. It was seen that 7 of these
selected projects had not even been started and 1 project was abandoned. Only
1 selected project i.e. Housing for Urban Poor at Bawana, Narela and Bhoragarh,
BSUP, Delhi sanctioned in 2007-08 was reportedly complete. The remaining 73 projects
were still incomplete. It was observed that while very few projects were completed in
their entirety, even the position of completion of DUs was only around 26 per cent.
The position of the completion of DUs in March, 2011 was as under:—

BSUP IHSDP Total

(Percentage) (Percentage) (Percentage)
Total dwelling units 1066161 540756 1606917
approved for construction
(new plus upgradation)
Dwelling units completed 296081 (27.77) 121421 (22.45) 417502 (25.98)
Dwelling units in progress 307985 (28.89) 135580 (25.07) 443565 (27.60)
Dwelling units occupied 145592 (49.17) 75219 (61.95) 220811 (52.89)

111. Thus, out of the `16.07 lakh DUs approved, only `4.18 lakh DUs
(26 per cent) were completed by 31 March, 2011. Further, out of this only ` 2.21 lakh
DUs (53 per cent) were occupied.
112. The MoHUPA explained (April, 2012) that a single project under BSUP or
IHSDP might comprise of redevelopment of various slums and as soon as houses and
related infrastructure of a slum was complete, the houses were occupied by the
beneficiaries even though the project on a whole might not be completed. Thus,
completion of DUs is the most important indicator for the Ministry. The MoHUPA
also provided (June, 2012) the latest position stating that out of `16 lakh DUs approved,
` 6.20 lakh (39 per cent) DUs had been completed and ` 3.75 lakh (60.48 per cent of
the completed DUs) were occupied as of June, 2012. The MoHUPA attributed
(June, 2012) the reason for the project not taking off to the non-availability of litigation
free land. It further stated that the ceiling cost of `80,000 per DU as central share,
under IHSDP had upset many ULBs considering the spurt in input cost.
113. In the above context, the Committee further enquired about the reasons for
non- commencement of seven projects and abandoning one project out of 82 projects
selected for Audit scrutiny and the present position of the projects. In reply, the
MoHUPA in their reply stated as under:—
‘‘Reasons for the non-commencement of seven projects and abandoning of one
project are non availability of suitable land. Now work has started in some of
these projects.’’
 33

114. The Committee also asked about the non-completion of 73 out of the above
said 82 projects selected for Audit scrutiny and completion of only 26 per cent of
` 16.07 lakh DUs approved under BSUP and IHSDP by 31st March 2011. In reply, the
MoHUPA explained as under:—
‘‘Ministry has all along been monitoring the progress of the projects in terms of
completion of Dwelling Units (DUs). As on 17.10.2013, 740706 DUs have been
completed out of 1562728 DUs sanctioned under the JNNURM (BSUP &
IHSDP). The progress in terms of completion of project is low. The reasons for
slow progress are below:—
• Projects have witnessed large cost escalations, due to rising prices of steel
and cement amongst other factors, States and Urban Local Bodies are not
able to meet such cost escalation. Government of India, under the
JNNURM Scheme has decided not to fund any cost escalations.
• In IHSDP component, cost ceiling was artificially imposed at ` 80,000
per Dwelling Unit which was revised in 2009 to ` 1 lakh per DU effective
from 1.4.2008. This ceiling translated to a heavier burden on the States /
ULBs resulting in stalling of projects. Instead actual cost under IHSDP
was also higher than ` 1 lakh and this coupled with large cost escalation,
has very adversely affected the progress of IHSDP projects especially in
the States / ULBs which are not able to fund the enhanced cost.
• Difficulties in making slum residents temporarily relocate in the case of
in situ projects;
• Inability of beneficiaries to contribute their share; and
• Lack of availability of litigation-free land."
115. In this regard, the Secretary, Housing and Urban Poverty Alleviation
elaborated in evidence as under:—
‘‘We have done a detailed State-wise and city-wise review and we have come to
the conclusion that almost 10 per cent of the projects cannot start because of
various reasons like litigation, lack of land, lack of other things. Out of the other
90 per cent, we have seen that almost about 25 per cent of total number of
houses, they are finding it difficult to complete it in time. Unlike UIG we have
two major problems. First problem is escalation that we have mentioned. Under
the IHSDP programme, there was an artificial limitation, of limiting this support
by government per house to ` 1.25 lakhs to say about ` 4 lakh. So, what has
happened is that one-third of the total number of houses, because it has been
delayed by five to six years, there has been a huge escalation cost. The
` 42,000 crore worth of project that we have sanctioned has actually now gone
beyond ` 60,000 crore. So, fundamentally there is a huge pressure on the cities
to deal with the escalation cost. Secondly, under the IHSDP programme, no
State and no city is able to complete a house within Rs. one lakh. So, most of
them have remained unstarted.’’
 34

116. Giving the updated status as on 15th September 2014, the MoHUPA stated
that out of 1,441,231 DUs approved, 1,05,041 DUs had been curtailed, 1,43,114 DUs
were yet to be started, 844,062 DUs (58.5 per cent) had been completed and 620,074
DUs had been occupied. The Ministry further informed that out of the 73 Projects
mentioned in audit report, all the DUs had been completed in respect of 14 Projects
and overall all the DUs pertaining to 355 projects had been completed.
117. On being pointed out that even in cases where DUs were completed, the
Ministry failed to ensure completion of projects in their entirety, the MoHUPA in their
reply stated as under:—
‘‘Ministry has been pursuing very actively with State Government / ULBs to
complete DUs and associated infrastructure in order to complete the project in
its entirety. It is humbly submitted that the Ministry was monitoring project
progress on the basis of DUs completed and now has requested State Government
for updating information on the completion of entire projects including occupancy
thereof.’’
118. The Committee further enquired about the occupation of only 53 per cent
of the completed DUs and the steps taken to enhance the occupancy of the completed
DUs. In reply, the MoHUPA submitted as under:—
‘‘There is a natural delay between completion and occupation of DUs and it has
got accentuated mainly on account of Slum Dwellers reluctance to shift to new
location. State Governments are being pursued to allot and occupy the DUs
completed under the Scheme.’’
119. Asked about the initiatives undertaken to overcome the problem of low
occupancy of DUs, the MoHUPA intimated as under:—
‘‘Identification of beneficiaries and allotment of houses under the Scheme is
under the domain of States/UTs. Ministry is pursuing with State/UT Governments
at all levels to identify beneficiaries and allot constructed houses. At present
6,23,177 DUs (73.6%) have been occupied against 8,46,692 completed DUs.
Ministry has also written to Chief Ministers and Chief Secretaries for completing
the DUs for which construction is under progress and allotment of the completed
houses as soon as possible. States have also been advised during the course of
numerous CSMC/CSC meeting and Review meetings at Central/Regional and
State level to take action to ensure occupancy of completed houses according to
a time-bound action plan. In subsequent scheme of RAY, Ministry has insisted
on whole slum approach so that all slum dwellers in that particular slum are
identified as beneficiaries to avoid various problems which came in identification
of beneficiaries during JNNURM.’’
120. In this regard, the Committee noticed the innovative practice of giving
JNNURM houses on rent to beneficiaries in Chandigarh. The Secretary, Housing and
Urban Poverty Alleviation explained it in evidence as under:—
‘‘The Chandigarh Government took a conscious decision of not transferring the
entire ownership to the slum dwellers. They have relocated the slum dwellers.
 35

But they have passed a law saying that each slum dweller will be asked to pay
` 800 per month as rent and live there. I have personally gone to those houses
and they are very happy. They do not want ownership immediately. They do not
want to pay any more upfront. They say that they are very happy that they have
got a lovely house and they are paying only ` 800 and the Chandigarh
administration is maintaining that. That was one of the points because of which
we have introduced under the Rajiv Awas Yojana a rental component. Besides,
the census operations clearly say that 27 percent of slum dwellers live in rental
houses. Incidentally, even in slums survey shows 22 per cent of slum dwellers
live in rental houses.
121. He added:—
‘‘Basically at this moment what we have allowed is, we have allowed a
municipality or a corporation or a developmental authority or a parastatal agency
to construct houses. In fact, we have already sanctioned about ten projects. At
this moment, we are not thinking of an individual private person to construct
houses to give on rent. At this moment, we are a little restrictive. We are only
allowing the municipality and the parastatals. So, we want to try it out.’’
122. When the Committee pointed out the need for enlisting various groups/
corporate houses which are guided by philanthropy in providing affordable houses to
the poor in the slums, the Secretary, MoHUPA deposed in evidence as under:—
‘‘As of now, like I said for group housing, we do not give so much of subsidy.
But under the affordable housing and partnership scheme, it can come up. There
we do not give 50 per cent and 75 per cent subsidy. There we give a subsidy
which is about 10 to 15 per cent because we want that at least something is
guaranteed because they will transfer it on a commercial basis to the buyer. So,
these groups can come there. Once it is beneficiary-led then that administrative
expenses of 15 to 20 per cent tends to get reduced. I have seen many houses in
Kolkata where people have actually constructed their houses within an amount
which is not really ` 3 orv` 3.5 lakh. They own a piece of land. They built
over a period of time small houses which are very decent houses and that has not
cost them a fortune. In many places that can happen. So, beneficiary-led
construction, we know will bring down the cost which the CPWD measurement
does.’’
123. The Committee drew the attention of the witnesses that the CPWD cost
was usually inflated. The Secretary, MoHUPA submitted as under:—
‘‘That is why we have also allowed community-led construction. One is,
individuals will construct on their own. The second is, the community as a whole
or a NGO wants to take up a construction, we have allowed that because I have
seen it, not in this Ministry but in a different Ministry, when you allow the drinking
water system to be set up by Gram Panchayats and community-led organisations,
the cost has come down by about 12 to 14 per cent, which is substantial.’’
 36

124. The Ministry's information revealed that 1,43,114 DUs were yet to be started.
On being asked about the action taken by the Ministry in cases where projects were
not started, the MoHUPA in their reply stated as under:—
‘‘The main reason of non-start of project is lack of availability of suitable land.
Ministry has been pursuing with State Governments to make land available for
these projects. It is submitted that under the scheme it is the responsibility of
State Governments and cities to make the land available and Government of
India does not fund procurement of land under this scheme except North-East.
State Governments have been requested to either start the project by October,
2013 and complete in the extended period i.e. till March, 2015 or drop the
project/dwelling units. Ministry is pursuing with States to complete these
projects.’’
125. During evidence, the Secretary, MoHUPA apprised the status of projects
implemented by the MoHUPA as under:—
‘‘1517 projects at a cost of over Rs. 20 thousand crore, with central share, have
been approved. Out of the houses that we wanted to complete 14.14 lakh houses
ultimately sanctioned, 58 per cent of the houses have been completed. A large
number of houses, around 3.5 lakhs are under progress. They are still under
construction and we had taken a very practical decision of cancelling over one
lakh houses since the tendering process etc. have not been done even today,
these houses have no chance of getting completed by the project time end. The
decision was hard but with this we will be able to adjust all the money which is
lying with the State Governments and we will also be paving a very clear ground
for starting our new programmes.’’
126. In a subsequent note, the MoHUPA stated about completing the remaining
Dwelling Units as under:—
‘‘Ministry has been pursuing with the State Governments for curtailment of the
non-started DUs. As per the proposals received from State Governments, CSMC
has curtailed 1,05,041 DUs in the month of September, 2014 on account of
them remaining non-started till date. As on date about 1,43,114 DUs are still
remaining non-started for which discussion with States are ongoing to either
take up these for construction at the earliest or drop them. Hence, no further
extension for completion of non-started DUs are envisaged.’’
(ii) Progress of Housing Projects in Major States
127. It was observed from the Ministry's records that as of June 2011,
69 per cent (i.e. 7,860.75 crore out of 11,349.48 crore) of the total ACA for BSUP and
IHSDP projects was released to just 6 States of Andhra Pradesh, Gujarat, Maharashtra,
Tamil Nadu, Uttar Pradesh and West Bengal. In these States, the progress of housing
projects was slow and none of the housing projects were fully complete. As per the
MoHUPA, as on January 2012, in respect of BSUP, out of the 7,14,113 DUs sanctioned
in these 6 States, 3,14,654 DUs were completed. While in respect of IHSDP, out of the
3,22,394 DUs sanctioned, 1,08,176 DUs were completed. Thus, by the Ministry's
own admission, only 44 per cent and 34 per cent DUs of BSUP and IHSDP, respectively,
were completed in the 6 States, which had taken the lion's share of the total ACA.
 37

128. In the above context, the Committee desired to know whether the Ministry
have devised any mechanism to reduce the cost of construction of houses under the
JNNURM project. In reply, the MoHUPA submitted as under:—
‘‘In JNNURM the use of local material and design to reduce the cost of
construction was envisaged. Under IHSDP, the cost of construction was limited
to one lakh per dwelling unit. The autonomous organization under the Ministry
i.e. BMTPC periodically comes out with the technology and material to reduce
the cost of construction. Beneficiary led execution has also been envisaged for
faster execution and reduction in the cost of construction.’’
129. There was no per dwelling unit cost ceiling in BSUP component of JNNURM.
However, ceiling of ` 1 lakh per dwelling unit was provided in IHSDP component of the
Mission and this was one of the most important reasons for slow progress in IHSDP.
Further, the cost ceiling under Rajiv Awas Yojana for the 12th Plan had been kept at
` 4 lakh for towns and cost cutting had been increased as per repeated requests of State
Governments and cities. Subsequently, cost ceiling under JNNURM had been increased
to ` 5 lakh for bigger towns and ` 4 lakh for smaller towns, In evidence, the Secretary,
MoHUPA elaborated on the increase in ceiling as under:—
‘‘One thing that I want to clarify to the Committee is when we allow ` 4 lakh, we
say that 75 percent of this money will be spent on housing and another 25 percent
of the money will be spent on the infrastructure development of that particular
area. So, effectively what we are telling them is that they can construct a house
within ` 3 lakh ; they should spend Rupees one lakh in improving the surrounding
areas like roads, drains, water supply, electricity, community centre and those
kinds of things. So, that is the average that has been permitted.’’
130. Asked whether any study was conducted before increasing the ceilings, the
MoHUPA in their reply merely intimated as under:—
‘‘Under JNNURM in the year 2010-11 and 2011-12 the average cost of per
dwelling unit including infrastructure was ` 4.57 lakh and ` 4.81 lakh. Therefore,
keeping in view the increase in cost of construction over last two years and per
dwelling unit average cost of ` 4.5 lakh, it has been decided that cost ceiling of
per dwelling unit including infrastructure would be 5 lakh for bigger towns
(population more than ` 5 lakh) and ` 4 lakh for smaller towns (population less
than ` 5 lakh). It is submitted that cost ceiling has been increased from ` 1 lakh
to ` 4 lakh in view of the increased cost of construction.’’
131. In this context, the Committee pointed out in evidence the need for cheaper
houses especially the fabricated ones. The Secretary, MoHUPA submitted as under:—
‘‘Sir, we have an organization called the Building Material and Technology
Promotion Council which is tasked to find out alternative technologies for
building materials and houses. They have gone through a global tendering
process. They have identified eight technologies which can be implemented,
out of which we have given three of them the test certificate, in the sense that
they have started working in India. The EWS houses that we are building are
already the lowest cost houses. The only other houses which are cheaper than
them is the mitti ka ghar like you call it, you can do it in the village, but in the
urban housing sector, a pre-fabricated house today, we tried it out in Karnataka,
 38

is turning out to be 60 per cent more expensive. But if there is a bulk order,
which again we tried out in many towns, if the number is around 2000 or 3000,
then of course the cost becomes almost comparable. It is about 8-10 percent
higher. That we are doing as a trial method."
(iii) Identification of Beneficiaries
132. Audit para reveals that there were deficiencies in identification of
beneficiaries of housing projects of BSUP and IHSDP. No beneficiary survey was
conducted for the BSUP project at Karasingsa (Itanagar), Arunachal Pradesh. Biometric
identification of beneficiaries was not done in respect of the BSUP scheme at Patna
Phase IV, Patna, Bihar. The Municipal Commissioner, Shimla did not conduct any
survey of eligible beneficiaries prior to sanction of Ashiana-II, a housing scheme for
urban poor in Shimla town, Himachal Pradesh. In the IHSDP Project in Jamnagar,
Gujarat. All the beneficiaries had not been identified at the stage of the DPR. In the
IHSDP Project in Ramnagara, Karnataka, there were 444 beneficiaries in the DPR but
the project proposal was for construction of 1800 houses. For the BSUP project in
lmphal, Manipur, a household survey for identification of beneficiaries was conducted
in 2007 at a cost of ` 14.70 lakh. However, the Imphal Municipal Council selected the
beneficiaries recommended by the elected members rendering the expenditure on the
survey infructuous. Under the project construction of 432 tenements under IHSDP at
Karaikol in Puducherry, all of the 432 beneficiaries were yet to be identified as of
November, 2011.
133. Under BSUP/IHSDP projects in Lucknow and Ghaziabad, Uttar Pradesh,
295 houses constructed under the scheme were allotted to the beneficiaries other than
those mentioned in the DPR by the order of District Authorities indicating that
willingness of the beneficiaries was not taken at the stage of DPR. Under BSUP, Kochi
Phase-II Individual Houses, Kerala, Audit noticed that the beneficiaries of three colonies
(Panayapally, Pattathiparampu and Chilavannur) were corporation employees with
regular source of income who were not eligible for assistance admissible under the
scheme. In the BSUP project in Kohima, Nagaland, though the beneficiary identification
was said to be done for 3504 Dwelling Units, the SLNA stated in June, 2011 that the
genuineness of the selected beneficiaries would be reviewed before issue of biometric
card and uploading on the website. In case of Urban renewal project—Dabua Colony,
Faridabad, Haryana, sanctioned in 2006-07 scrutiny of records revealed that out of
1834 Dwelling Units completed with a cost of ` 38.96 crore, only 202 Dwelling
Units were handed over the beneficiaries as the process of identification of beneficiaries
had not completed. Besides, biometric identification, which was required to be done
under JNNURM, was not conducted for housing projects in Chhattisgarh, Integrated
Housing Project for slum dwellers of Rajarghat, Kachharipara and Hatgachia areas at
Mouza Boinchtala under BSUP, BSUPs in Kolkata, Asansol Phase-III, Bardhaman
and IHSDP Siliguri, BSUPs in Chennai, Tamil Nadu.
134. In evidence, the Secretary, Housing and Urban Poverty Alleviation deposed
in this regard as under:—
‘‘The other important observation that has been given by the paragraphs is the
non-identification of the beneficiaries. They have cited a few cases in which
 39

complete identification of the beneficiaries did not take place. We totally agree
with that. In some cases, supposing there were thousand people to be identified,
they have identified only 500 and so the projects were sanctioned with the promise
that rest 500 beneficiaries will be selected subsequently, but in real life situation
they have turned out to be very difficult and as you must have read in the
newspaper that Delhi is the best example where thousands of houses have been
constructed and Delhi still have not been able to identify the beneficiaries.’’
135. The Committee sought the reasons for not doing beneficiary surveys/
biometric identification of beneficiaries. In reply, the MoHUPA stated as under:—
‘‘The responsibility of identifying the beneficiaries was with the State Government
and ULBs. Identification of beneficiaries was the pre-requisite condition before
sanction of all the projects. But in few cases, projects were approved while
beneficiary identification was in progress on the request of States. States were
asked to complete the identification process soon. It is further submitted that
BSUP and IHSDP guidelines do not envisage Socio-economic Survey and
biometric identification, but the States and UTs were advised during the course
of various CSMC/CSC meetings for conducting socio-economic surveys of
potential beneficiaries including preparation of bio-metric cards, wherever
feasible, to avoid the possibility of sale, misuse of housing units allotted to
properly targeted beneficiaries. Further, States were advised, in case of time
constraint, to proceed for a rapid survey for identifying beneficiaries, their main
and subsidiary occupations, their educational profile and felt needs so as to
design appropriate social infrastructure for each project. Most of the States have
identified beneficiaries while others like Bihar due to capacity constraints/non-
availability of land/ delay in execution of projects, inspite of constant persuasion
of Ministry, did not take socio-economic survey or identify the beneficiaries.’’
136. The MoHUPA further stated as under:—
‘‘The responsibility of identifying the beneficiaries was with the State Government
and ULBs and it was expected that while submitting the DPRs, ULBs will prepare
the list of beneficiaries. Later on CSMC also desired that bio-metric survey of
beneficiaries can also be carried out. In most of the projects the list of
beneficiaries were submitted by State Government and ULB at the time of DPR.
Thereafter because of various local factors, in some projects, list of beneficiaries
was requested to be amended by the States. CSMC allowed States to amend the
list of beneficiaries as per their requirement. Ministry has been pursuing with
States for carrying out bio-metric survey of allottees or linking of beneficiaries
to their UID for unique identification of beneficiaries.’’
137. Asked why were the houses constructed under JNNURM allotted to the
beneficiaries other than those mentioned in the DPR and why was the willingness of
the beneficiaries not taken at the stage of DPR, the MoHUPA in their reply submitted
as under:—
‘‘Identification of beneficiaries is undertaken by implementing agencies and the
concerned State Governments. In case the intended beneficiaries were not willing
 40

to shift to other locations, the other beneficiaries may have been included in the
projects by the States/ULBs as per their criteria.’’
138. The Ministry further stated as under:—
‘‘State/ULB submit DPR along with list of beneficiaries and for the relocation
of projects consent of beneficiaries was mandatory. Various local factors including
delay in execution of projects resulted in change of list of beneficiaries which
was consented to by CSMC.’’
139. On being asked what action had been taken against the States/UTs which
failed to ensure identification of targeted beneficiaries, the MoHUPA in their reply
stated as under:—
‘‘States/UTs have identified the beneficiaries at the time of submission of DPR
barring few projects.’’
140. To a pointed query as to whether the Government of India have reviewed
the status of all housing projects and stepped up the efforts to make allotment of
Dwelling Units to eligible beneficiaries, the MoHUPA in their reply stated as under:—
‘‘Ministry constantly reviews the progress of IHSDP and BSUP component in
Central level meetings or Regional level meetings. Ministry also review a progress
and allotment of these dwelling units to suitable beneficiary with State. Ministry
has written to all States for allotment constructed dwelling units to intended
beneficiaries as soon as possible.’’
141. In this regard, the Ministry elaborated as under:—
‘‘Ministry is pursuing with State Governments at all levels to identify beneficiaries
and allot constructed houses. At present 6,20,074 DUs have been occupied against
8,44,062 completed DUs. Ministry has also written to Chief Ministers and Chief
Secretaries for completing the ongoing DUs and allotment of the same as soon
as possible. In Delhi, DUs are not allotted because Delhi Government is not
able to finalise its policy. Ministry has taken up with Delhi Government on this
issue many times. It is learnt that Delhi Government is about to finalise its policy
of allotment. In subsequent scheme of RAY, Ministry has insisted on whole
slum approach so that all slum dwellers in that particular slum are identified as
beneficiaries to avoid various problems which came in identification of
beneficiaries during JNNURM.’’
(iv) Delays due to Non-availability of Land
142. A major reason for projects not being taken up at all and delays in progress
was due to non-availability of land. In some cases land was made available only partly.
Thus all the proposed dwelling units could not be constructed. In some States/UTs, it
was also seen that the land identified was already occupied by others and therefore not
available. Further, the projects were required to be completed in 12 to 18 months from
the date of sanction thereof as per decision taken in 26th meeting of CSMC. However,
Audit came across 18 cases in 16 States/UTs, where due to delay in land acquisition,
housing projects could not be completed within the stipulated period.
 41

143. The Committee enquired about the reasons for failing to ensure timely
availability of land for the housing projects and the steps taken by the Ministry to
overcome the delay in acquisition of land so that housing projects are completed on
time. In reply, the MoHUPA stated as under:—
‘‘It is the responsibility of concerned State Governments and ULBs to make
adequate suitable land available for construction of BSUP and IHSDP projects.
In some cases there has been a problem of identifying the suitable land and in
some cases after land has been identified, project could not took off because of
litigation initiated by various private parties when ULBs started to construct
dwelling units. Government of India has been pursuing with State Governments
to allot suitable land or else drop the project. In view of inordinate delay, it has
been impressed upon the State Governments that in cases where adequate land
is not available, State Government should either curtail the dwelling units or
drop the project.’’
144. In evidence, the Secretary, MoHUPA apprised the Committee the lessons
learnt by the MoHUPA from the experience of JNNURM as under:—
‘‘But the lesson learnt is very clear that if there has to be a Government funded
programme for housing for the urban poor, then the participation of the poor in
planning and implementation of the programme choosing the location of the
projects as well as the availability of the land which is still a very critical point.
These things are absolutely essential and we could not deal with some of these
things properly in our earlier programmes which have led to not only poorer
physical performance as well as degradation of performance in a number of
cases.’’
(v) Action Programme for Controlling Mushrooming of Slums
145. During evidence, the Committee desired to know whether the Ministry had
any action programme for controlling the mushrooming of slums in various towns.
In reply, the Secretary, Housing and Urban Development deposed as under:—
‘‘Sir, thank you for asking this question. The JNNURM programme is of course
over in 2012. It has been extended by two years, that is upto 2014. The MoUD
is working on it. But we have been able to get a new mission sanctioned and that
is we call the Rajiv Awas Yojana for the period from 2013 to 2022. We have got
the Cabinet approval last week. That programme has both the curative angle as
also the preventive angle. Under the curative angle, we will continue to work on
the existing slums improving on what we have experienced in JNNURM. Under
the preventive angle there are two programmes which have been brought in.
One is we allow rental housing to come up. We have said that under the Rajiv
Awas Yojana we will support municipalities and States to set up rental housing.
We have also come up with a programme in which we allow private sector
developer to build houses for the poor and that is called the Affordable Housing
Partnership Scheme. That is the second part. The third part now we are saying
every new development must have a provision in which at least 15 per cent of
the FAR of the 35 per cent of the dwelling units must belong to EWS category.
 42

So, the new Rajiv Awas Yojana which has been approved last week by the Cabinet
will have both the curative and the preventive side. We thought of suggesting to
the State Governments to bring in a new law replacing the old slum re-settlement
law. But that we are leaving it to the discretion of the State governments. We do
not want them to be advised on what kind of legislation they should bring. Now
this programme has inbuilt provision of both curative and preventive side.’’
146. In a subsequent note, the MoHUPA stated as under:—
‘‘The Ministry has launched implementation phase of Rajiv Awas Yojana
envisioning a 'Slum-free India' on 3.9.2013. The guidelines of the scheme stipulate
two pronged strategy to tackle slums— a) Curative Strategy for slum
redevelopment of all existing slums; and b) Preventive Strategy for containment
of growth of future slums. Under the curative strategy, the main steps are
identification of all slums, slum mapping, profiling, tenability analysis,
prioritisation based on assessment of housing and infrastructure deficiency in
each slum, formulation of development options for each slum. For this each
State has to prepare Slum Free City Plan of Action (SFCPoA) for the identified
cities. Under the preventive strategy, the main steps would involve assessment
of housing shortage for the urban poor, framing supply options for the urban
poor and enabling policy reforms for supply of urban poor housing.
Implementation of RAY is expected to address the problem of slum to a certain
extent.’’
147. Elaborating on the Rajiv Awas Yojana, the Secretary, Housing and Urban
Poverty Alleviation submitted in evidence as under:—
‘‘The fact remains that today in the urban scenario it is impossible to construct
any house for less than ` 3-4 lakh. So, the remedial step that we have taken,
only last week we have got the approval, is under the Rajiv Awas Yojana, that
artificial limit of unit cost of ` One lakh has been removed and now we have
been allowed to bring it up to ` 4 lakh.’’
148. He elaborated:—
‘‘The new programme what we are doing is we are targeting one million houses.
It is because last year also under the JNNURM programme, even though we
targeted almost 1.5 million we could not do it because with Rs. One lakh we
could not do it. So, the Cabinet has allowed us that for the on-going programmes
which is about three hundred thousand houses, they have allowed us one more
year, from 2014 now it has been allowed up to 2015. But Cabinet has not given
any additional money. What the Finance has told us is that we have to go and
talk to the State Governments and let the State Governments pump in some
more money and some of the States have already started doing it to complete the
existing programmes and the other provision that we have been given is that
those houses which could not be started under the old Rs. One lakh provision,
they can be dropped and they can be transferred to new scheme. So, that remedial
step has been taken. That is a huge relief under the new Rajiv Awas Yojana
wherein we are in a position to implement a scheme. So, in the Rajiv Awas
 43

Yojana we have done away with the concept of a Mission and a non- Mission
city. Rajiv Awas Yojana is now available to the entire country. Any city can
apply for it. The support systems are different. The support is, any town which
has population more than half a million, Government of India will give 50 per
cent support and for other towns, the Government of India will give 75 per cent
support. In North-East the Government of India will give 80 per cent. The new
Rajiv Awas Yojana which is going to replace JNNURM for Ministry of HUPA is
going to be a much more liberal and well-conceived. That will take care of most
of the observations that have been made by the Audit.’’
149. He further explained:—
‘‘Sir, unlike the MoUD, they have a large number of reforms to be implemented,
we had three sets of reforms. One is of course internal earmarking of municipal
Budget up to the level of 25 per cent. Most of the Mission Cities have reported
that they have complied with this even though the actual allotment varies from
city to city. Similarly, 20-25 per cent of developed land was to be earmarked
which all the States and municipalities were finding it difficult. Now, that
condition has been changed in the new Rajiv Awas Yojana programme. Third of
course, the reform meant that basic services will have to be provided in the
slums which are neither here nor there so that reform conditionality has been
dropped. In its place, the new Rajiv Awas Yojana says that the slum dweller will
have to be given a mortgageable long term lease hold right over the property
that is occupied by the slum dweller. So, that is a new important condition which
has been brought in. Fourth condition that has been brought in under the Rajiv
Awas Yojana is that looking at the organisational structure of the municipalities,
most of the municipalities are very weak and we are saying that at least by the
end of this Five Year Plan period the municipalities should create a small cadre
of people who deal with slum improvements, people who deal with community
mobilisation. It is because under the Rajiv Awas Yojana community participation
has been made a very important component right from the time of the slums
survey to the preparation of DPR and other things. It has been done.
150. The Secretary, Housing and Urban Poverty Alleviation further elaborated
on the Rajiv Awas Yojana as under:—
‘‘The other recommendation that was made is the policy that there should be a
stronger review of the programmes which, of course, goes without saying. But
what we have done now is this. In the previous programme, it was project-
based. So, there are two important changes that we have made in the Rajiv Awas
Yojana. The first important change, of course, is the slum free City Development
Plan. We have also suggested that for Slum Improvement Plan, survey of the
entire town should be taken up but the DPRs will not be prepared for the entire
town. We prioritise the slums and then we prepare the DPR. When we prepare
the DPR, the whole slum has to be surveyed. Then, we have also developed a
Project Monitoring System which tracks things—right from the time when the
project is submitted till the time money is released, till the time instalments are
released. In addition to that, there is monitoring of physical progress. You have
 44

to give us a physical time-frame within which it has to be done like 24 months or

26 months. What is the physical progress that you want to achieve? That will
also be incorporated in the Project Monitoring System.’’
151. Regarding the change in funding pattern, he apprised as under:—
‘‘The last and the most important point, of course, is that so far funding used to
be under the Additional Central Assistance Scheme. As you know, for releases,
we have to go to the Ministry of Finance. Now, the Cabinet has allowed us to
proceed as Central Sponsored Scheme. For this year, of course, the Budget has
been provided in the Finance Ministry's Budget, it will continue as ACA. But
for the next year onwards, it will become a Central Sponsored Scheme. So, that
is one new thing that has happened.’’
152. Intimating that there is subsidized loan component of under the Rajiv Awas
Yojana, he continued:—
‘‘As a part of the preventive strategy which you have mentioned, the Rajiv Awas
Yojana has also incorporated a new scheme. The Cabinet has approved it which
we are calling as the Rajiv Rinn Yojana. Under this, any EWS and LIG beneficiary
will be entitled to take a loan of ` 8 lakh for construction of a house of which
the interest on the first ` 5 lakh loan will be subsidised by the Government of
India to the tune of 5 per cent. So, we have calculated that if one takes a loan of
` 5 lakh, one gets an interest subsidy of 5 per cent and the EMI will actually
come down to 25 per cent of his income. It shall be a big relief. So, the Rajiv
Rinn Yojana has also been given sanction as a part of the preventive strategy of
the Rajiv Awas Yojana. It was also approved last week in the Cabinet. That is the
new important point that has happened in the Rajiv Awas Yojana which will
make sure that more housing stock is created. So, Sir, I have tried to cover most
of the points that have been given to me.’’
153. When the Committee mooted the idea of integrating Corporate Social
Responsibility with the Rajiv Awas Yojana, the Secretary, Housing and Urban Poverty
Alleviation deposed in evidence as under:—
‘‘For the Public Sector Undertakings — I am not talking of the private corporate
sector - and the Ministries of the Government of India, we have earmarked 7 per
cent of the total Rajiv Awas Yojana to be devoted to those slums coming up in
the Ministries' list. For instance, Defence, Railways and others are there. All the
PSUs related to the Ministries will have to pool CSR activities into this. That is
permitted. Regarding the private sector, we have not really incorporated them.
We think they will do it in a standalone method. If someone wants to spend this
money in housing in the slums, we shall be more than happy. They can easily
come under Affordable Housing in Partnership Scheme. That is allowed. All the
Ministries, PSUs like Oil India have all been allowed to be partners in this
Scheme now.’’
 45

154. Assuring that there would be no problem in identification of a beneficiary

under the Rajiv Awas Yojana, the Secretary, Housing and Urban Poverty Alleviation
explained in evidence as under:—
‘‘Under the Rajiv Awas programme what we are suggesting and what we are
mandating is that whenever you take up a slum, you take up the whole slum.
A survey has to be done for the entire slum. It does not matter you do not treat
100 per cent of the slum dwellers, if some may have pucca houses, don't take
them, but all the people would have to be identified. So, the beneficiary thing
will be taken care of in the new programme. Second point was that even for one
change in the name the file used to come all the way to Government of India and
we had to sanction that change in name also. That has been dispensed with. We
said that we do not want to get into all these micro level arrangements. It has to
be handled at the level of the State and the municipalities. That was the second
major problem with regard to the beneficiaries. The third important point that
they mentioned was the establishment of the programme management unit and
the city management unit. Theoretically, we have been able to set up 26
programme management units even though the staffing is not complete. For
various reasons the staffing is not complete. In some States in case of 5, they
have 3 and in the cities also they did not take up much because firstly the cities
did not have much money to start with and secondly they were finding it very
difficult. But we have reiterated this requirement under the Rajiv Awas Yojana.
We have categorically said that these five to six people will have to be given to
the States. We are also giving a separate direction to the States that in case the
MoUD is already funding a project management unit and you have same people
there, then do not replicate them and instead take new people so that they are of
use.’’
155. About the changes in the system to ensure recruitment of staff, the Secretary
Housing and Urban Poverty Alleviation apprised in evidence as under:—
‘‘What we have done is that we have issued a detailed circular about what kind
of expertise is required, what kind of qualification is required, what is the salary
to be paid etc. That has been issued and in fact we have been working at it for
the last two years. So, many States have started recruiting these people. So, the
kind of experts that we have allowed is an MIS expert, a GIS expert because we
want a slum survey with GIS and MIS integration. We have also allowed them
to take a town planner. We have allowed them to take a social development
expert. We have allowed them to take an engineer because city engineers are
generally not available for slums. We have also allowed them to take a capacity
building and training expert. These six projects with specified qualifications
and the salaries have already been indicated to them and they have started
recruiting them. So, we will just dovetail them into the new programme.’’
156. Detailing the improvements in the Rajiv Awas Yojana, the Secretary, Housing
and Urban Poverty Alleviation further submitted as under:—
‘‘I am very happy to say that most of the nine recommendations have been
incorporated in the new Rajiv Awas Yojana. One very important point that you
mentioned is about maintenance. In the Rajiv Awas Yojana, the Cabinet has
 46

allowed us to spend four per cent of the project cost on maintenance. Under this
Programme if the project cost is Rs. 1,000 crore, the Cabinet has allowed that
under this Programme, we can earmark four per cent additional cost for the
maintenance part. We have seen that in many housing colonies, creating a small
maintenance kitty helps the slum dwellers. It helps the slum dwellers
tremendously. In many places, voluntarily people have started contributing
` 20 or ` 40 or ` 60 per house. They have created small societies. So, to help
them we will allow you four per cent maintenance grant so that you keep it as a
kitty and then maintain it. That is one point that has been taken care of.’’
157. When the Committee pointed out that the cost of the project i.e. house cost
went up due to non-availability of enough land, the Secretary, Housing and Urban
Poverty Alleviation apprised as under:—
‘‘Sir, what we have seen is that, if you look at the census figures, you will see
that—even in the slum areas, now we have got the figures for both urban and the
slum areas – almost 65 to 70 per cent of the houses, the census has declared are
good houses; about 22-23 per cent of the houses they have declared as liveable
and 5-6 per cent of those houses have been declared as unliveable and untenable.
This has been corroborated by another independent slum survey that we had
started in about 1000 towns of the country of which we have figures of about
450 towns. This also is corroborated there. There also we have found that in-
situ development of a house where cannot take place is not more than 5 to 10
per cent. The number of kuccha houses which are on untenable land is not more
than 10 per cent. So, the Rajiv Awas Yojana is giving preference for in-situ
development fully realising that land is a major problem. In fact, JNNURM
suffered because of lack of land. We did not have enough land to start with. So,
in-situ development will be a preferred choice under the Rajiv Awas Yojana and
we are saying that you should take up relocation or re-settlement only in extreme
cases of untenable land or where the housing is extremely kuccha and in bad
condition.’’
VIII. Implementation of Urban Infrastructure and Renewal Projects
(i) Status of Urban Infrastructure Projects
158. Urban Infrastructure Projects had been taken up under sectors like
Water—Supply; Sewerage; Storm Water Drainage; Solid Waste Management; Urban
Transport including Roads and Flyovers, MRTS; Development of Heritage Area;
Preservation of Water Bodies, Urban Renewal; and Parking Lots and Spaces. In respect
of UIG, in States like UP where there were 7 Mission Cities, not even a single project
had been completed. In Delhi, only 4 projects were completed as against the 28 projects
that had been sanctioned. The States where a comparatively sizeable number of projects
had been completed were Gujarat, Karnataka and Andhra Pradesh. In Andhra Pradesh,
17 projects out of 50 had been completed. In Gujarat, 33 out of 71 projects had been
completed. Similarly, for urban infrastructure projects under UIDSSMT, of the
766 projects approved, only 126 projects were completed.
159. The MoUD cited (April / May 2012) various constraints in implementation
of projects which are being done by the State Government/ULBs in accordance with
rules and procedures. The constraints cited included shifting of utilities, delay in receipt
 47

of permission/clearances from various authorities, lack of capacity of ULBs and in

land acquisition. They further stated that fund flow is dependent upon achievement of
reforms in accordance with timelines agreed as per Memorandum of Agreement with
States and ULBs.
160. In the above context, the Committee enquired about the reasons for dismal
execution of infrastructure projects resulting in delay/non-completion/non-starting of
projects. The MoUD replied as under:—
‘‘Cited by the States, the reasons for slow execution of infrastructure projects
resulting in delay/non-completion/non-starting of projects are due to delay in
procurement process, delay in land acquisition, delay in shifting of utilities,
delay in receipt of permission/clearances from various authorities like Railways,
NHAI, Defence, Environment & Forests, lack of capacity of ULBs etc.’’
161. On being asked about the efforts made by the Ministry to speed up the
progress, the MoUD explained as under:—
‘‘217 out of 539 projects sanctioned under UIG and 403 out of 806 projects
sanctioned under UIDSSMT have been reportedly completed as on 30-09-2013;
which is about 46% taking into account both the components. The other projects
are at various stages of implementation. States/UTs have been requested to
expedite implementation of projects. The implementation of the projects is being
done by the State Government/Implementing Agencies/Urban Local Bodies
(ULBs) in accordance with rules and procedures. The progress of the projects is
being assessed through State Level Steering Committee (SLSC), State Level
Nodal Agency (SLNA) and IRMA for the State. The Mission Directorate of the
Ministry remains engaged with the State Government/SLNAs in continuous
review of UIG & UIDSSMT projects. This is being done based on a work plan
given by State Government eliciting quarterly targets for physical progress of
the projects. During these review meetings, encumbrances and issues coming in
way of implementation of the projects, inter-ministerial clearances etc. are
discussed thoroughly. Apart from these, the implementation of reform agenda is
also discussed. As informed by the State Governments, the progress has been
slow on account of delay in procurement process, delay in land acquisition,
delay in shifting of utilities, delay in receipt of permission/clearances from various
authorities, lack of capacity of ULBs etc. The State Governments have been
advised to look into the matter and remove the impediments coming in the way
of timely execution of project, so that these projects are completed and the
created assets are put to public use before 31st March 2014.’’
162. Subsequently, the MoUD submitted in this regard as under:—
‘‘The State Governments continue to report number of projects completed while
submitting the QPRs. The information is also captured from IRMA reports.
Completion certificates are also sought from the States. Based on this reporting,
the Ministry has provided the number of completed projects. As on 31.08.2014,
242 projects in UIG and 454 projects in UIDSSMT have been completed with
an overall completion ratio of 52 percent taking both subcomponents. Further,
 48

as submitted and informed, projects are executed by the State Governments and
wherever any issue was brought before the Government of India pending with
central agencies, appropriate steps were before the Government of India pending
with central agencies, appropriate steps were taken.’’
163. Asked to State the normal period of completion of various urban
infrastructure projects under JNNURM, the MoUD in their reply stated as under:—
‘‘The normal period of completion of various urban infrastructure projects under
JNNURM is about 2 years. However, this varies from project to project.’’
164. Further, the Committee enquired about the steps taken by the Ministry to
expedite the completion of JNNURM projects. In reply, the MoUD stated as under:—
‘‘As brought out above, Review meetings with State Governments, SLNAs and
ULBs have been conducted regularly by the Ministry for timely completion of
the projects. In addition, a number of communications at the level of Chief
Secretaries and Principal Secretaries (UD) have been sent to the States advising
them to expedite completion of all the projects. As of now, no funds are being
released and the States have been advised to complete these projects from their
own resources.’’
(ii) Status of Completion of the Selected Water Supply Projects
165. Out of 37 selected water supply projects (21 projects under UIG and
16 projects under UIDSSMT), 5 had not even been started and 1 project was withdrawn.
Only 3 selected projects were complete. The remaining 28 projects were under various
stages of completion.
166. The Committee desired to know the reasons for not starting 5 out of
37 projects selected for water supply project and the latest status of those 28 projects
under UIG and UIDSSMT which were under various stages of completion. In their
reply, the MoUD stated as under:—
‘‘Out of 37 selected projects on Water Supply Sector, 16 projects pertain to
UIDSSMT. Out of these 16 projects, 6 projects have been reported physically
completed and the remaining number of projects is in progress except of
Aurangabad in Maharashtra, progress of which is stalled due to court case.
However, the Government of Maharashtra has ensured that the project would be
completed by 31.03.2014. The reasons for non-starter projects are being
requested from the State Governments.’’
167. Subsequently, the MoUD in their reply elaborated as under:—
‘‘Out of 18 projects under UIG, 7 projects have reportedly been completed. Out
of 11 UIDSSMT projects, 7 projects have reportedly been completed. As per
guidelines, projects in JNNURM are to be implemented/monitored by the State
Government with the help of the ULBs/Parastatals in terms of rules/procedures
of the State Government/UTs. Being first large scale intervention for upgradation
of urban infrastructures and services in the cities all over the country, it was the
learning process in projects preparation by the State Governments and its
 49

implementation. For timely completion of the Projects, State Government/UTs

are responsible for resolving the issue like availability of land, obtaining various
clearances etc. In respect of remedial measures taken, DPR preparation/scrutiny
checklist has been revised including the details for clearances as required. Later,
before consideration of the new projects, State Government/UTs were insisted
upon to sort out the issue like availability of land and requisite clearances to
avoid delay.’’
(iii) Delay in Execution of Water Supply Projects
168. According to Audit, there were delays in completion of several selected
water supply projects due to lack of clearances or failure to take clearances from
various agencies in time. Delays in water supply projects also took place due to delay
in land acquisition and slow tendering process. Audit had noticed 11 such cases in
10 States/UTs.
169. The MoUD in their reply (May 2012) stated that it is for the ULB/State to
take necessary clearances for execution of the projects. If clearances were awaited,
these were mentioned in the report of the appraisal agency and reflected in CSMC
minutes. In later stages also, it was looked into by CSMC/IRMA. In respect of the
specific cases mentioned by Audit, the States were being advised to obtain necessary
clearances in order to facilitate timely completion of projects. Further, in order to
address the issues at the sanction stage itself, a checklist was being circulated to the
States which provided for identification of anticipated bottlenecks as well as strategies
to address them. The MoUD also stated that delay in award of tenders is one of the
well known reasons for delay in implementation of projects."
170. In the above context, the Committee enquired reasons for not taking timely
clearances from the various agencies as it could have prevented the delay and desired
to know the remedial measures taken. In reply, the MoUD explained as under:—
‘‘As per guidelines, projects in JNNURM are to be implemented/monitored by
the State Government with the help of the ULBs/Parastatals in terms of rules/
procedures of the State Government/UTs. Being first large scale intervention
for upgradation of urban infrastructures and services in the cities all over the
country, it was the learning process in projects preparation by the State
Governments and its implementation. For timely completion of the projects,
State Governments/UTs are responsible for resolving the issues like availability
of land, obtaining various clearances etc. In respect of remedial measures taken,
DPR preparation/scrutiny checklist has been revised including the details for
clearances as required. Later, before consideration of the new projects, State
Governments/UTs were insisted upon to sort out the issues like availability of
land and requisite clearances to avoid delay.’’
(iv) Benchmarks laid down by the MoUD
171. The MoUD laid down in 2008-09 the indicators and their benchmarks with
respect to water supply. These benchmarks require 100 percent water supply
connections supplied all through 24 hours and with quality being 100 percent.
 50

5 (Kolkata, Asansol, Dhanbad, Greater Mumbai and Patna) out of 65 Mission Cities
under JNNURM were targeted for 24x7 water supply system. However, it was observed
that these cities were not able to achieve this target.
172. Asked to explain the steps taken to achieve the service level benchmarks,
the MoUD in their reply stated as under:—
‘‘The Ministry has notified 28 indicators/parameters for improving service
delivery in the field of Water supply, sewerage, Solid Waste and Storm water
drainage (CPHEEO), which are to be achieved by the urban local bodies. During
the process of approval of DPRs by the Ministry, the States/ULBs are asked to
submit their commitment to achieve service levels on implementation of projects.
Thus, in a way commitment to achieve SLBs is precondition before approval of
any project. While apprising the DPRs, Central Technical Agencies also had
examined this aspect and suggested to include it in the CDP Toolkit. Thereafter,
CDP toolkit was revised incorporating the SLB indicators in CDP preparation
checklist to ensure that ULBs adhere to and provide the current status of SLBs
as well as improvements in achieving SLBs by implementing the new projects."
(v) Status of Completion of Selected Solid Waste Management Projects
173. Out of 11 selected solid waste management projects, 6 projects under UIG
and 5 projects under UIDSSMT, 2 projects viz. Municipal Solid Waste Management
for Patna Town, UIG, Patna, Bihar and Integrated Solid Waste Management Project,
UIG, Haridwar, Uttarakhand were not started till May 2011. The remaining 9 projects,
though started, were not complete. In respect of Integrated Solid Waste Management
Project, Haridwar, Uttarakhand. The MoUD have informed (May 2012) that the work
had been awarded.
174. Asked to state the reasons for not starting 2 out of 11 selected solid waste
management projects, the MoUD explained as under:—
‘‘The State of Bihar has informed with regard to Municipal Solid Waste
Management for Patna Town that — The Municipal SWM under this scheme
was undertaken in 9 wards of Patna Municipal Corporation with effect from
January 2010. The work was outsourced to M/s A2Z. Subsequently the matter
has become sub-judice. The bid process by PMC to appoint agency is on.
Integrated Solid Waste Management Project, UIG, Haridwar, Uttarakhand.
The State of Uttarakhand has informed as under:—
In respect of Solid Waste Management Haridwar, initially the tendering process
got delayed due to objections from Local Public and Ashrams on imposing of
the USER charges. Later the tenders were called but dispute among the bidders
led the matter to the High Court. High Court awarded Stay Order on the project.
However, in May 2012 as per direction of the High Court, the work was awarded
to M/s KRL Infrastructure Pvt. Ltd. The process of procuring machines and
equipments is in progress. ULD has committed to complete the project before
March 2014. EIA hearing has been done and door to door in one ward has been
started.’’
 51

175. Throwing more light on the issue, the Secretary, MoUD deposed before the
Committee as under:—
"Actually, we are working with the States for drainage projects also, but as things
are, we give freedom to the States to choose. It has so happened that the most
popular scheme is water supply; the second choice is roads; and third is drainage
and solid waste management is the most neglected. Though people talk about
solid waste management, but now only major States have stated giving attention
for major cities. Otherwise, the percentage of ACA going for solid waste is as
low as 7 per cent."
176. He added:—
"Sir, my submission is that we have taken up certain initiative in solid waste
management. If you kindly give us an opportunity in a separate meeting, then
we will explain it and also take guidance from you on how to go further. But we
are going in a very big way in recycling the waste, whether it is sewerage; whether
it is solid waste of normal tyre; or it is construction and demolition waste. Of
course, there are e-waste and plastic waste and so on, but the normal household
solid waste; the green waste; construction and demolition waste; and sewerage
waste are the four priorities."
177. About the further progress in the projects, the MoUD submitted as under:—
"Two projects in Solid Waste Management were sanctioned for Patna, Bihar
and physical progress in r/o these projects are 13% and 51% respectively.
Integrated Solid Waste Management Project, UIG, Haridwar, Uttarakhand: As
per the report submitted by State Government, Physical progress for SWM
project, Haridwar is 30%."
178. The Committee desired to know the latest position of the completion of the
remaining 9 projects and the efforts made to expedite completion of these projects. In
reply, the MoUD submitted that 3 out of these 9 projects have been completed and
remaining 6 projects are at various stages of completion. The Ministry, however, could
not furnish anything on the efforts made to expedite completion of these projects.
(vi) Delays in Completion of Solid Waste Management Projects for Want of
Environment Clearance and/or Availability of Land
179. Audit came across 3 cases in 3 States where there was delay in completion
of Solid Waste Management Projects due to non-availability of land, environment and
forest clearance, non-clearance of site and public agitation.
180. The Committee desired to know the reasons for delay in obtaining
environment and other clearances as well as in ensuring availability of land for the
projects. The MoUD in their reply apprised as under:—
"Rohtak
State Government has informed that there was delay in issue of environmental
clearance and now environment clearance in r/o Rohtak SVVM has been obtained
 52

from Pollution Board Haryana and work has started at site. 48% of work has
been completed.
Hazaribagh
State Government has stated that non-availability of land-fill sites for SWM
project in Hazaribagh has been the main reason for slow progress of the project.
Now, work has been started and physical progress is 10%.
Tura
State Government stated that Tura town falls in category B 1 of the Environment
Impact Assessment Notification, 2009. In this regard, form-1 for environment
clearance was submitted to State Expert Appraisal Committee (SEAC) and the
Meghalaya State Pollution Control Board on 19.06.2008. After this, the EIA/
EMP was prepared by the consultant as per the TOR issued by the SEAC and
submitted to State Environment Impact Assessment Authority (SEIAA) whose
term expired in July 2010. The matter was referred to State Pollution Control
Board for conducting public hearing. The work has been started and physical
progress is 92%.
Shimla
The State Government stated that the work of Solid Waste Treatment Plant was
awarded on PPP mode to Mis Hangers Biotech, Mumbai. The Environment
Impact Assessment (EIA) is being pursued with HP State Pollution Control Board.
After obtaining the EIA clearance the plant will be fully made functional.
As per JNNURM guidelines, the projects are implemented by the State
Government as per the extant rules & procedures. It is for the State Government
to take relevant clearances and ensure availability of land. All such issues are to
be conceptualized and tackled at States level . However, keeping in view learning
of the implementation of the JNNURM, the MoUD has been insisting upon
availability of land and spade work for technical clearances before the
implementation of the projects."
(vii) Blocking of Funds due to Idling of Machinery and Equipment
181. In 4 cases of Solid Waste Management Projects in 3 States, JNNURM
funds amounting to ` 3.41 crore remained blocked due to non-utilisation of equipment
following non-construction of compost plant, shortage of staff, purchase of vehicles
without requirement and non-completion of solid waste plant.
182. The Committee enquired about the reasons for non-utilisation of the
machinery and equipment. In reply, the MoUD explained as under:—
"It is reiterated that as per guidelines, projects in JNNURM are to be
implemented/ monitored by the State Government with the help of the ULBs/
Parastatals in terms of rules/procedures of the State Governments/UTs. The
implementing Agencies are responsible for purchasing of equipment and
machinery and to get better use and utilized them properly. Such issues are
 53

supposed to be settled by the States with their respective AGs, as submitted

earlier in the light of the fact that this performance audit report is a consolidated
report on the audit of all the States/UTs. Moreover, Advisory has been issued by
the Ministry for maintenance of financial propriety while implementing the
projects and States had been advised to follow the State Financial and
Procurement Rules strictly in implementation of the projects.
In an Advisory issued on May, 29, 2012, it had been brought out that "Projects
under the Mission are prioritized and prepared by the States and submitted to
the Government of India for approval/sanction. It is therefore the responsibility
of the States to implement projects with a view to maximizing economy, efficiency
and effectiveness which includes inter-alia the following:—
• Ensuring availability of land.
• End to end implementation to make sure that all activities be taken in time
so that services to be accrued from these projects are effectuated.
• Institutionalization of robust monitoring mechanisms.
• Adherence to procurement and contractual rules and regulations of the
concerned State/UT.
Further, they had also been advised to settle the matter or to get the matter
resolved as per the extant rules and procedures with the respective State AGs."
183. On being asked about the latest status of utilization of these machinery/
equipment, the MoUD failed to furnish any reply.
(viii) Wasteful Expenditure due to Change of Project Site
184. In Rohtak, Haryana, an expenditure of ` 1.76 crore was incurred on solid
waste management project. After work had already progressed in the site already
chosen, the site was changed (March 2009) by the State Government rendering the
expenditure of ` 1.76 crore infructuous.
185. Asked why was there a change of site for the solid waste management project
in Rohtak thereby incurring a loss of `1.76 crore, the MoUD submitted as under:—
"As per guidelines, projects in JNNURM are to be implemented/ monitored by
the State Government with the help of the ULBs/Parastatals in terms of rules/
procedures of the State Govt./UTs. The site selection and execution of projects
is done by the State Governments. The commitment of Central Government
remains intact and any cost over-run has to borne by the State Government/
implementing agency. There is no impact on the central share commitment.
Corrective action if any, is required to be taken by the respective States/UTs as
per their existing rules/procedures and following of codal formalities as the
projects under JNNURM are implemented by the States/UTs.
As regards Rohtak SWM project, State Government has informed that the
environment clearance in R/o Rohtak SWM has been obtained from Pollution
Board Haryana and work has started at site. 48% of work has been completed."
 54

186. Further enquired whether any responsibility had been fixed in this regard,
the MoUD could not furnish any reply.
(ix) Status of Completion of Selected Sewerage Projects
187. Out of 56 selected sewerage projects 3 had not even been started, 1 project was
abandoned and 5 projects were deferred. Only 4 were complete and the remaining 43
projects were under various stages of completion.
188. The Committee enquired about the delay in completion of 43 selected
sewerage projects and their present status. In reply, the MoUD stated as under:—
"In a number of such projects, the work of sewerage lines take time especially in
areas where roads and lanes are very narrow and congested. These lines have to
be laid very meticulously as correct levels. Moreover the existing soak pits and
septic tanks have to be deactivated and tackled in order to establish connections
to the new sewerage network. 11 projects have been completed and physical
progress in r/o almost all remaining projects is more than 50%."
189. Further, the Committee desired to know the action taken by the Ministry in
cases where the projects were not stated and the effective steps taken by the Ministry to
expedite completion of these projects. The MoUD in their reply explained as under:—
"As per guidelines, projects in JNNURM are to be implemented/ monitored by the
State Government with the help of the ULBs/Parastatals in terms of rules/
procedures of the State Governments./UTs. It is the States that are assigned the
work of completion of projects either through the ULB or through a para statal
and reviewed by States from time to time as per the guidelines by the State
Level SLNA. The MoUD has been constantly reviewing the implementation of
projects. Intensive monitoring is one of the steps taken by the Ministry to expedite
completion of these projects at various levels. The Ministry conducted review
meetings with the State Secretaries, SLNAs and Parastatal agencies from time
to time for timely completion of the projects. The progress of the projects are
also reviewed through the Quarterly Progress Reports (QPR) submitted by the
State Governments and also IRMA Reports.
The fund flow of the project is linked to the implementation of reforms and
realization of funds and fiscal progress of the projects. As per the UIDSSMT
guidelines, TCPO is the monitoring agency for the projects sanctioned under
UIDSSMT in small and medium towns and representatives from TCPO have
been deputed to the States to monitor the projects wherever felt necessary.
33 non-starter/slow moving UIG projects and 20 non starter/slow moving
UIDSSMT projects were withdrawn. ACA released for these projects is
being adjusted/recovered from the States/UTs."
(x) Irregularities in the Award of Sewerage Projects
190. In respect of Sanitary and Sewerage System for Bilaspur, UIDSSMT,
Chhattisgarh, it was observed that the 9782.231 cu.m. hard rock excavated during the
digging of trench for laying of pipes was not accounted for in material at site in the
 55

records. According to State Public Works Department Schedule of Rates, 2010, rate
for supply of hard rock was ` 639.00 per cu.m. The value of the hard rock amounting
to ` 62.51 lakh was not accounted for in the accounts of the work. During exit
conference, the Department accepted (29 October 2011) the audit observation and
stated that excavated hard rock was consumed by the contractor in the same work and
agreed to recover the cost.
191. In the Sewerage Project, UIDSSMT, Mussoorie, Uttarakhand interest free
mobilization advance of ` 1 crore was given to the contractor by Uttarakhand Peyjal
Nigam, Dehradun in respect of the work for laying of sewerage line in different zone
of Mussoorie under UIDSSMT. This was contrary to Uttarakhand Procurement Rules,
2008, which contemplated interest on mobilization advance till the amount is deducted
or adjusted.
192. It was observed in respect of UIDSSMT — Sanitary and Sewerage System
for Bilaspur, Chhattisgarh and sewerage treatment plant, that ` 26.15 crore was paid
as mobilization advance to the two contractors though mobilization advance was not
to be paid as per the terms of contracts. This resulted in undue aid of ` 26.15 crore to
the contractors and loss of interest of ` 8.63 crore at the rate of 14 per cent per annum.
193. In respect of Sewerage Treatment Plant work of Ahmedabad Municipal
Corporation in Gujarat, Audit observed that in the price bids for construction of 60
MLD capacity Sewage Treatment Plant (STP) at Pirana old site opened in April 2007,
the L1 agency quoted at ` 24.70 crore (inclusive of O & M cost and power loading)
against the estimated cost of ` 21.75 crore. The negotiated offer stood at ` 22.84
(2.15 per cent above the prevailing market rate), but the Municipal Corporation rejected
(May 2007) the offer on the ground that it was at a higher side. On opening (July
2007) price bids on second attempt, L1 agency quoted at ` 24.66 crore (construction
and O&M costs) and brought down to ` 24.11 crore after negotiation. On a proposal
of the Municipal Corporation (July 2007), the Standing Committee accepted the tender
(July 2007) and the Letter of Intent was issued (August 2007). Thus, injudicious
rejection of tender at ` 22.84 (at just 2.15 per cent above the prevailing market rate)
and acceptance of another offer at ` 24.11 crore (July 2007) in less than 90 days
resulted in avoidable expenditure of ` 1.27 crore.
194. In the above context, the Committee desired to know the reasons and
justifications for instances of irregular payments, incurring of expenditure in
contravention to JNNURM guidelines, irregular payment of mobilization advances,
undue benefit to contractors and action taken against those responsible for these
irregularities. In reply, the MoUD stated as under:—
"MoUD has been impressing upon the States and advising them for following of
all financial procurement rules. The Minstry has also vide letter No. K14012/
46/2012- NURM - I dated 3rd May, 2013 and 7th March, 2013 reiterated its
advise, to the States on deposition of utilization of interest ,accrued on on-going
projects sanctioned under UIG Sub-Mission of JNNURM and Omnibus request
to he States based on Draft Report of Performance Audit of JNNURM had also
been issued and the States had been requested to settle as per the extant guidelines
 56

and procedures to resolve the issue With respective State AGs. It is reiterated
that project implementation and its execution are done by the States / ULBs.
Hence such issues are required to be settled by the States with their respective
AGs. The Ministry has issued necessary advisories to the States/UTs."
(xi) Lack of Transparency in Tendering
195. During evidence, the Committee sought views of the representatives of the
Ministries on the problems, deficiencies and lack of transparency in the tendering of
Urban Infrastructural Projects and mooted the idea of e-tendering. In reply, the
Secretary, Urban Development deposed as under:—
"In terms of tendering, etc., of course it is a State specific.... The State
Governments must take charge because the issues are so very intricate that it is
not possible to regulate whole of India sitting in Delhi."
196. The Committee further enquired whether the mechanism of e-tendering
has been implemented for awarding contracts, for urban infrastructure development
under JNNURM, the MoUD in their reply apprised as under:—
"Urban Development is a State Subject. The procurement for the projects
approved under JNNURM is done as per the State's procurement policy. In
many States, the procurement policy mandates adoption of e-tendering mode
for procurement for projects."
197. The Ministry further stated in this regard as under:—
"JNNURM was launched in 2005. On that time, there was no mechanism of
e-tendering for procurement issued by the Government of India. States/UTs were
implementing their own procurement policy and the procurement for the projects
approved under JNNURM is done as per the State's procurement policy. The
Government of India through Department of Expenditure, Ministry of Finance
framed a mechanism for e-tendering in the year 2012 (http://eprocure.gov.in).
Thereafter, a number of States has developed their e-procurement policy on the
line of Government of India. Projects sanctioned under JNNURM are
implemented by ULBs. But, a number of ULBs in the Country do not have
proper infrastructure for starting e-tendering mechanism such as availability of
computer with internet etc."
(xii) Status of Completion of Selected Roads/Flyovers/Rail Over Bridges/Mass
Rapid Transport System and other Urban Transport Projects
198. As per the Audit, there were 19 projects selected under this category which
included 4 MRTS, 14 road and flyover projects and 1 other transport project. Out of
these, 15 were under UIG and 4 were under UIDSSMT. Out of these selected projects,
1 project was abandoned and 2 projects were withdrawn. Only 3 projects were complete.
The remaining 13 were under various stages of completion.
 57

199. When asked t o explain the reasons for abandoning 1 project and withdrawing
2 projects out of the 19 selected projects, the MoUD explained as under:—
"The project of Roads & Flyover at Rampur, Uttar Pradesh under UIDSSMT
was abandoned by the State Government on the ground of adoption of the
project by NHAI. With respect to the project — "Construction of grade separator
at Ring Road Nagavara Junction", KUIDFC, SLNA for the State of Karnataka,
has informed that the SLEC, in its 14th Meeting held on 05.12.2009 withdrew
the project as the water table at this location was very high and directed the
Bangalore Development Authority (BDA) to take up the construction of Flyover
at this junction with its own funds. The CSMC in its 83rd Meeting held on
05.03.2010 approved the withdrawal of the aforesaid project.
With respect to the project — "Construction of Underpass at RV Teachers'
College", KUIDFC, SLNA for the State of Karnataka, has informed that the
SLEC, in its 9th Meeting held on 18.03.2008 noted the request of BBMP,
implementing agency, that the project had run into difficulty since it could not
be aligned with the Metro rail work in the area and its commitment to surrender
the 1st installment of ` .1.68 crore (GoI Rs.1.18 crore & GoK ` .0.55 crore)
along with interest earned on parking of funds. The CSMC in its 56th Meeting
held on 29.09.2008 approved the withdrawal of the aforesaid project."
200. On being enquired whether any responsibility has been fixed in this regard,
the MoUD could not furnish any reply.
201. Further asked to state the latest status of the remaining 13 projects, the
MoUD in their reply stated that 1 project had been completed, 11 projects were in
progress while 1 project had been closed.
202. During evidence, the Committee specifically pointed out lapses/deficiencies
in operating buses under the JNNURM especially the failure to make the buses ply on
the roads even after there had been purchases and announcing that a certain number of
buses would be allocated to such and such districts. The Secretary, Urban Development
submitted as under:—
"We are reviewing, Sir. Things are improving. We insist on city getting involved
in operating buses. Governments are not used to delegating powers to the cities.
This confusion took some time to get resolved."
203. He added:—
"State specific SPV should be formed. It took some time. Buses came but SPV
was not ready. SPV is ready but to recruit staff, the State Government regulates
everything. Local municipality has no power to do anything solid except cleaning
road and all that.”
204. He further stated:—
"Money we give but they do not have the power. Now, things are improving.
Many things have got resolved but it took some time. When it was started, it was
the nascent year of the project. So, it took time."
 58

205. To a query regarding lack of funds with the State Government affecting
implementation of such projects, the Secretary, Urban Development replied as under:—
“The point is that these are all public service projects; water supply, sewerage
and bus services. If the State Government will not allow the user charges to be
levied and collected, then merely giving contract will not work. Therefore, we
are insisting that you can give bus but somebody has to put diesel in the bus,
somebody has to pay salary to the driver and somebody has to pay for insurance
and repair and maintenance. That cannot come by the Government of India
grant. It has to be paid by the people who are using the bus."
206. The Secretary, Urban Development presented another problem regarding
the operating of buses as under:—
"The problem we are facing along with the States is that there is an acute shortage
of bus manufacturers and bus availability."
207. He added:—
"It is absolutely necessary if you want quality buses. We have got standards.
The moment you say low floor buses, with this seating arrangement, comfort for
the elderly and all that, immediately buses are not available. It is an absolutely
sellers' market. You can get cars off the shelf. You pay one Rupee and take the
car home but here you pay fifty percent and still you have to wait for six months
to get the buses. That is why we are struggling with the system and trying to
promote buses."
208. When the Committee pointed out the need for using buses of different sizes
in different cities and towns, the Secretary, Urban Development deposed in evidence
as under:—
"We have issued fresh guidelines in the month of August. After the Cabinet
approval came we could sanction mini and large buses, articulate buses where
two buses join together which looks like a train coach. This is also permitted
now."
(xiii) Urban Renewal Projects
209. Audit observed that out of 532 projects approved under UIG, upto
2010-11, only 11 projects were related to urban renewal i.e. redevelopment of old
city areas. Even out of these 11 projects, only 2 projects, both in Bhopal, had been
completed, 8 projects were still in progress whereas 1 project of Cochin approved
in 2009-10 remained a non starter even after lapse of more than 1 year of approval.
In respect of UIDSSMT, out of 766 projects approved upto 2010-11, only a meager
10 urban renewal projects had been approved for 10 cities. Even out of these
10 projects, only 1 project in Kolhapur, Maharashtra could be completed and in the
remaining 9 projects, the work was in progress. The MoUD replied that it was for
the States to prioritize the project and submit the same to the Ministry for
consideration/approval.
210. In the above context, the Committee enquired as to why out of 532 projects
approved up to 2010-11 under UIG only 11 projects related to urban renewal.
 59

The MoUD in their reply stated as under:—

"The guidelines of JNNURM envisaged the Main thrust on infrastructure projects
relating to Water Supply, Sewerage, Solid Waste Management, road network,
urban transport & redevelopment of inner city. It is the States Which has to
conceptualise and prioritise their projects in admissible sectors, as per JNNURM
guidelines, according to their felt needs and availability of resources and submit
the same to the Ministry for consideration/approval. These projects were
approved based on the recommendation made by the State/UT Governments."
211. Asked to state the reasons for completing only 2 urban renewal projects
under UIG, the MoUD replied that as on 20th October 2014, 4 out of 10 urban renewal
projects sanctioned under UIG had been completed. Another 5 projects had been
reported to be at different stages of completion. In a majority of the cases, the delay in
completion of projects was in view of delay in removal of encroachments from the
project sites. The State Governments had been requested to give reasons for delay
specifically in these cases.
212. Enquired about the reasons for approving only 10 urban renewal projects
out of 766 projects approved upto 2010-11 in respect of UIDSSMT, the MoUD in
reply informed as under:—
"Under UIDSSMT of JNNURM, the selection and submission of projects on
priority for funding is done by respective State Governments/UTs. The Ministry
sanctions projects subject to technical appraisal and allocation of State/UTs share
and availability of funds".
213. On being asked to explain as to why only 1 project in Kolhapur, Maharashtra
could be completed out of 10 urban renewal projects under UIDSSMT, the MoUD
submitted as under:—
"As on 31.10.2013, six (06) projects (2 in Jammu and Kashmir, 2 in Maharashtra,
1 in Madhya Pradesh and 1 in Rajasthan) have been completed including
Kolhapur in Maharashtra under UIDSSMT. Various reasons for slow progress
of the projects as reported by States are (a) land acquisition problem and litigation,
(b) faulty DPRs and (c) non-receipt of approvals from various agencies like
Environment, Defence, NHAI and Railways."
214. When asked to state the reasons for not taking up effective steps to ensure
approval of adequate number of urban renewal projects, the MoUD in reply explained
as under:—
"As explained in para 210, It is for the States to conceptualise, draw & prioritise
the projects, according to their needs and availability of resources and submit
the same to the Ministry for consideration/approval. CSMC approves these
projects based on the recommendation made by the State/UT Governments,
technical appraisal, adherence to guidelines and availability of funds.
Redevelopment/urban renewal is one of the admissible sectors. Other Sectors
are Water Supply, sewerage, drainage, solid waste management — and it is for
the States to prioritise the projects in the Sectors as per the need, requirement of
the ULBs. Under UIDSSMT the selection/recommendation of projects is made
 60

by the State Government on the basis of their felt need and accordingly projects
were approved in order of the Prioity of the States /UTs.
IX. Financial Management
(i) Delay in Release of ACA after Approval of Project
215. Audit scrutiny has revealed that funds under the Mission were to be released
as Additional Central Assistance (ACA) to the State Government or the designated
SLNA. The State Government /SLNA were to pass on the ACA along with their
matching share to implementing agencies. However, the guidelines did not specify
any timeframe within which releases were to be made after the project was approved.
The scrutiny of physical and financial progress report (up to 31.03.2011) as seen from
records by Audit revealed that there were delays in release of funds from the Central
Government to the respective SLNAs.
216. In 15 cases out of 53 test checked cases under BSUP, the time taken in
release of the first installment ranged from 2 to 15 months from the date of approval of
these projects. In 21 out of 29 test checked cases under IHSDP, the time taken in
releases of the first installment ranged from 1 to 8 months from the date of approval of
these projects. Similarly, in 31 out of 532 projects under UIG approved by March
2011, there was time taken ranging from 4 to 15 months in release of first installment
from the date of approval of the projects. Under UIDSSMT, in 20 out of 35 projects
selected for detailed examination, there were delays ranging from 3 to 27 months in
releasing funds from the date of approval of projects.
217. In the above context, the Committee enquired about the non-specification
of any time frame within which financial releases were to be made after the project
was approved in the Guidelines. The MoUD in their reply stated as under:—
"Release of funds to the projects is recommended in accordance with the
stipulations of guidelines and also utilisation, financial and physical progress.
Effort is made to ensure early fund release within four corners of approved
guidelines."
218. In their reply, the MoHUPA submitted as under:—
"The funds under the scheme are released as ACA through Ministry of Finance.
Ministry recommends the release of ACA as soon as projects are approved by
CSMC and compliances are provided by State Government as envisaged by the
CSMC at the time of approval. Since release of ACA involves various divisions
of Ministry, it is not possible to specify any timeframe but it is submitted the
Ministry has been recommending release of ACA as soon as projects alongwith
the compliances are approved."
219. Asked to elaborate on the timeframe adopted by the Ministries for the
financial releases, the MoUD in their reply stated as under:—
"After approval of a project by the CSMC / Ministry, as per approved guidelines,
immediate requests were sent to the Ministry of Finance for release of
Government of India share as ACA to the States."
 61

220. In their reply, the MoHUPA stated as under:—

"As JNNURM is implemented as a project based ACA scheme, the releases are
made based on submission of projects by States and pace of implementation of
the same. Normally when completed UCs is submitted by the State it takes
15 days to approve in CSMC meeting and next 15 days to release the ACA to the
State. Therefore, on an average one month is taken for release of ACA from the
date of submission of completed UCs."
221. The Committee further enquired about the reasons for delay in release of
Additional Central Assistance funds after approval of project from the Central
Government to the respective State Governments/SLNA. In their reply, the MoUD
informed as under:—
"The delay in release of ACA is mostly due to delay in submission of the requisite
documents by the State. The documents regarding the fulfilment of conditions
prescribed while approving the projects under UIG scheme have to be submitted
by the State after which the first instalment is released to it. The projects under
UIDSSMT are approved by the State Level Sanctioning Committee (SLSC).
The minutes of SLSC Meetings approving the projects, timelines for
implementation of reforms, technical clearances of the projects, priority of the
projects within available allocation for the State and confirmation of matching
share are to be received and scrutinised by MoUD before recommending to
Ministry of Finance for release of first instalment. In most of the cases, initially
the allocation for the State was exhausted, and funds were released after additional
allocation amounting to Rs.5000 crore was provided by Government of India."
222. The MoHUPA in their reply stated as under:—
"So far as release of ACA is concerned, once the project is approved, the ACA
is recommended as soon as possible after getting approval of the Minutes from
the Competent Authority. In few cases, however, when the project/installment is
conditionally approved, the recommendation of ACA is made only on receipt of
compliance report from the State/SLNA, which results in delay of release of
ACA in few cases. Further, as funds under ACA are available with and released
by Ministry of Finance this procedural aspect could be attributed also as one
reason for delay in few cases.”
(ii) Non-release of Matching Share by State Governments
223. The ACA for the projects under JNNURM is released by the Ministry of
Finance / Ministry of Home Affairs on the basis of recommendation of the MoUD and
the MoHUPA as the case may be, directly to the States/UTs. The State Governments
were required to release the same amount to ULBs/Implementing agencies immediately
with their matching share. The scrutiny of the records of SLNAs as well as ULBs by
Audit revealed that there were delays in releasing the matching share to the
implementing agencies by some State Governments. The MoUD replied (May 2012)
that advisory has been issued to the States to release their Share on time as per existing
JNNURM guidelines.
 62

224. The Committee enquired about the delay in release of funds/matching

share by the State Governments to the implementing agencies and the steps taken to
ensure timely release of matching share by State Governments. the MoUD in their
reply intimated as under:—
"The Government of India took effective steps to ensure that matching share is
released by the States by making one of parameters to confirm release of State's
share before processing claims of the States for release of subsequent instalments
of ACAs to the States."
225. In their reply, the MoHUPA stated as under:—
"The responsibility of releasing adequate State share timely is with the State
Government. By and large State Governments have released their share on time
but in few cases procedural delay on account of inadequate provision in budget,
submission of UCs etc., has been reasons for delay in release of fund by State
Government. Government of India has been constantly pursuing with the State
Government to release their share and next instalment of Government of India
is released only after ensuring that States and ULBs have released their matching
share for the project."
226. The MoHUPA further stated as under:—
"State Governments are expected to release their share expeditiously to ULBs
along with Central Government share already released. It is difficult for the
Ministry to enforce strict timelines on State and monitor the same. Nevertheless
while releasing the next installments, Ministry ensures that matching share of
State Government is already released to ULB, without which Ministry does
not release its share. It is further submitted that due to cost escalation which
Central Government does not bear, the overall share of States had increased
significantly."
227. During evidence, the Secretary, Housing and Urban Poverty, Alleviation
apprised the Committee in this regard as under:—
"It is some kind of hope that, of late, a number of State Governments have come
forward and have given additional share to complete the buildings for which the
Government of India could not have given additional funds. In this process, we
are hoping to complete another 3.5 lakh dwelling units with some cancellation
which have already taken place. On the remaining non-starter units, the States
have promised that they will be completing."
(iii) Diversion of JNNURM Funds
228. Audit came across 7 cases in 7 States/UTs where the JNNURM funds to
the tune of ` 9.86 crore meant for housing projects were diverted for purposes other
than those admissible under JNNURM and in some cases even for non-JNNURM
purposes. In these cases, the Ministry replied that the States/UTs concerned would be
asked to transfer the amount back to the project account. Further, there were 8 cases in
6 States where the funds of `114.68 crore earmarked for urban infrastructure projects
had been diverted under similar circumstances.
 63

229. Committee enquired about the reasons for diversion of JNNURM funds
meant for housing projects for non-JNNURM purposes, recovery of the diverted
funds and mechanism put in place, if any, to check such diversion of funds. In reply,
the MoHUPA stated as under:—
"Central Funds under the JNNURM Scheme are released in the form of ACA
through State Government. Therefore all checks and balances which are available
for funds released through State budget are provided in the scheme. In spite of
that, in few cases it has been reported that funds have been used for some other
purposes. Government of India has taken up with the State Government very
strongly. State Government of Maharashtra has deposited the diverted amount
in the concerned account. However, few State Governments Tamil Nadu,
Karnataka, Jharkhand have not responded. The Ministry is following up the
matter with the State Governments. It is primarily the responsibility of State
Governments to utilize the funds for the projects for which they have released
and only few State Governments have diverted nominal ACA for other purpose.
Since there are only few minor instances came to the notice of the Ministry, the
matter has been followed up with the erring State Governments."
230. Regarding the final outcome of the Ministry's follow up action, the MoHUPA
in their reply explained as under:—
"With regard to this incidence quoted in the Audit Para following explanations
from the State is submitted:—

i. With reference to diversion of ` 4.63 crore in respect of project at

Tirupati, Andhra Pradesh, it has been reported that the ULB and the
State Government will deposit the fund to the project.
ii. With reference to diversion of ` 0.22 crore in connection with slum
rehabilitation project at Chandigarh, it is to mention that the UT has
not claimed DPR reimbursement for the projects and whenever the
claim for the same is received it will be re-imbursed as per extant
guidelines so as to regularize the expenditure.
iii. The State Government of Haryana has informed that ‘Municipal
Corporation, Faridabad had already recouped an amount of `3.28 crore
into the JNNURM funds from its own sources. Hence, Para may be
dropped’.

iv. State Govt. vide letter dated 22.10.2013 has informed that ‘there was
temporary diversion of fund for preparation of DPR due to paucity of
fund at Ranchi Municipal Corporation level at that point of time. Since
the Govt. has already released fund, the matter stands resolved as to
the diversion has been appropriated by depositing back the sum to the
concerning account by the ULB’.
v. The State Govt. of Jammu & Kashmir vide letter dated 25.04 2014 has
informed that as reported by Executive Officer, MC Parole, there is no
 64

diversion of funds under construction of community toilets. Moreover,

land was not available where slum dwellers lived. The then President
of the Municipal Committee, Parole with the consent of Public/
representatives of the wards proposed the sites viz. Hospital, Toll Plaza
and Cattle Pond at Parole for construction of Community toilets.
It has also been reported that the community toilet at proposed sites i.e. Hospital,
Toll Plaza and Cattle Pond at Parle have been constructed. It is worthwhile to
mention here that there is no diversion of JNNURM funds as reported for any
non-JNNURM scheme. It is submitted that outstanding diversions, if any, would
be adjusted against next release to the respective State Governments."
231. The Committee then enquired about reasons for diversion of funds for
urban infrastructure projects for purposes other than those admissible under JNNURM
and for non-JNNURM Projects. In reply, the MoUD elaborated as under:—
"The execution of the projects approved under JNNURM is responsibility of
the State Govt. which implements the projects as per the rules/procedure
prevailing in the State Govt. In case of any mis-utilization of funds or any
deviation is observed or reported the State Governments are requested to look
into such matters for taking remedial and corrective action thereon.
The replies received from the Govt. of Assam and Andhra Pradesh are as under:—
The Government of Assam has clarified that the land acquisition cost of the
South Guwahati West Water Supply Project was not included in the approved
DPR hence the amount was provided by the State Government through separate
administrative approval on 1.10.2010. Hence acquisition of private lands was
made without involving the project fund. The Assam Government has been asked
to provide copies of the relevant documents for vetting by the MoUD and
submission to Audit.
SLNA, A.P. has informed that an amount of ` 78.38 crore has been recouped by
making payment of JNNURM bill from the funds available under Godavari
Drinking Water Supply Scheme Phase —I (Maulana Abul Kalam Hyderabad
Sujala Sravanthi Scheme).
The response from the States of Odisha, Haryana and Tamil Nadu has been
requested."
232. The Committee further desired to know the level at which the decision to
divert the funds was taken; reasons as to why the Ministry failed to check the diversion
of funds; and whether responsibility had been fixed for diversion of funds. The MoUD
in their reply explained as under:—
"The JNNURM is ACA to the State Plan. The projects are implemented by the
States in accordance with their financial rules and procedures. The Govt. of
India has been requesting the State Governments/UTs to adhere to all financial
principles while implementing the projects. GoI has also asked the States to
 65

ensure fiscal discipline, including non-diversion of funds. Replies received from

some of the States are as under:—
Haryana
It has been informed by the State of Haryana that the amount of ` 203.86 lakh
has already been reimbursed in the head of JNNURM of State Govt.
Himachal Pradesh
As per the directions of the Hon'ble High Court of HP in CWP No. 56/2009, the
change of land use was obtained from GoI under FCA, 1980. On the request of
Forest Department, the funds amounting to ` 1.91 crore were deposited on
account of compensatory afforestation, NPV and cost of trees. Accordingly State
fund Were sanctioned by the Govt. of HP for the above said purpose. As such no
JNNURM/Central Funds were diverted for this purpose.
Specific replies of the State Governments have been asked for which replies are
awaited."
233. Thus, it could be seen from the replies submitted by the MoUD that the
Ministry merely furnished replies received from the State Governments concerned
and remain silent on other aspects on which classifications were sought from them by
the Committee.
(iv) Creation of Revolving Fund
234. Creation of a Revolving Fund was envisaged to leverage market funds for
financing further investment in infrastructural projects in the case of UIG/UIDSSMT
and for meeting Operations and Maintenance expenses of assets created in the case of
BSUP and IHSDP. However, this Fund had not been created by the SLNAs in
25 States/UTs. In 2 States (Tamil Nadu and West Bengal) it was created partially. In
2 States, (Assam and Uttar Pradesh), though it was created, yet the same was utilized
for meeting the expenses for preparation of DPRs/Project Management Consultancy
Charges and execution of roads respectively. The MoUD accepted (May 2012) the
audit observations that the fund was not created by several States.
235. In the above context, the Committee desired to know the reasons for
deficiencies in creation and management of revolving fund. The MoUD in their reply
stated as under:—
"As per Para 19 of approved guidelines, creation of revolving fund is to be done
by the State. The adherence to the guidelines is based on the financial management
of the State. However, grant-cum-loan may be sanctioned in such a manner that
25% of Central and State grant put together is recovered and ploughed into
Revolving Fund to Leverage market funds for financing of further investment in
infrastructure projects. At the end of the Mission period, the Revolving Fund
may be graduated to a State Urban Infrastructure Fund. The same has been
clearly specified in the Scheme guidelines to be followed by States and Cities.
Ministry has stressed on necessity by States of creation of such Fund through
workshops on Pooled Finance. Further action is dependent on States taking up
the activity as per their internal Rules & procedures."
 66

236. In their reply, the MoHUPA submitted as under:—

“Revolving funds were to be created from 10% of the funds released by SLNA
as soft loan or grant-cum-loan. In the case of Ministry's project i.e. BSUP &
IHSDP, State Governments and Central Government released money to the ULBs
in the ratio of their share as grants. It was not released as a soft loan; therefore
revolving fund was not to be created. Moreover, in the case of this Ministry,
project beneficiary contribution of minimum 12% and ULB contribution was
also ensured. It is also brought to the notice that revolving fund as a reform
condition was to be created by MoUD.”
(v) Parking of Funds
237. The State Government was required to release the ACA amount along with
their matching, share immediately to the implementing agencies. However, in 9 cases
in 9 States/UTs, JNNURM funds to the tune of `637.23 crore were parked by SLNAs
or ULBs.
238. The Committee specifically enquired why were the funds parked by SLNAs
or ULBs though it was required to be released to the implementing agencies along
with the matching share. The MoUD replied that the necessary advisory had been
issued.
239. In their reply, the MoHUPA informed as under:—
“ACA is released project-wise to the ULBs through State Governments. The
first instalment of ACA is released on sanction by Government of India and
submission of final DPR along with compliances of observations, if any, by
CS MC. In few cases after fund is released by State Government to ULBs, fund
does not get utilised immediately because of hindrances to start of project on
ground like availability of land, court cases etc. Therefore for some time fund
remains with ULBs. It is submitted that it should not be treated as parking of
funds as ACA was released as per the guidelines and because of certain ground
situations there was delay in start of the project and utilization of ACA.”
240. On being enquired about the remedial measures taken in this regard, the
MoUD in their reply stated as under:—
“MoUD has informed all the States to credit interest earnings on the ACA for
the ongoing projects parked with them, into the relevant accounting head meant
for interest receipt of GoI, in order to bring back the same to Consolidated Fund
of India.”
241. In their reply the MoHUPA apprised as under:—
"Ministry has cancelled all non starter projects and has asked States to either
refund the ACA or adjust the ACA against future releases. Moreover, Ministry
after taking note of this situation is thinking of releasing money to States in
lump-sum instead of project-wise so that State Governments can release money
to only those projects which are ready to start on ground.”
 67

(vi) Utilisation of Interest

242. In the JNNURM Guidelines issued by the Ministries, no specific instructions
regarding the strategy for utilization of interest earned on the amount deposited into
Bank were mentioned. Audit observed that 22 out of 30 States/UTs earned the interest
on the amount deposited into Bank to the tune of ` 210.35 crore up to 31 March, 2011
and in the remaining 8 States, amount of interest could not be calculated in Audit
because the amount was not shown to audit or the amounts were deposited into non-
interest bearing accounts.
243. The MoUD intimated (April 2012) that as per their record, the States had
earned interest of ` 226.58 crore upto 31 December, 2011. However, the Ministry did
not intimate the status/details of utilisation/adjustment of this amount. The MoUD
further intimated (May 2012) that Ministry of Finance had issued instructions for
adjustment of unutilized ACA and interest thereon in the case of non-starter projects
only, which were reportedly communicated to the States. As far as interest earned on
ongoing projects was concerned, the matter was referred to the Ministry of Finance
(Department of Expenditure) in consultation with Internal Finance Division. However,
the Ministry of Finance issued instructions regarding utilisation of interest earned
only in September 2011 and the MoUD did not provide details of interest adjusted in
respect of instances pointed out by Audit. Audit scrutiny further revealed that in some
cases, the interest amount was even utilized for purposes not contemplated in the
JNNURM Guidelines.
244. The Committee enquired about the reasons for not mentioning specific
instructions regarding utilization of interest earned on the amount deposited into banks.
The MoUD replied as under:—
“The MoUD vide correspondence of 3rd May, 2013 has advised the States for
adoption of financial discipline. It has also given specific O.M. of 7th March,
2013 on utilization of interest accrued on ongoing projects sanctioned under
UIG Sub-Mission of JNNURM and give the accounting heads for purpose of
deposition of interest accrued.”
245. In their reply, the MoHUPA submitted as under:—
“The instructions regarding use of interest on unutilized ACA were received by
this Ministry from Ministry of Finance in September, 2011 and those instructions
were issued to the concerned States. Since this scheme is being implemented as
the Additional Central Assistance scheme, Ministry of Finance releases the ACA
on the recommendation of this Ministry. Therefore, when the instructions of
Ministry of Finance were received they were communicated to the concerned
State Governments.”
246. Asked to state the total interest amount earned so far on JNNURM funds
deposited into banks and the Ministries plan to utilize this amount, the MoUD in their
reply informed as under:—
“Such details on the interest earned in each project account not readily
available with the Government of India and would be available with the
 68

State Governments / UTs/ULBs only. Once such thing comes to the knowledge
of the Ministry, appropriate action is taken. It is reiterated that necessary advisory
has been issued to the States/UTs in this regard.”
247. The MoHUPA in their reply stated as under:—
“Ministry does not have the figure of total interest earned on JNNURM funds
deposited in the bank. It is submitted that as per instructions of Ministry of
Finance, interest earned on unutilized ACA is to be deposited back with the
Government of India and since most of the projects are still under implementation,
States are utilizing the ACA released to them as per the programme."
248. Further, the Committee enquired why were effective steps not taken to
oversee that the interest amount was being utilized for the purposes contemplated in
the JNNURM Guidelines. The MoUD in their reply apprised as under:—
“Instructions for Utilization of interest have been issued by the Ministry to the
States. Hence, effective steps have been taken to utilize these interests so earned
on the project amount released to the States.”
249. In their reply, the MoHUPA intimated as under:—
“As per the direction of Ministry of Finance, Department of Expenditure vide
O.M. No. 59(4) PF-I/2006(Pt) dated 28th January, 2013, the interest amount of
unutilized ACA is to be recovered into the relevant accounting head in order to
bring back the same to Consolidated Fund of India. Therefore, its use for
JNNURM activities is not permissible. It is also submitted that most of the
projects are still under implementation and completion period for the
implementation has been extended up to 31 March, 2015 and ULB & States are
utilizing the ACA released to them.”
250. Regarding the final action taken, the MoHUPA in their reply explained as
under:—
“The Ministry of Finance vide its O.M. No. 59(5) PF-1/2010 dated 21st
September, 2011 Para 2 (i) has intimated the following:—
“The principal amount of unutilised ACA lying with the State may be adjusted
against the fresh project(s) or ongoing projects of that particular State only.
Adjustment be made to the extent of installment of admissible ACA, with any
excess amount of unutilized ACA being liable for adjustment in subsequent
instalments.”
This Ministry taking into account the directions received vide O.M. cited above,
has adjusted unutilized Central ACA because of cancellation of projects or
curtailment of DUs in the subsequent installments of ongoing projects.
So far as interest earning on ACA for ongoing projects is concerned, this Ministry
vide its letter No. G-20011/1/2009-BSUP/JNNURM (Part) (FTS 2930) dt. 18th
February, 2013 has forwarded Ministry of Finance direction for credit of interest
earnings on ACA in the relevant accounting head for interest receipt of
Government of India.
 69

“Taking note of the suggestion given by CAG, Ministry in its future schemes is
contemplating releasing the funds to States giving flexibility to the States for
further release to ULBs on the basis of progress of projects in ULBs so that the
fund does not remain lying unutilised with ULBs. With this flexibility, State can
release funds to fast moving projects expeditiously. Central Government will
release further installments to States on utilisation of earlier instalments and
UCs.”

(vii) Non-refunding of ACA in Respect of Abandoned/Withdrawn Projects

251. Audit pointed out cases in which projects were abandoned or withdrawn
and the ACA released to the State Governments/ULBs/implementing Agencies remained
unutilized and was not refunded to the Government of India. In respect of abandoned
projects, an amount of ` 44.79 crore released as ACA was not refunded and in respect
of withdrawn projects, the quantum of such amount was ` 309.29 crore.

252. Asked to state the total number of abandoned/withdrawn projects under

JNNURM, the amount involved in these projects and the amount released so far for
these projects, the MoUD in their reply submitted as under:—

“Under UIG, 33 projects amounting to ` 2832.23 crore entailing ACA of

` 1343.73 crore which were sanctioned under JNNURM were later withdrawn/
dropped by the respective State Governments. ` 220.33 crore was released as
ACA for these projects. Under UIDSSMT a total of 15 projects valuing ` 349.07
crore were dropped due to implementation issues involving ACA released to the
tune of ` 140.97 crore. Against these 15 dropped projects, 13 fresh projects
valuing ` 371.90 crore were taken up by respective States. An ACA of ` 154.70
crore has been released after adjusting the ACA released against the aforesaid
dropped projects.”

253. In their reply, the MoHUPA stated as under:—

“As on 17.10.2013, a total of 24 and 55 projects have been abandoned/cancelled

under BSUP and IHSDP projects respectively. The total project cost involved in
these 79 projects is ` 3044.20 crore. ACA to the tune of ` 407.61 crore was
released under these projects and after the cancellation, a major part amounting
to ` 279.54 crore has been recovered back.”

254. Apprising the final action taken, the MoHUPA further intimated as under:—

"All the non-starter projects have been cancelled by the Ministry. A total of 71
and 102 projects have been cancelled being non-starter under BSUP and IHSDP
respectively. The total project cost involved in these 173 projects is
` 5671.36 crore. ACA to the tune of ` 619.63 crore was released under these
projects which have been/is being adjusted against future releases. In case of
States where future releases are not expected, they are directed to refund the
released amount with interest.”
 70

255. The Committee further enquired why did the Ministry not ensure refund of
ACA in respect of abandoned/withdrawn projects. The MoUD in their reply informed
as under:—
“Ministry of Finance adjusts released ACA for withdrawn/dropped projects
against subsequent releases being made for other on-going projects in that State.
As on 30.09.2013, the ACA released for 10 of the withdrawn/dropped projects
amounting to ` 81.79 crore has already been adjusted. The adjustment of ACA
released for remaining 23 projects is under process.”
256. Furnishing further progress regarding adjustment of ACA, the MoUD stated
as under:—
“The Ministry has withdrawn 33 UIG and 20 UIDSSMT projects. Total ACA
released against these projects is ` 420.08 crore. Out of which, an amount of
` 106.14 crore has already been adjusted. The balance amount of ACA pending
to be recouped would be adjusted either from the subsequent instalments of
ACA in respect of projects sanctioned during the transition phase or any other
project which may be launched by the Government of India in future. The States
have also been requested to refund the ACAs so released in respect of these
projects.”
(viii) Non-adherence to the Guidelines for Release of Central Assistance
257. The Audit scrutiny of the appraisal notes, minutes of meeting and
recommendation and release files of the MoHUPA for test checked 29 projects revealed
that the conditions for release of ACA was not verified in any of the projects sanctioned.
The certificate regarding depositing of State share in separate account was not found
recorded anywhere in the above records produced for audit scrutiny. On being pointed
out by audit, the MoHUPA called for information from the States and intimated to
Audit that the States have confirmed about fulfilment of the condition. However, the
fact remains that the conditions were not verified prior to release of first instalment.
258. The Committee enquired the reasons for not ensuring adherence to the
guidelines for release of Additional Central Assistance. The Ministry replied as under:—
“For BSUP and IHSDP component of JNNURM, the initial release of first
installment (50% in case of IHSDP and 25% in case of BSUP) is recommended
for release after the State signs tripartite Memorandum of Agreement and the
project is approved by CSMC. These projects are approved only after appraisal
is done, which amongst other aspects also includes check for compliance to
guidelines. Memorandum of Agreement signed by the State is also a commitment
by the State for adhering to the guidelines of the scheme. The State Government
is relied upon to follow proper process. The next installment of ACA is released
upon utilization of Central Government share, State share and ULB share as
approved for the project. Physical progress is also checked before release of
next installment. Hence, all guidelines were adhered to in letter and spirit.”
259. Subsequently, the Ministry submitted as under:—
“BSUP guidelines stipulates that release of 1st instalment of GoI share for projects
would be made after approval of projects by CSMC, submission of final
 71

authenticated copy of DPRs and compliance of any other condition, if any,

imposed by CSMC. State share release is checked and ensured while considering
the case for second and subsequent instalments. Inadvertently the guidelines of
BSUP have been followed in case of IHSDP also. Nevertheless, it is reiterated
that State Government has released its share against 1st instalment before Gol
released its second instalment.”
(ix) Rush of Expenditure at Central Level
260. In terms of Rule 56(3) of the General Financial Rules, rush of expenditure
is regarded as a breach of financial propriety and should be avoided. The expenditure
may be restricted to 15 per cent during the month of March and 33 per cent during the
last quarter of financial year. Analysis of the sanction orders issued by the Ministry of
Finance (MoF) and Ministry of Home Affairs during 2005-06 to 2010-11 for release
of funds to various States/ Union Territories under JNNURM by Audit revealed that
the above provisions werenot adhered to in the years 2005-06 to 2010-11 and huge
quantum of funds were released during the last quarter of financial year, especially
during the month of March of the relevant year as detailed below:—
(` in crore)

Year Total ACA Release Percentage Release Percentage

released made in last made in the
quarter month of
March
1 2 3 4 5 6

UIG (MoUD)
2005-06 90.11 90.11 100 90.11 100
2006-07 1262.96 561.41 44.45 232.16 18.38
2007-08 2529.84 1357.58 53.66 758.74 29.99
2008-09 4544.47 1749.13 38.49 446.05 9.82
2009-10 3977.88 1050.9 26.42 734.82 18.47
2010-11 1930.93 1201.13 62.2 849.13 43.98
Total 14336.19 6010.26 41.92 3111.01 21.70
UIDSSMT (MoUD)
2005-06 87.47 87.47 100 87.47 100
2006-07 1248.97 921.43 73.78 657.17 52.62
2007-08 1204 627.58 52.12 532.2 44.2
2008-09 3280.26 2621.27 79.91 1524.97 46.49
2009-10 298.82 249.76 83.58 213.28 71.37
2010-11 1223.44 232.67 19.02 216.26 17.68
Total 7342.96 4740.18 64.55 3231.35 44.00
BSUP (MoHUPA)
2005-06 72.14 72.14 100 72.14 100
2006-07 901.78 560.92 62.2 429.22 47.6
2007-08 1192.8 844.81 70.83 434.41 36.42
2008-09 1582.92 1148.83 72.58 927.2 58.58
 72

1 2 3 4 5 6

2009-10 1338.37 790.69 59.08 414.31 30.96

2010-11 1925.4 872.4 45.32 699.03 36.31
Total 7013.41 4289.88 61.16 2976.31 42.43
IHSDP (MoHUPA)
2005-06 0 0 0
2006-07 492.62 470.04 95.42 328.2 66.62
2007-08 792.24 401.27 50.65 156.47 19.75
2008-09 1296.2 887.84 68.5 809.41 62.44
2009-10 780.72 333.21 42.68 160.66 20.58
2010-11 880.25 581.33 66.04 432.96 49.19

Total 4242.03 2673.69 63.02 1887.7 44.50

261. As funds were being released by the Ministry of Finance/Ministry of

Home Affairs at the fag end of the year, the State/UT Governments were consequently,
releasing the funds to the implementing agencies very late.
262. The MoUD in their reply stated (May, 2012) that during 2005-06 allocation
of ` 90 crore was provided in the last quarter on the launch of JNNURM in December,
2005. During 2006-07, 2007-08 and 2008-09 also additional allocation of ` 300 crore,
` 500 crore and ` 2400 crore respectively provided in the last quarter of the financial
year leading to higher utilization of funds in the last quarter. The MoUD further stated
that due to slow progress of reforms, the releases were withheld and on approval of
relaxation on achievements, most of the funds were released during last quarter in
March, 2011.
263. The MoHUPA replied (April, 2012) that JNNURM was being run in a
mission mode and as such the scheme of things permit release of part of ACA upfront
on sanction of projects and subsequent instalments on utilization of previous releases
and progress of reforms. The MoHUPA also stated that the funds were being released
as and when the new projects were sanctioned or on receipt of UCs from the States
irrespective of the fact that these were received in the month of March or May of a
particular financial year. It further stated that the releases were demand driven while
sticking to overall seven year allocation for a State.
264. In the above context, the Committee enquired as to why were huge quantum
of funds released during the last quarter of each financial years especially during the
month of March and why could the Ministry not prevent such violation of fiscal
discipline. The MoUD in their reply explained as under:—
“The recommendation for release of ACA is dependent on the submissions of
the proposals for sanction of new projects, utilization certificates in respect of
ongoing projects and necessary documents by the State Government. The Plan
Funds of JNNURM in the form of ACA to the States are sanctioned and released
by the Ministry of Finance, which takes care of their own guidelines on 'rush of
expenditure during the last quarter of the financial year. The Mission was launched
 73

in December, 2005 and hence all the expenditure of ` 90.11 crore was to be
released only in the last quarter of the Financial Year i.e. 2005-06. During 2006-07,
2007-08 and 2008-09, additional allocation of ` 300 crore, ` 500 crore and
` 2400 crore respectively were provided in the last quarter of the financial year,
leading to higher utilization of funds in the last quarter. The progress of reforms
was slow. Consequently the releases of instalments could not take place.
Subsequently, on 01.12.2010, the Cabinet approved relaxation on achievements
of reforms and allowed release of funds subject to withholding 10% of ACA
under UIG. Therefore most of the funds were released during last quarter
especially in March, 2011. Briefly stated, the release of funds to the projects
depends upon completion of documentation, physical and financial progress in
the project and approval of the competent authority.”
265. In their reply, the MoHUPA stated as under:—
“It is submitted that in few years especially 2008-09, 2010-11 and 2012-13, the
expenditure in the month of March is much more than expenditure in other
months. The expenditure is dependent on submission of Utilisation Certificates
by States and ULBs. It may be noted that construction activities get picked up
after rnonsoon and utilisation certificate is submitted generally from November
to January, therefore, leading to some bunching of expenditure in last month of
financial year. Ministry has taken note of this and along with ULBs and States
will make efforts to spread out expenditure more evenly in future.”
(x) Utilization Certificates
266. According to Audit, Utilization Certificates of ` 2436.78 crore (UIG),
` 2036.66 crore (UIDSSMT), ` 3054.05 crore (BSUP) and ` 2504.64 crore (IHSDP)
as of May 2012, March 2011, March 2011 and March 2011 respectively were
outstanding in the MoUD and the MoHUPA from the States/UTs.
267. On the query concerning timely submission of Utilization Certificates and
action taken to ensure strict compliance of the provisions of timely submission of
Utilisation Certificates, the MoUD in their reply stated as under:—
“The Ministry considered releases of subsequent instalments of ACA only after
receipt of Utilisation Certificates. The States continued claims of subsequent
instalments based on the Utilisation Certificates only. The State Governments
were time and again requested to submit UCs in time. However, the States could
submit these UCs only after utilisation of funds for project implementation and
in any circumstances; the States could not have been in a position to submit UCs
without utilising funds released for the projects. Hence, it is a fact that no
instalment of ACA was released without receipt of Utilisation Certificates.”
268. In their reply, the MoHUPA apprised as under:—
“Under the scheme, Ministry has not asked for the UC for the released amount
in earlier years as a separate activity. UCs are submitted by implementing agencies
for the release of next instalment. Therefore, implementing agency i.e.
State Government and ULB submit the UC of atleast 70% of the Central Government
 74

release along with matching share of State and ULB before claiming the next
instalment. Under IHSDP, Central Assistance is released in two instalments and
under BSUP Central Assistance is released in 4 instalments. Therefore, it is
submitted that UC of earlier release are ensured at the time of release of next
instalment and UC of total Central Assistance would be ensured at the time of
project completion.”
269. As reasons for not following the provisions of Rule 42 (1) of GFR, the
Ministry submitted as under:—
“It is submitted that under this scheme grants are released by the Ministry for
specific projects and next instalment become due only after utilising the
prescribed percentage of earlier released instalment including state and ULB
share. UCs are envisaged at the time of submission of proposal. Subsequent
instalments and final UC is expected at the time of completion of the project.”
270. Further the Committee enquired about the steps taken for rationalization of
fund-flow arrangements i.e. from the Centre to implementing agencies via SLNA/
States/UTs, in timing and quantum as per ground level status of projects to ensure
minimum unspent/excess amount outside Government accounts. The MoUD in their
reply stated as under:
“The funds are sanctioned based on the physical and financial progress in the
projects and adherence to guidelines. Both these aspects are duly assessed while
processing the Utilisation Certificates. The GFR format for UC duly captures
the physical and financial progress in the project. Moreover, it is also mandatory
to submit the SLNA Appraisal of latest IRMA Report which certifies the latest
physical and financial progress along with the Utilisation Certificate. The
Guidelines of UIDSSMT explicitly mention about the fund flow for the projects
implemented by the State Government and ensures its implementation. The
financial progress is invariably looked into while considering release for
2nd subsequent instalment of ACA for the projects.”
271. In their reply, the MoHUPA elaborated as under:—
“As explained earlier, the Central ACA is recommended for release once the
Utilization Certificate of the respective instalment of the concerned BSUP/IHSDP
project is received from the SLNA/ULB. The actual utilization of fund is based
on the ground level progress achieved and utilization of funds. No time-frame
however can be prepared at this level. The CSMC/CSC while approving projects
consider time-frame of completion of projects, but in practical terms it has been
observed that the ground realities differ due to various reasons, approvals e.g.
issues related to collection of beneficiary share, land clearance etc. Despite best
efforts at the Central level, monitoring of utilization of Central ACA at the ULB
level is difficult. The Central ACA is released as per the Financial Cost sheet
approved at the time of sanction of DPR as such the excess ACA is not released
to the State Governments. However, in cases, where the State proposes revision
of DPRs or deletion of DUs in a project, the ACA released earlier as per original
sanction, become excess release to the State. This Ministry as per the instructions
 75

issued by the Department of Expenditure adjusts the excess released ACA in

other BSUP and IHSDP projects within the State through Department of
Expenditure, Ministry of Finance. Thus efforts are made that no excess ACA is
available with the State Governments at any given point of time.”
X. Monitoring and Evaluation
(i) Inadequate Monitoring by the Ministries due to Paucity of Staff
272. As per the scheme guidelines, the MoUD and MoHUPA were to periodically
monitor their respective components through designated officers for each State/UT. In
the MoUD, there was a Mission Directorate set up exclusively for JNNURM. The
Directorate had three directors as on October 2010, who were responsible for all the
States/UTs where JNNURM was being implemented. In respect of their assigned States/
UTs, the directors were assigned, inter alia, examination of CDPs, scrutiny of DPRs
for consideration of CSMC, examining the reports of the appraisal agencies, review of
reforms, monitoring the implementation of projects etc.
273. However, at the time of setting up the JNNURM Directorate, no additional
staff was created (as the staffing pattern was not worked out) and the staff in the
Directorate had been posted by way of internal adjustment in the Ministry. The Ministry
felt that the augmentation of the staff had not kept pace with the increase of workload
of the Directorate. It was also observed from the records of the •MoUD that they had
put up proposals in 2008 to the Administration Wing of the MoUD and few staff were
posted thereafter. The proposal for additional staff was made in 2008, while the scheme
was launched in 2005.
274. In the MoHUPA, against the proposal for creation of one post of Mission
Director, 2 posts of Director / Deputy Secretary (DS), 1 post of Deputy Director (DD)
and 2 posts of Under Secretaries (US), 1 post of each was created. Till August 2007,
1 DS / Director had been holding the additional charge of JNNURM in addition to
other work in the MoHUPA. For implementation of IHSDP, it was decided that the
existing officers and staff dealing with the National Slum Development Programme
(NSDP) and Valmiki-Ambedkar Awas Yojana (VAMBAY) would be utilized, as these
2 schemes were subsumed in IHSDP. However, NSDP staff was not deployed and four
staff members from VAMBAY, 1 each in the grade of Section Officer, Assistant, LDC
and Peon were deputed.
275. In the above context, the Committee desired to know the reasons for not
creating additional staff to periodically monitor the respective components of JNNURM
and the Ministries' failure to augment their monitoring staff to keep pace with the
increased work load of the Mission Directorate. The MoUD in their reply explained
as under:—
“The Mission was launched in December 2005 for a period of 7 years and
subsequently it has been extended for 2 years i.e. upto 31.3.2014. However,
when the creation of JNNURM was launched, it was decided that the staff in the
Directorate would be provided from within the sanctioned strength of the Ministry
by internal mobilization. When the work of the Mission Directorate increased
 76

the issue for posting of manpower in JNNURM was taken up from time to time
and after a prolonged correspondence with the MoUD and the Ministry of
Finance, against the projected requirement of 44 posts, 18 posts in various grades
were sanctioned on 11/5/2011. Subsequently, when the work of the Mission
further increased due to additional activities, such as capacity building activities,
the matter for strengthening of Mission Directorate was again taken up for creation
of 25 additional posts, however, the Ministry of Finance agreed for sanction of
only 10 posts vide their sanction ID dated 6/6/2013. From the above, it is evident
that as far as the Mission Directorate is concerned the matter for sanctioning of
the manpower, the proposals were initiated from time to time to keep pace with
the increase of workload."
276. In their reply, the MoHUPA stated as under:—
"The Ministry had made concerted efforts to augment the staff strength of the
JNNURM Mission Directorate. However, proposals could not fructify due to
various reasons."
277. On being asked about the Ministries' failure to anticipate their role well in
advance to handle a scheme of such magnitude, the MoUD replied as under:—
"JNNURM being an ACA to the State Plan, monitoring of projects & reforms is
to be done by the States. Hence, the resource personnel at the Ministry was kept
at low end. However, from the above, it is evident that as far as the Mission
Directorate is concerned the matter for sanctioning of the manpower, the
proposals were initiated from time to time to keep pace with the increase of
workload. The issue highlighted by the Audit has been noted and will be kept in
mind while launching such urban projects/ schemes in future."
278. In their reply, the MoHUPA submitted as under:—
"Ministry is continuously pursuing with Ministry of Finance for creation of
adequate staff for managing such a huge scheme. Ministry has anticipated its
work load and asked for creation of 22 posts which were bare minimum but
Ministry of Finance approved only 13 posts. Not creating enough staff strength
for the scheme is not the result of either lack of anticipation or lack of persuasion
on behalf of the Ministry. Even for its new scheme RAY, Ministry has been
pursuing with Ministry of Finance vigorously for creation of bare minimum
additional posts and has not met with success till now."
279. When enquired as to why was the staff of NSDP intended to be utilized for
JNNURM not deployed in the MoHUPA, the Ministry in their reply apprised as
under:—
"MoHUPA, not being the cadre controlling authority for managing the organized
services, face in-adequate manpower. The staff of VAMBAY and NSDP identified
for IHSDP component of JNNURM could not be dedicated for IHSDP, as the
other Division from where the staff was taken back were already understaffed."
(ii) Delays in Furnishing Quarterly Progress Report by States
280. The scheme envisaged that the SLNAs would send Quarterly Progress
Reports (QPRs) to the MoUD and the MoHUPA. QPRs were intended as an input at
 77

the time of the subsequent release for projects. Audit observed that there were delays
in receipt of the QPRs. In some cases QPRs were not received at all.
281. The Committee enquired about the reasons for not ensuring timely
submission of Quarterly Progress Reports of projects being implemented and action
taken when the States failed to furnish timely Quarterly Progress Reports. The MoUD
in their reply stated as under:—
"Quarterly Progress Reports (QPRs) are received regularly from most of the
States. However, some States are irregular in sending the same for many reasons
including lack of staff and inadequate capacity, as reported by the States.
Continuous follow up is conducted by the Ministry."
282. In their reply, the MoHUPA intimated as under:—
"Ministry apart from persuading State Governments cannot take any other action
for non-submission of timely QPRs and other progress report. While releasing
the next installment, it is ensured that updated information of the project is
available."
283. Subsequently, the MoHUPA submitted as under:—
"Ministry has been insisting with the State Governments for submission of MPR
and QPR. In case of non-submission, issue has been taken up with State
Government through meetings and letters. Further, in addition to this mechanism
of monitoring of MPR and QPR, Ministry has,developed online monitoring
system to upload progress of projects. Ministry has already taken extensive
capacity building measures for the States and cities to enable them to update
project-wise information on this online monitoring system."
(iii) Non-seeking of Timely Completion Reports
284. For monitoring progress of projects sanctioned, it was stipulated that upon
completion of the project, nodal agency through the State Government would submit
completion report in this regard. However, during audit scrutiny, it was gathered that
the same was not being sent to the Ministry. As per the Ministry's record, 105 projects
under UIG had been completed upto March 2011 whereas status of completion from
3 States/UT (Delhi, Maharashtra and Madhya Pradesh) for only 10 projects were
received in the Ministry (May 2010). It was also observed that the MoUD did not take
up the matter of submitting completion report with the States and only on 1 November
2011, the States were reminded (those States and for those projects for which all
4 installments had been released) to send Financial Closure Certificate/Completion
Certificate or the current status of the project as the case may be. As such the MoUD
did not use scrutiny of 'Completion Report' as a tool for monitoring.
285. The MoUD replied (May, 2012) that a formal completion certificate is
usually issued after successful trial run of the project and only a few of the completed
projects had successful trial runs.
286. Asked to explain the reasons as to why did the MoUD not insist on furnishing
of completion report in cases of completed projects, the Ministry submitted as under:—
"Ministry is always insisting for furnishing of completion Certificates for all the
projects reported to be physically completed by States/UTs. Completion reports
 78

in respect of 134 UIG and 242 UIDSSMT projects are available with the Mission
Directorate. Information on completion of projects is also incorporated in the
QPRs submitted by the States/UTs and IRMA reports."
287. In evidence the Secretary, Urban Development apprised the Committee on
the imperfect reporting by States as under:—
"In 2010-11, 2011-12, 2012-13 and almost one-third of 2013-14, there has been
a regular hammering. I personally discuss it with the State Principal Secretaries.
Half of the time their reporting is imperfect. They have achieved reform; they
do not report. They are not reading what they are writing. They often simply
sign and send the papers. This is one side; the other side is that after working
closely with them we could resolve the information gap. We have also made
measurable calibration of reforms. Otherwise, the interpretation was also different
from our side and their side as to what is the achievement of reform. They were
not aware of how to report. So, we made four to five measurable indicators for
each reform. Then they could answer with supporting document, which we could
verify very clearly. Moreover, they took initiative also."
(iv) Non-achievement of the Objective of Constitution of Technical Advisory
Group
288. At the national level, an Advisory group headed by a Technical Advisor
drawn from civil society with proven experience in mobilizing collective action for
reforms in urban governance, was to be constituted. The Technical Advisory Group
(TAG) for UIG was constituted on 27 February, 2006 and it was stipulated that 'National
Technical Advisor (NTA)' who was the Chàirperson of TAG would be a special invitee
to CSMC. TAG was required to meet at least once in a month i.e. 12 meetings in a
year. However, against 60 meetings required to be held during March 2006 to March
2011, only 37 meetings were held by TAG. Further, TAG was required to help the
Mission to create City Voluntary Technical Corps (CVTC), to take peoples' participation
forward, in each Mission City. However, out of 65 Mission Cities, CVTC have come
up only in 14 Mission Cities, as of August 2011. The NTA constituted by the MoUD
was to be a special invitee to CSMC meetings of the MoHUPA. However, the MoHUPA
intimated (July 2011) that NTA had not been invited in the CSMC /CSC meetings of
BSUP and IHSDP.
289. The Committee enquired about the reasons for holding only 37 meetings
out of 60 meetings stipulated during the period March 2011 and failure to utilize
Technical Advisory Group fully while implementing JNNURM. The MoUD in their
reply stated as under:—
"The TAG has been created to help create City Voluntary Technical Corps
(CVTC) to encourage private sector participation and citizens involvement.
Reportedly TAG helped in creation of CVTC only in 14 Mission Cities. The
TAG has been requested to give report on the work done and evaluate efficacy
of TAG. Such report is still pending. As per the view of Mission Directorate in
the present context the TAG may not have its relevance, since the present phase
 79

is likely to end on 31.3.2014. However, continuation of such advisory group

will be deliberated upon with all the concerned authorities — while formulating
contours of JNNURM, Ph-II, as and when launched."
(v) Non-appointment of Independent Review and Monitoring Agency (IRMA)
and Third Party Inspecting and Monitoring Agency (TPIMA)
290. To review and monitor process in the Mission Cities and to keep track of
the physical and financial progress of the projects throughout the project development
life cycle (pre-construction, construction, commissioning and trial run and post
construction), the MoUD evolved a State level mechanism for third party monitoring
and review of the project sanctioned under the JNNURM Sub Mission-I (UIG) by an
Independent Review and Monitoring Agencies (IRMA) to be appointed by SLNA.
Similarly, the MoHUPA had also evolved such mechanism to appoint Third Party
Inspecting and Monitoring Agencies (TPIMA) for review and monitoring in respect
of BSUP and IHSDP projects. It was necessary that each project is covered by an
IRMA/TPIMA and ground level feedback is provided over the entire project
development life cycle to all concerned stakeholders at the City, State and Central
level.
291. During audit in the MoUD, it was ascertained that only 27 States / UTs had
appointed IRMA for third party monitoring of the projects under UIG and UIDSSMT.
It was not appointed in Bihar, Dadra and Nagar Haveli, Daman and Diu, Delhi,
Himachal Pradesh and Nagaland. There was no project approved under UIG and
UIDSSMT in Andaman & Nicobar Islands and Lakshadweep. The MoUD could not
intimate as to whether all the projects in the 27 States/UTs had been covered or not.
The MoUD checked only compliance of guidelines regarding 'appointment of IRMA'
at the time of appraising the proposal for the selection of IRMA and did not ensure
compliance of other guidelines like cross-verification with information provided by
SLNA/DEA to identify issues/constraints in project implementation and thereby
enabling 'corrective action by periodical review of the reports.
292. As such, it did not ensure that there were activities of IRMA in all the four
stages of projects i.e. pre-construction stage, construction stage, commissioning, trial
run, testing stage and post-construction stage as per toolkit. The mechanism of IRMA,
to be utilized for better project quality; time and cost control; value for money
procurement; improved budgeting planning and funds flow in the project; and
measurement of project outputs and impact was found not to be used by the MoUD in
an effective manner.
293. Further, TPIMA had been appointed by 21 States/UTs as of January 2012,
and the same had not been appointed in Arunachal Pradesh, Bihar, Dadra & Nagar
Haveli, Daman & Diu, Jharkhand, Meghalaya, Punjab and Sikkim. It was observed
that 8 out of 58 BSUP projects and 3 out of 30 test checked IHSDP projects in the
MoHUPA had not been covered by State appointed TPIMA. There was a delay of
more than 3 years in appointment of TPIMA from the date of approval of TPIMA e.g.
the project — "Housing for Urban Poor at Bawana, Narela and Bhorgarh, in Delhi”.
The project was approved on 13 June, 2007 whereas TPIMA was appointed on
31 January, 2011.
 80

294. In addition, 2 agencies had been appointed as Central TPIMA to inspect

126 projects on sample basis from various States /UTs. Subsequently Central TPIMA
had been extended to cover 4 North-Eastern States namely Arunachal Pradesh, Tripura,
Meghalaya and Sikkim. Central TPIMA also covered the UT of Chandigarh completely.
Jharkhand, Goa, Andaman & Nicobar Islands, Dadra & Nagar Haveli and Daman &
Diu were still uncovered by any TPIMA. The MoHUPA in their reply (January 2012)
stated that it had been pursuing with States to appoint TPIMA for all projects.
295. Audit scrutiny further revealed that out of 58 test-checked BSUP projects
and 30 IHSDP projects, TPIMA reports had not been received in respect of 29 projects
and 19 projects respectively. In some cases, the IRMA and TPIMA concerned did not
carry out adequate site visits and submit their reports. Further, there were also cases,
where their recommendations were not acted upon.
296. In the above context, the Committee desired to know as to why IRMA/
TPIMA were not appointed in all the States/UTs for effective monitoring of projects
as well as the reasons for delay in their appointment. The MoUD in their reply explained
as under:—
"The following are some of the reasons, as informed by the State Governments,
for delay in appointment of IRMAs:—

(i) Non-responding by the agency to the advertisements issued by the State

resulting re-advertisement of the proposals.
(ii) Some of the States were required to resubmit the proposals since the
procedures for appointment of IRMA were not followed.
(iii) During an assessment in the year 2009, it came to light that some of
the States were not able to appoint IRMA on their own, hence an exercise
was conducted by the Government of India itself to select various
agencies by following the proper rules and procedures and IRMAs
were selected for 13 States and their names recommended to the Stares
for entering into agreement and for appointment of IRMA.

(iv) Delay in signing of agreement contract by the SLNA and IRMA etc.
However, as on date IRMA in all the States have been appointed."
297. In their reply, the MoHUPA stated as under:—
"As per the guidelines, it was the responsibility of State Government to appoint
TPIMA. TPIM reports are analysed by TPIM Cells and the observations of
TPIMAs are discussed in the meeting in presence of State representatives so as
to take necessary, corrective and remedial steps for proper execution of projects
and ensuring the quality of projects. The Ministry has emphasized time and
again that 2nd Installment of IHSDP and 3rd/4th instalment of BSUP is not
released in a project without report of TPIM/Quality report and comments of
SLNA thereon so as to ensure the quality of projects and the remedial actions
for rectifying the defects, if any. As on date, all the States have appointed TPIM."
 81

298. Further, the Committee enquired why had IRMA and TPIMA not been
used effectively for the implementation of JNNURM and how do the Ministry plan to
utilize them effectively. In reply, the MoUD submitted as under:—
"The IRMA (Independent Review and Monitoring Agency), periodically visits
the sites of projects and reports to the Government of India and State Governments
on all aspects including physical and financial progress of the projects. Before
release of any subsequent installments of ACA, the reports of IRMA are taken
into consideration. Their suggestions are also noted by the States / Implementing
Agencies for compliance and taking suitable measures for implementation of
projects."
299. During evidence, while conceding that some States have not been able to
appoint TPIMA, the Secretary, Housing and Urban Poverty Alleviation apprised the
remedial measures taken in this regard as under:—
"There was also a mention about quality monitoring and quality control. We
have a system of third party monitoring, what you call the TPIMA Management
Systems, wherein a TPIMA Report is required for release of each installment.
That TPIMA Report is a technical report which is prepared after a visit to the
site. The observations have been that a couple of States have not been able to
appoint the TPIMA, like Punjab and Haryana and some other States like Assam.
So, what we have done is in the last one year for North-eastern States and for
Assam we have allowed them to use the TPIMA that has been appointed by the
Government of India. We have also allowed the Punjab Government to use the
TPIMA appointed by the Government of India because Punjab was a late starter
in the JNNURM. They did not want to participate in the Programme till about
two years ago. Now, they have got a few programmes sanctioned. This system
will also continue in the new Programme."
(vi) Programme Monitoring and Evaluation System (PMES)
300. The Mission Directorate, MoUD implemented a web enabled Programme
Monitoring and Evaluation System (PMES) for JNNURM. The PMES was stated to
be designed to capture the physical and financial progress aspects of JNNURM projects,
both as reported by the PEA and the IRMA. PMES consisted of different modules
such as CDP, DPR, appraisal etc. and these Modules were stated to be interlinked. By
the time PMES was made operational in 2008, more than 300 projects had already
been approved under JNNURM (UIG). The audit in selected States/UTs indicated
that the States/UTs hardly used the PMES.
301. The MoUD in their reply (April, 2012) confirmed the audit observations
and intimated that PMES had been closed with effect from 31 March 2012 and the
deficiencies in PMES would be taken care of in Project Monitoring and Information
System (PMIS).
302. In the above context, the Committee enquired from the MoUD reasons for
non implementation of PMES effectively in all the States/UTs covered under JNNURM.
 82

In reply, the MoUD stated as under:—

"PMES was formulated as an online system where the participation of State/
UTs and the ULBs was vital. Adequate training was given to the concerned
officials of ULBs and States to make online data entry into PMES. But due to
inadequate response of the States and ULBs, PMES could not be used effectively."
(vii) lnadequate Monitoring by State Level Committee (UIG&BSUP)/State Level
Coordination Committee (IHSDP)/State Level Sanctioning Committee
(UIDSSMT)
303. The primary role of the State Level Steering Committee (SLSC) for UIG
and BSUP was to decide and prioritize the projects under JNNURM. It also had a role
in monitoring the implementation of the projects and review the progress of urban
reforms in the States/UTs. As per UIDSSMT guidelines, the State Level Sanctioning
Committee shall meet as often as required but at least thrice in a year without fail and
review the progress of ongoing projects and sanction new projects. As per IHSDP
guidelines, the State Level Coordination Committee (SLCC) shall meet as often as
required but at least once in a quarter to review the progress of ongoing projects and
for sanction of new projects.
304. During the audit of selected States/UTs, it was observed that sufficient
number of meetings of the State Level Sanctioning Committee/SLCC were not organised
for monitoring the implementation of the projects and review the progress of urban
reforms in the States. In Haryana, only 4 meetings of State Level Sanctioning Committee
and 1 meeting of State Level Steering Committee were held during 2007-11. No system
of State level monitoring of the projects existed in Delhi. In Delhi, it was seen that
there was no mechanism to monitor the reforms at State/ULB level. Only 2 meetings
of SLSC were held in respect of UIG and BSUP during 2007-11 in Madhya Pradesh.
No meeting of SLSC was conducted in Puducherry after 2009-10. Discussions were
held in Assam on appraisal of progress of the project works but action taken/suggested
for speeding up the project works were not found on record or documented. Similarly
in Daman and Diu though various meetings at the State Level were conducted under
the chairmanship of UT Administrator during the period from 2008-09 to 2010-11,
the project is yet to take off.
305. The MoUD replied (May, 2012) that it is the responsibility of the State
Government to hold SLSC meetings and they had been continuously advised to hold
meeting for review and monitoring of implementation of projects as well as urban
sector reforms.
306. In the above context, the Committee desired to know the periodicity of
calling Monitoring Committee meeting for JNNURM and number of Monitoring
Committee meetings each at Central and State levels expected to be held so far as per
this schedule. The MoUD in their reply apprised as under:—
"As per the guidelines of UIG subcomponent of JNNURM, among other
mechanism for monitoring of projects, at the Central level, the CSMC may meet
as often as required to sanction and review/monitoring progress of projects
sanctioned under the Mission. The CSMC is headed by the Secretary (UD),
Government of India. Generally, CSMC meetings take place once in a month
 83

depending on the proposals submitted by the State Governments for sanction of

new projects and release of subsequent installments of the Additional Central
Assistance (ACA) to the States. Till 30th September, 2013, 126 number of such
CSMC meetings have been held for sanction of projects and installments
including monitoring of UIG projects. As per guidelines under UIDSSMT, it
has been stipulated that State Level Sanctioning Committee (SLSC) shall meet
at least thrice in a year without fail and review the progress of ongoing projects
and sanction new projects. The meeting of SLSC is a continuous process.
However, the periodicity of meeting of SLSC varies from State to State."
307. In their reply, the MoHUPA stated as under:
"There is no fixed schedule for holding CSMC/CSC Meetings. This depends
upon the proposals submitted by the States/UTs as on date, there have been
147 CSMC and 143 CSC meeting since the inception of the scheme, On an
average, CSMC and CSC meeting been held twice a month upto 2011-12 and
thereafter CSMC and CSC meetings have taken place on an average once in a
month. It may be noted that new projects were approved till 31st March, 2012
and now these meetings are taking place for release of further installments in the
already approved projects."
308. Asked to state the total number of Monitoring Committee meetings held
each at Central and State Levels so far, the main problems/hindrances identified in
these Monitoring Committee meetings and plan to overcome them, the MoUD informed
as under:—
"At the Central level, as on 30.09.2013, 126 meetings of the Central Sanctioning
and Monitoring Committee (CSMC) have taken place. At the State level, it is
stipulated that the State Level Sanctioning Committee (SLSC) would meet at
least thrice a year to review the progress of on-going projects. Periodicity of
such meetings varies from State to State. No data-base of State Level meeting is
available. In the review meeting, the main problems identified with respect to
implementation of projects relate to land acquisition, clearances etc. For reform
implementation the main difficulty has been in getting legislative and competent
administrative approval. Each State has been taking up the issue of various
clearances with Railways, Defence at their level. The projects can be facilitated
only if time-bound clearances are ensured by requisite authorities. Till date
135 CMC meetings have been held at the Government of India level. All required
actions including making requests to MoF for release of funds to the States have
been taken pursuant to deliberations in Such CSMC meetings. The SLSC
meetings are held at States level and these data base are not available with the
Mission Directorate. The States have been requested to provide data base relating
to SLSC meetings. These can also be directly settled by the States with their
respective AGs."
(viii) Need to Strengthen the Monitoring of JNNURM Projects
309. The Committee enquired about the steps initiated to monitor implementation
of JNNURM projects with a view to analyzing the causes of delays more closely and
 84

resolving hindrances so as to ensure timely completion of these projects. The MoUD

in their reply explained as under:—
“The Mission Directorate constantly monitors implementation of projects and
reforms. A number of steps have been taken as part of this endeavour:
(i) A system of Quarterly Progress Reports (QPR) is in place to monitor
implementation of projects and reforms.

(ii) Central Sanctioning and Monitoring Committee (CSMC) reviews the

progress of implementation of the Mission every month. The
representatives from select States/UTs are asked to attend these meetings
with a view to review and expedite the implementation of the Mission.
(iii) Meetings of the State Secretaries of Urban Development are held under
the Chairmanship of Secretary (UD) where the implementation of the
Mission is reviewed.
(iv) There are Regional Review Meetings by Secretary (UD) for different
regions of the country.

(v) Correspondences at the level of Secretary (UD) are written to the Chief
Secretaries of the States/UTs bringing to the notice issues requiring
urgent action.
(vi) Capacity building measures such as conducting Rapid Training
Programme of the officials of ULBs/parastatals, supporting Programme
Management Unit (PMU) at the State level and Project Implementation
Unit (PIU) at the ULB level, and Independent Review and Monitoring
Agency (IRMA) at the State level, preparing and providing toolkits for
preparation of CDPs, DPRs along with their reimbursement etc. has
been taken by the Mission Directorate.
(vii) The reform appraisal agencies have been asked to hand hold the States/
ULBs in order to facilitate the reforms process.

(viii) The Reform primers have been prepared by the Mission Directorate
and disseminate to the State/ULBs to facilitate understanding of reforms.
The status of reforms and project implementation of the already sanctioned
projects of a State/UT is considered by the CSMC at the time of sanctioning of
a new project or any second or subsequent installment of funds."
310. In their reply, fhe MoHUPA Stated as under:—
"The main reasons of the delay are as follows:—
• Projects have witnessed large cost escalations, due to rising prices of steel
and cement amongst other factors, States and Urban Local Bodies are not
able to meet such cost escalation. Government of India, under the
JNNURM Scheme has decided not to fund any cost escalations;
 85

• In IHSDP component, cost ceiling was artificially imposed at ` 80,000

per Dwelling Unit which was revised in 2009 to ` 1 lakh per DU effective
from 1.4.2008. This ceiling translated to a heavier burden on the States /
ULBs resulting in stalling of projects. Instead actual cost under IHSDP
was also higher than ` 1 lakh and this coupled with large cost escalation,
has very adversely affected the progress of IHSDP projects especially in
the States / ULBs which are not able to fund the enhanced cost;
• Difficulties in making slum residents temporarily relocate in the case of
in situ projects;
• Inability of beneficiaries to contribute their share; and
• Lack of availability of litigation-free land.
It can be seen that the reasons for delay are primarily non-availability of land,
cost escalation and reluctance of beneficiaries. These issues related to the ground
situation in each city are required to be sorted out at the city level. Though
Ministry, while monitoring, tries to find solution for such issues, if possible."
311. Replying to a specific query as to whether the monitoring of JNNURM
projects have been strengthened so that there are no diversion of funds to ineligible
beneficiaries/schemes, the MoHUPA submitted as under:—
"The Ministry and the CSMC have been advising the States from time to time
that a 3 Tier monitoring shall be done for BSUP/IHSDP projects. At the lowest
level, ULB/ monitoring agencies should monitor the implementation of the
projects. The second tier of monitoring is at the State level where the SLNA is
required to monitor the implementation as per its role envisaged in the guidelines.
The third tier of monitoring is the TPIM Agencies appointed by the States. The
States are following this rigorous monitoring in general and at the time of sanction
of 3rd and 4th installment under BSUP and 2nd installment under IHSDP,
Government of India ensures that the TPIMA Report are analysed by SLNAs
and their comments upon the physical and financial progress and quality aspects
of the project before release of further instalments."
312. The Committee further enquired whether any responsibility had been fixed
for lapses in monitoring JNNURM. In their reply, the MoUD stated as under:—
"The progress of projects and reforms is constantly monitored at the level of
Government of India. The Constitutional provisions stipulate urban development
and local bodies to be a subject matter of the State Government. The MoUD has
been working with these stipulations. Both projects and reforms are implemented
by State Governments as per the extant laws, rules and procedures. There is no
lapse in monitoring of the projects as far as Government of India is concerned."
313. On being pointed out that lapses in monitoring had been brought out in
chapter 9 of the Audit Report, the MoUD stated as under:—
"It is reiterated that the Ministry has been monitoring the implementation of
projects on the basis of QPRs, IRMA reports, RAA reports, review meetings,
 86

communications, visits etc. Unlimited number of communications have been

sent to the States/UTs to expedite completion of projects and achievement of
reforms within the stipulated guidelines."
314. When asked to explain steps taken to supplement the earlier initiatives to
strengthen Monitoring and Evaluation aspects, the MoHUPA elaborated as under:—
"One of the reasons highlighted by PAC for inadequate monitoring is paucity of
staff at the Ministry. It is already submitted in written response that in spite of
Ministry's continuous persuasion for creation of adequate staff for managing
such a huge scheme, the proposals could not fructify.
However, Ministry has been monitoring the progress of projects approved through
MPRs and QPRs. PAC has also observed that submission of MPRs and QPRs
have not been very regular. As already submitted, Ministry has been insisting
with the State Governments for submission of MPR and QPR. In case of non-
submission, issue has been taken up with State Government through meetings
and letters.
The Mission Directorate has also empanelled Agencies to play the role of TPIMA
under JNNURM for third party appraisal and monitoring.
A Management Information System (MIS) has been designed in this Ministry to
capture physical and financial progress of JNNURM projects. The information
provided by MIS is cross verified with independent reports from TPIMA to
identify all the constraints and issues in the project implementation and to enable
timely corrective action if necessary. TPIM enables this Department in
achievement of the following:—
• Better Project Quality
• Cost Control
• Time Control
• Improved Planning and Budgeting
• Control over Fund Flow and Utilization
• Measuring Project Outputs
• Measuring impact of JNNURM
Besides these, Central Sanctioning and Monitoring Committee (CSMC) and
Central Sanctioning Committee (CSC) approve the projects under BSUP and
IHSDP respectively and sanction the first instalment on the basis of duly approved
Detailed Project Reports (DPRs) submitted by the States/UTs and subsequent
instalments on receipt of Utilization certificates from the State Governments of
the earlier instalments released."
XI. States/UTs which have been successful in implementing JNNURM
315. The Committee desired to know the States/UTs which had been successful
in implementing JNNURM and the Ministries plan to emulate their success stories in
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other States/UTs. The MoUD in their reply stated as under:—

“It is reiterated that projects under JNNURM are implemented by the State
Governments/UTs. Some of the States viz. Andhra Pradesh, Arunachal Pradesh,
Gujarat, Himachal Pradesh, Karnataka, Manipur, Rajasthan and Tamil Nadu are
the States which can be attributed as successful in so far as implementation/
completion of projects vis-a-vis total number of projects approved are concerned
(completion around 50%). The best practices as reported/noticed are shared
with the other State Government/UT during the review meetings and other
forums."
316. In their reply, the MoHUPA submitted as under:
"Some of the States are able to implement these projects faster vis-à-vis others.
The reasons of delay as reported by States are primarily non-availability of land,
capacity of ULBs to prepare DPR and slow tenders to appoint contractor and
supervise these work. States which have strengthened ULB with better financial
conditions are able to implement these projects more speedily. Ministry has
been impressing upon State Governments to strengthen ULB so that such projects
can be implemented expeditiously."
317. During evidence, the Committee sought views of the MoUD on the point
that the condition of development of a municipal life, the type of municipalities and
management that was needed in the North-Eastern or the Himalayan States were very
much different from what were in the plains or the advanced States. The Secretary,
Urban Development submitted as under:—
“Actually, they were saying like that, but we have gone into the issue proper as
to what exactly is required. It turns out that it is not that it is insurmountable for
them. For example, the question is that the stamp duty be reduced to 5 per cent
because we think that as a principle high rate of stamp duty leads to leakages
and inhibits urban development in a systematic manner. For example, the user
charge on water is one major problem. The North-Eastern States are not willing
to levy user charges. Nothing is there that distinguishes them from the rest of
India. You are giving water and you pay charges. You are doing the sewage
cleaning and you levy charges. They are not willing to levy property tax, and
there is no good reason for them not to."
318. On being enquired about the steps taken in this regard, the MoUD in their
reply stated as under:—
“Most of the Municipalities in North-East or the Himalayan States have been
formed very recently. In comparison, the Municipalities in some States were
formed long back like Gujarat, Maharashtra, A.P. etc. These have evolved over
time and gained competence in managing municipal affairs on their own, whereas
the recently-created municipalities in North-East and Himalayan States are still
learning and comparatively more dependent on the State Governments. Hence,
JNNURM has considered bracketed these States under special category and
relaxed some norms for achieving reforms. Cities in the North-East and other
special category States have to recover only 50 per cent of O&M charges, as
 88

compared with 100% O&M cost recovery mandated for the rest of Mission
Cities.
As per Government decision of date 31st May, 2012 achievement of reforms
has been delinked for UIDSSMT for ongoing projects in North-East and J&K.”
XII. Measures which would have ensured better implementation of JNNURM
projects
319. The Committee sought the opinion of the Ministries on the arrangements
with which the implementation of JNNURM could have been better. The MoUD in
their reply apprised as under:—
“Professionally skilled and strengthened Mission Directorate was a pre-requisite
for implementation of the JNNURM which can give handholding to States and
ULBs. Along with this, handholding of States would be required at the inception
stage which would then had a capacity building at the urban local body level i.e.
project identification, identification of problems, surveys, project
conceptualization, preparation of DPRs, implementation of projects and asset
management. The ULBs also require staff equipped in financial, technical and
administrative matters to implement all the reforms in a time bound manner.
There are around 5000 towns which need support under UIDSSMT for
improvement in urban infrastructure in view of fast urbanization. However, the
total allocation for JNNURM is very less and cannot cater to the needs of urban
infrastructure and increasing urban population. The creation of Municipal cadre
and professionalization of Municipal services in the ULBs are key to urban
governance and based on the learning so far, it is the endeavour of the Ministry
to stress for the same to have better implementation of JNNURM."
320. In their reply, the MoHUPA submitted as under:—
“The implementation of JNNURM component of BSUP & IHSDP would have
been better if we have allowed cost escalation on account of tendered cost and
escalation because of building material. Artificial ceiling of Rs.1 lakh under
IHSDP was a big damper. Inadequate staff in Ministry at Government of India
level is also one of the major issue. The releases which were made through
Ministry of Finance in 4 installments in BSUP projects also caused delay in
reaching the money to the concerned ULB which certainly affected the progress
of the project. Rehabilitation of the slums is a complex social issue where the
consent of all beneficiaries is paramount. In many cases, over a period of
execution the consent of beneficiary, which was given earlier, was not
implemented in Practice and beneficiary refused to vacate or shift to new place."
321. The Ministry further submitted as under in this regard:—
“Establishment of a single directorate in a single Ministry for all the four
components of JNNURM instead of the two directorate in two separate Ministries
in-charge of the mission would have been a better arrangement."
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322. Pointing out that DPR examination should have been done more extensively
and thoroughly, the Committee enquired whether there was any Committee to do such
things. In reply, the MoHUPA stated as under:—
‘‘There is a Central Sanctioning and Monitoring Committee for BSUP projects
and a Central Sanctioning Committee for IHSDP projects set up under the
Chairpersonship of Secretary (HUPA) to appraise and sanction the DPRs
submitted by the States/UTs. DPRs are prepared by States/UTs with the technical
expertise either available in-house or through appointment of technical
consultants which is also supported by the Ministry. Once prepared, DPRs are
submitted to the Ministry which are appraised by the 2 appraisal agencies
designated by MoHUPA i.e. HUDCO and BMTPC. The appraisal agencies,
appraise the DPRs, discuss with the State Government representative/consultants
regarding queried raised or shortcomings with regard to availability of documents
etc. and review the cost estimates so that revised DPRs can be placed before the
CSMC for consideration. CSMC goes through all the components of DPRs,
takes into account concerns of appraisal agency and if satisfied accord approval/
conditional approval or defer the project for State Government to incorporate
comments. In case of conditional approvals, the States are required to submit all
the information/undertaking complying the conditions based on which the same
is considered approved and fund is released.’’
323. When asked to explain as to why the Ministry were intruding in the matters
pertaining to the State List like Property Tax, Stamp Duty, Rent Control Act, etc. the
MoHUPA replied as under:—
‘‘The Ministry has mandated certain reform conditionalities which States agree
to undertake through signing of Memorandum of Agreements (MoAs). However,
the Ministry only issues advisories and model laws to help States expedite the
process of implementation of these reforms. These are not intrusive in nature."
324. In this regard, the Secretary, Urban Development clarified in evidence as
under:—
‘‘There is no intention of any kind of interference with the State Government or
the urban local bodies. The idea was to handhold the efforts in making the urban
local bodies self-sustainable. It was an effort to motivate them to take up reforms.’’
325. On being pointed out that the structure of JNNURM is faulty as it mostly
dependent on the States/ULBs which already were having low capacity resources, the
MoHUPA explained as Under:—
‘‘Land and colonisation are State subjects as per the Constitution. Hence, the
schemes of GoI related to housing to a large extent are not obligatory on them.
Further, these schemes e.g. RAY, JNNURM etc are contingent upon the States/
UTs signing and MOA for implementing the same and ageeing to the reform
conditionalities. In this it is assumed that the States already have the capacity to
implement the schemes. However, as part of the schemes modalities, the GoI is
also providing for additional funding support for augmenting manpower at the
 90

State and City level (through establishment of PMU/PIU/State and City level
technical cells), conducting of regular workshops/training /capacity building
programmes to handhold States/Cities, preparation of detailed project reports
and plans as mandated under the schemes.’’
326. Further, the Committee enquired as to why were consultations with the
stakeholders not done adequately. In reply, the MoHUPA apprised as under: —
‘‘A number of consultations with States/UTs, ULBs along with research
institutions, think-tanks, bilateral-multi lateral agencies, practitioners in the field,
NGOs/CBOs and civil society organisations have been held in formulation of
the scheme and periodic revisions/amendments in the scheme. Guidelines/
toolkits, best practices etc. have been compiled based on the feedback from
various stakeholders. Further, formulation of plans mandate participation of all
stakeholders within the city/ULB jurisdiction. Further, community participation
at every stage is encouraged by the Ministry in implementation of the scheme.’’
 PART II
OBSERVATIONS AND RECOMMENDATIONS
1. Jawaharlal Nehru National Urban Renewal Mission (JNNURM) was
launched by the Government of India on 3rd December, 2005 as a reform-driven,
fast track programme to give focused attention to the improvement of severely
stressed infrastructure and basic services to the poor living in the identified 927
cities and towns of India so as to enable them to realize their full potential with
focus on efficiency in urban infrastructure/service delivery mechanisms and through
community participation and enhanced accountability of Urban Local Bodies
(ULBs)/Parastatal agencies towards citizens, thus becoming true engines of growth.
It envisaged a total investment of more than ` 1,00,000 crore during a 7 year period
from 2005-06 to 2011-12 with a committed Central Government share of ` 66,084.65
crore. JNNURM consisted of two sub-missions: the ‘Urban Infrastructure and
Governance’ (UIG) (Sub-mission I) and the 'Basic Services to the Urban Poor'
(BSUP) (Sub-mission II) for 65 identified Mission Cities which comprise 35 cities
with million plus population, other State capitals and cities of heritage and tourism
importance across the country. The main thrust of UIG was on infrastructure
projects relating to water supply and sanitation, sewerage, solid waste management,
road network, urban transport and redevelopment of old cities whereas that of
BSUP was on integrated development of slums through projects for providing
shelter, basic services and other related civic amenities. In respect of non-Mission
Cities, there were two components namely: (i) ‘Urban Infrastructure Development
Scheme for Small and Medium Towns’ (UIDSSMT) and (ii) ‘Integrated Housing
and Slum Development Programme' (IHSDP) with the same broad objectives as
envisaged in UIG and BSUP. The Ministry of Urban Development (MoUD) is the
nodal Ministry for UIG and UIDSSMT while that of BSUP and IHSDP is the
Ministry of Housing Urban Poverty Alleviation (MoHUPA). Against this
background, a Performance Audit of the implementation of the JNNURM for the
period 2005-06 to 2010-11 was conducted by the C&AG of India between
April 2011 and November 2011. It covered the audit of the MoUD and the MoHUPA
and interaction with other stakeholders like the Ministry of Finance, the Ministry
of Home Affairs and the erstwhile Planning Commission at the Government of
India level and the audit of State Government Departments, State Level Nodal
Agencies and Urban Local Bodies/Parastatal agencies at the State Level. The audit
sample comprised 216 projects in 39 Mission Cities and 46 cities and towns other
than Mission Cities spread over 25 States and 5 UTs. Out of these 216 projects,
there were 82 housing projects and 134 urban infrastructure projects. The
Performance Audit highlighted various shortcomings/lapses in the implementation
of the Mission viz, release of less budgetary allocation than envisaged, non-
completion of majority of approved projects, very few projects for re-development
of old cities, non-establishment of/inefficient Programme Implementation Units in

91
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several States, shortcomings in implementation, financial management, and

monitoring of both housing and urban infrastructure projects as well as reforms
meant to strengthen the ULBs/Parastatals. These and other relevant issues have
been dealt with in the succeeding paragraphs.
2. Shortfall in Release of Additional Central Assistance : The Committee are
concerned that there had been huge shortfalls in allocation and release of Additional
Central Assistance by the Central Government for JNNURM. Against an allocation
of ` 66,084.65 crore envisaged by the Planning Commission for JNNURM during
the Mission period 2005-06 to 2011-12, a budgetary allocation of ` 45,066.23 crore
was made and against this allocation, only ` 40,584.21 crore had been released in
respect of UIG, UIDSSMT, BSUP and IHSDP upto 2011-12. In the case of UIG, the
shortfall was as high as 94.86 percent in Goa and there were 14 States/UTs where
the releases were short by more than 50 per cent. Though the MoUD claimed that
substantial progress had been shown by the States in the later half of the Mission,
the Secretary, Urban Development conceded during evidence that as all the reforms
were not achieved during the given period, the Government had decided to withhold
10 per cent of the ACA, to be released once the reforms were achieved by them. As
remedial measures, the Government had also appointed the Reform Appraisal
Agencies to monitor the progress of the reforms and submit their reports periodically
to the Ministry. The States had also been reportedly requested to expedite submission
of UCs for claiming second instalment of ACA for the projects and complete the
projects. The Ministry of Housing and Urban Poverty Alleviation also apprised
the Committee on various measures taken by them to facilitate States/UTs in setting
up technical support structure and conduct capacity Building Programmes so that
the State/Parastatal/Urban Local Body officials are trained in project formulation,
designing, implementation and monitoring for successful implementation of
JNNURM. The Ministry further informed that to avoid procedural delays, they
propose to release the ACA directly w.e.f. 2014-15. However, the Committee find
that even after taking up these remedial measures, there still exist huge shortfalls
in releasing ACA for all the four components of JNNURM as on 30.09.2013 i.e.
` 20,040.49 crore released for UIG projects against the sanctioned ACA of ` 27,893
crore, ` 9,708.59 crore for UIDSSMT Projects against the sanctioned amount of
` 11,313.60 crore; and ` 17,639.6 crore for BSUP and IHSDP projects out of
` 20,169.32 crore. The Committee also note that the MoUD provided another figure
of ` 21,732.13 crore for UIG projects as total release for the same date i.e. 30.09.2013
and feel that the MoUD owes an explanation to them with respect to mismatch of
figures concerning funds released for UIG because it shows a casual approach on
their part in maintaining data appropriately. Further, the Committee are of the
opinion that withholding 10 per cent of ACA for not completing the requisite reforms
would further hold up the completion of projects. The Committee, therefore, desire
that the two Ministries continue in their efforts to find and remove stumbling blocks
both at the Central and State levels, take strict action against the defaulting States
and ensure proper utilization of sanctioned funds and timely release of subsequent
instalments. The Committee would like to be apprised of the latest status on the
ACA released to States/UTs subsequent to various remedial measures taken by the
Ministries concerned, particularly the Reform Appraisal Agencies, alongwith the
reports, if any, submitted by these agencies.
 93

3. Delay in Completion of Projects : The Committee are distressed to find

that as per the auddit report, only 253 projects consisting 8.98 per cent of the total
2482 JNNURM projects approved upto 31 March, 2009 could be completed within
the average period of completion of 2 years i.e. by 31 March, 2011. Even later,
despite taking remedial measures and engaging with the States and Municipalities
through review meetings, various communications, video conferencing, Independent
Review and Monitoring Agencies, workshops for expediting the completion of the
remaining projects, the MoUD could complete only 46 per cent of their UIG and
UIDSSMT projects as on 30th September, 2013. The record of the MoHUPA was
hardly better as they could complete only 8,44,062 Dwelling Units (DUs), constituting
58.6 per cent of the total 14,41,231 DUs sanctioned while cancelling 173 projects
and curtailing non-started DUs in 526 projects by 15th September, 2014.
Consequently, the mission period for the MoUD and the MoHUPA was extended
upto March 2014 and March 2015 respectively. The MoUD could not achieve the
revised target also, since out of 539 UIG and 806 UIDSSMT projects approved
during 2005-12, only 247 UIG and 454 UIDSSMT projects had been completed as
on 31st August, 2014 and 33 UIG projects and 15 UIDSSMT projects had been
withdrawn. Main reasons for the delay in completion of the projects cited by the
Ministry were land acquisition issues, litigation matters, shifting of utilities, delay
in obtaining statutory permission from Defence, Railways, Environment and Forests
and other regulatory Departments, delay in claiming second installments by States
for non-implementation of urban sector reforms, imposition of impracticable cost
ceiling, cost overruns and cost escalation in steel and cement sector, non-availability
of technical manpower at ULBs, changes in site location due to ground realities,
difficulties in relocating slum dwellers and inability of beneficiaries to contribute
their share. The Committee wonder why these issues were not taken care of when
the Mission was conceptualized with a view to equipping the implementing agencies
with adequate preparedness to surmount the challenges that may arise in the course
of the implementation of Mission. While deploring this lapse, the Committee hope
that now since both the Ministries have learnt suitable lessons from their experience,
there is a need to put in extra efforts to complete the remaining projects without
further loss of time. The Committee would like to have the details of the specific
action taken in this direction as well as targets achieved at the end of the extended
Mission period.
4. Adverse Impacts due to Non-completion of JNNURM Projects : The
Committee express concern over the fact that various adverse impacts have
emanated due to the non-completion of JNNURM Projects. These include cost
escalation in view of time overrun, stagnation of the service delivery levels which
would have increased upon completion of projects and inconvenience and hardships
to general public. In evidence, the Secretary, Urban Development submitted that
all cost escalations were to be borne by the State Governments and the Ministry
did not take note of it. The Committee cannot see infallibility of such a decision
since JNNURM is a fast tracked reform linked programme guided by the Centre
and most of the States are found to be ill equipped with the result that they have
been struggling to accomplish the reforms in order to complete the projects.
Moreover, the Mission was launched without assessing the States' ability to
implement the reforms which caused the delay in completing the projects, and
 94

consequent cost ecalation. Even the fixation and imposition of the cost ceilings
especially for the Dwelling Units was questionable. The Committee, therefore, would
counsel the Government to desist from putting the entire burden of cost esclation
on the States as a matter of routine and instead take due care and attention while
approving the projects, to all the attendant factors including capability of the States
to bear the financial burden. At the same time, in exceptional cases where there is
laxity despite availability of resources is proven, the offending States should be
penalized by making them bear the cost escalation.
5. Delay in Establishment of Project Management Units and Project
Implementation Units : The Committee note that the Programme Management
Units (PMUs) were to be established to assist the State Level Nodal Agency (SLNA)
in discharging their roles and responsibilities of appraisal of projects submitted by
Urban Local Bodies (ULBs) /Parastatal agencies, monitoring physical and financial
progress of projects and implementation of reforms and to enhance capacity of
SLNA by extending technical and advisory support etc. Similarly, Project
Implementation Units (PIUs) were to be created as operative units to supplement
and enhance the skill mix of the ULBs. However, these two crucial units were neither
established nor allowed to function properly. While the PMUs were not established
in 9 States/UTs, the PIUs were not created in 10 States. In the States/UTs where
they had been set up, it was observed that they were not performing the multifarious
functions assigned to them and even found to be assigned tasks other than those
stipulated in their scope of work. There were also vacancies in these Units in many
States while some States attempted to appoint them towards the closure of scheme.
The Committee deplore such mechanical and perfunctory manner of implementing
JNNURM which deprived the projects of the intended benefit of professional
expertise. The MoUD submitted that they came up with the guidelines of PMU in
2007 which stipulated that the support, i.e. reimbursement of cost incurred on
these Units by the Government of India, was for 3 years because of which many
States found it difficult to hire manpower from the market when there was no
certainty about continuity of such structures/support beyond 3 years. All these
factors coupled with lack of capacity at the State/ULB level resulted in delays and
inadequate manpower in the Units. The Ministry took the stand that the
responsibility for delaying establishment of PMU/PIUs lies with the State
Governments/SLNAs and that the Ministry had already issued toolkit and advisories
in this regard. The Committee cannot accept such a stand of the Ministry since
they ought to have ensured professional support to the ULBs through the technical
and managerial expertise of the PMUs and PIUs for successful implementation of
JNNURM. As it turned out, the role of the two central Ministries virtually ended
with approving plans/projects, sanctioning funds and asking the States to complete
the projects. This sort of unprofessional project management is sheer abdication of
responsibility and is bound to lead to failures and wastage of money. Both the
Ministries should have taken proactive action to lead from the front, make the
formation and functioning of the PMUs and PIUs a precondition for starting projects
and assessing of funds and ensure the States compliance with these preconditions/
guidelines/procedures to ensure successful implementation of the Scheme, failing
which there was no point in launching a scheme of such gigantic magnitude. The
Committee Would like the Ministry to take suitable lessons from this lapse and
make suitable amendments, whenever and wherever necessary in future.
 95

6. Conduct of Elections in ULBs : As yet another lapse in the implementation

of JNNURM the Committee find that though regular conduct of elections in ULBs
was a mandatory reform under JNNURM, in 6 States i.e. Arunachal Pradesh,
Assam, Jammu and Kashmir, Jharkhand, Meghalaya and Nagaland, elections had
been irregular, while in Sikkim, elections were held for the first time in 2010 i.e.
5 years after launching JNNURM. The Ministry could not furnish any plausible
reason for this lapse and attributed even the holding of elections in these States an
achievement for JNNURM. However, the Committee feel that the MoUD failed to
ensure fulfillment of JNNURM mandate. As a new National Urban Renewal Mission
is likely to take off soon, the Committee recommend the Ministry of Urban
Development to sensitize the States about the need for fulfilling the JNNURM
mandate of holding regular elections in their local-urban bodies and extend every
possible guidance and assistance in the matter. The Committee also desire to be
apprised of the present position with respect to conduct of elections in ULBs in
these States.
7. Failure to Transfer 12th Schedule and City Planning Function : The
Committee are distressed to find that only 11 out of 31 States/UTs could transfer all
18 functions under 12th Schedule to their ULBs, which are sine quo non for urban
renewal and rejuvenation of their ULBs. In Arunachal Pradesh, Jammu and
Kashmir and Meghalaya, not a single function was transferred while in Sikkim
and Nagaland only one function was fully transferred. Further, even though
JNNURM reform agenda sought to implement Article 243W of the Constitution
by transferring the city planning function from the States to the ULBs, this reform
was not implemented in 16 States/UTs i.e. Arunachal Pradesh, Bihar, Chandigarh,
Delhi, Goa, Jammu and Kashmir, Jharkhand, Manipur Meghalaya, Mizoram,
Nagaland, Puducherry, Punjab, Sikkim, Uttarakhand and Uttar Pradesh. Though
the Ministry informed that States have evolved a mechanism to associate ULBs
with Parastatal agencies to perform functions like Urban Planning, Urban Forestry
and Fire Services, the Committee believe that these functions, being related to
local municipal services can be best managed by the ULBs themselves. This not
only creates local accountability of the ULBs towards the electorate in those areas,
where citizens expect their local government to act, but also equips the ULBs to
influence the development and management of the city areas. The Committee,
therefore, consider the failure to transfer 12th Schedule and city planning functions
to ULBs a major stumbling block in the implementation of JNNURM. The
Committee have now been informed that the defaulting States could not transfer
these functions to their ULBs since they were not in a position to perform them due
to capacity constraints and accordingly the States/UTs had been advised to expedite
formulation of a Municipal Cadre. Reportedly 14 States have constituted Municipal
Cadre. The Committee welcome such a positive approach and would like the
Ministry to take further appropriate action to guide, assist and prevail upon the
States/UTs to urgently equip their ULBs with the requisite skilled/professional
manpower to ensure successful implementation of the tasks entrusted to them. The
Committee desire to know the latest status on Municipal Cadre in all States/UTs as
well as transfer of 12th Schedule functions to ULBs in States other than 12 States,
which already reported so.
8. Accounting System : The Committee are constrained to note that out of
 96

the 66 ULBs/Parastatals which had committed to implement the reform to shift to

accrual based double entry accounting by 2010-11, only 44 ULBs/Parastatals had
implemented the reforin. This is yet another glaring failure in the implementation
of JNNURM since it is imperative to have improved/modern municipal accounting
system to achieve better financial management and transparency. The MoUD
conceded that eight years of implementation of JNNURM had exposed major
lacunae within the ULBs in terms of capacity and resources which were highly
inadequate to implement urban reforms. Enormous challenges were involved in
migration from cash based accounting towards accrual based double entry system
which require advance technical skills and several ULBs lacked the capacity to
implement this reform. This once again reinforces the Committee's observation
that JNNURM was launched without analyzing actual ground realities and that
professional cadre is urgently required for efficient functioning of ULBs. The
Committee deplore that an ambitious and complex scheme was imposed on the
unprepared ULBs which were not ready for the task. As mentioned in the previous
recommendation, the Ministry had asked each State/UT to constitute a Municipal
Cadre including accounts cadre and appointed Reform Appraisal Agencies to review
the implementation of reforms in the States/UTs. The Ministry also claimed that
they had been supporting capacity building of States/UTs and ULBs through
development of Training Manual and Comprehensive Capacity Building
Programme. These steps should have been conceptualized while formulating
JNNURM and put in place before launching the Mission so that the ULBs are
adequately empowered for ensuring successful implementation of the various
projects. Nevertheless, the Committee desire that the Ministry should make earnest
efforts in this direction with a view to achieving the mandatory reform of migrating
towards accrual based double entry accounting system by the ULBs at the earliest
so that the next phase of JNNURM could witness a better success rate.
9. Failure to Achieve the Reforms of 85 Per cent Property Tax Coverage -
Efficiency and 90 Per cent Collection Efficiency of Property Tax : The Committee
are dismayed to note that though property tax is the single most important source
of revenue for ULBs, 28 out of 51 ULBs/Parastatals, which had committed to
implement the mandatory reform of 85 percent property tax coverage efficiency
by 2010-11 could not implement it. Further, out of 39 Mission Cities selected for
audit scrutiny, only 7 cities could put in effect the requisite GIS database of properties
intended for having a full record of properties in the city and bring them under the
tax net. The Committee have been informed that these reforms involved putting in
place a comprehensive property database to ensure complete property mapping
and bringing all properties under the tax net including online systems which will
make payment of taxes hassle free but these activities consume a considerable
amount of time. The Committee deplore the Ministry for having failed to initiate
handholding exercise for this reform at the time of the launching of JNNURM.
Further, the Committee find that only 19 out of 42 ULBs/Parastatals which had
committed to implement the reform of 90 per cent collection efficiency of property
tax could accomplish the feat by 2012 ostensibly due to the reform being complex.
The failure on this count continued unabated as even by 2014 i.e., 9 years after
JNNURM was launched, only 30 ULBs had achieved this reform. For 85 percent
coverage of property tax, 42 ULBs reportedly achieved the reform and 52 ULBs
 97

reported More than 50 per cent collection efficiency. As, remedial measures for
these failures, the Ministry had circulated a toolkit and had been providing hand
holding support, conducting workshops and to enhance capacities. The Committee
doubt the efficacy of these measures which should have been taken well before the
Mission was set in motion. Considering that there exists a widespread lacuna in
collecting the property tax, the Committee urge upon the Ministry to take more
serious efforts to achieve these reforms not only in all the Mission Cities but also in
all the remaining cities and towns in the Country too, so as to strengthen the financial
position of the ULBs towards achieving better implementation of JNNURM and
other related schemes.
10. Introduction of Property Title Certification System in ULBs : Recognizing
the adverse effects of the manual system of registration, JNNURM had sought to
introduce property title certification system in ULBs to enable the cities move
towards guaranteed title systems thus creating a public record of titles which would
timely describe the property as well as the title and has a system for reflecting any
transaction in real time. Disappointingly however, none of the cities had achieved
this reform. The Ministry submitted that this reform was a complex reform more
so as land was a State subject. The Ministry further stated that the Department of
Land Resources, Ministry of Rural Development which were responsible for the
matter had taken steps to facilitate this reform. The Committee feel that it was a
lapse on the part of the Ministry not to have analysed threadbare the complexities
of the reform especially the coordination with the Department of Land Resources
before including the same in JNNURM so that those factors preventing smooth
implementation of the reform are timely identified and eliminated. While criticizing
such a grave lapse, the Committee desire the Ministry to devise necessary
procedures, in coordination with line Ministries/Departments concerned and make
it imperative for the States to introduce property title certification system in their
ULBs while implementing JNNURM.
11. Failure to Achieve 100 Per cent Cost Recovery in Respect of Water Supply
and Solid Waste Management Projects : The Committee are perturbed that out of
39 Mission Cities selected for audit scrutiny, only 7 and 5 cities could achieve the
mechanisms for collection of user charges for water supply and solid waste
management respectively with the objective to meet the cost of operation and
maintenance thereof despite these being mandatory reforms under JNNURM. The
Ministry contended that while reforms implementation had been a challenge, most
of the smaller cities had inadequate capacity in terms of finance and human resources
which had led to slow achievement of reforms. The Committee feel that with proper
ground work, careful planning and meticulous execution, these reforms could not
have been difficult to achieve and the Ministry erred in not foreseeing them and
taking advance action. Since levying of user charges is indispensable for ensuring
an uninterrupted water supply and operation of solid waste management projects,
the Committee would like the Ministry to prevail upon the States to make their
ULBs formulate reasonable user charge policy, introduce volumetric/telescopic tariff
and revise and realize tariff on time bound basis, if found necessary, towards
achieving 100 per cent operation and maintenance cost recovery of the schemes/
projects concerned.
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12. Failure to Implement Enactment of "Public Disclosure Law" : JNNURM

envisaged the enactment of Public Disclosure Law to ensure release of quarterly
performance information about the municipal governance to all stakeholders. The
goal of such an initiative was to institute transparency and accountability in the
functioning of municipalities through publication of information pertaining to
personnel, particulars of administrative structure, finances and operations. The
Committee are, however, concerned that till 2010-11, the MoUD could not prevailed
upon 21 out of 31 States/UTs to implement such a basic State level mandatory
reform even after obtaining assurance from them to implement the reform. The
Ministry claimed that in these States, due to administrative exigencies, draft bills
were still pending at the State cabinet for approval and advisory had been issued to
them. The Ministry have since informed that 26 out of 31 States have implemented
this reform. The Ministry further submitted that all the ULBs/States had also been
covered under the RTI Act, 2005. The Committee feel that mere issuance of advisory
could not make the States fall in line. The Committee also criticize the Ministry for
trying to divert attention of the Committee from this lapse by referring to the RTI
Act, 2005, which is a need based system to get information by an individual user
whereas the Public Disclosure Law is to bring out transparency through a
mandatory public disclosure on the part of municipal governance. This exposes
the Ministry's cavalier attitude to achieve the mandatory reform of enacting Public
Disclosure Law which could have been instrumental in containing bribery,
corruption, graft and other sort of irregularities in the implementation of JNNURM
projects. The Committee, therefore, recommend the MoUD to make it incumbent
upon the States/ULBs to make available regular information on ULB activities
suo-motu to public through mandatory enactment of Public Disclosure Law in
such a way that the nature, mode and extent of implementation of the disclosure is
evaluated to verify whether they are disclosing information as envisaged under the
rules.
13. E-Governance : The Committee are perturbed to note that out of 63 ULBs/
Parastatals which had committed to implement the E-Governance reform by 2010-11,
only 27 ULBs/Parastatals could implement this reform. Further, it was found that
e-governance was put into practice only in 11 out of 39 Mission Cities selected for
audit scrutiny. The Committee have been informed that due to capacity constraints
at the Municipal level and complexity of some modules, several ULBs were not in
a position to implement this reform. The Committee believe that the objective of
this reform of achieving e-governance in ULBs/Parastatals was to improve the
system of governance and make it efficient as well as transparent by using IT
applications to make the ULBs more efficient and effective in delivering services to
the citizens. Thus, implementation of this reform was expected to benefit the ULBs
as well as the citizens by simplifying systems and processes. Failure to implement
this reform poses a major challenge in ensuring successful implementation of
JNNURM. The Committee, therefore, urge upon the Ministry to take more energetic
concrete action to ensure implementation of e-governance reform by all the ULBs/
Parastatals in all the Mission Cities at the earliest.
14. Failure to Implement Reforms Pertaining to Land and Property : The
Committee are shocked that the MoUD could not ensure implementation of such
basic reforms as revision of building bye-laws, introduction of computerized process
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of registration of land and property, rent control laws and rationalization of stamp
duty to 5 per cent which were initiated as parts of JNNURM. To illustrate, 21 out
of 63 ULBs/Parastatals which had committed to implement the reform for revision
of building bye-laws for streamlining the approval process by 2010-11, did not
implement it. Even after about 3 years, only 58 out of 65 ULBs could achieve this
reform. Similarly, 14 ULBs/Parastatals could not introduce computerized process
of registration of land and property despite committing to implement the reform
by 2010-11. The situation did not improve in the succeeding years as only 52 out of
65 ULBs reported achievement of this reform by 2014. Further, as many as
16 States/UTs which had committed to implement the reforms of Rent Control
Laws by 2010-11, failed to implement it. Even by March 2014, 9 States could not
achieve this reform. Furthermore, 13 States/UTs could not rationalise Stamp Duty
to 5 percent even though JNNURM required this reform on the ground that a
reduction in the rate would help to develop a healthy real estate market by providing
boost to the economy, reduce the undervaluation and size of the black money and
increase revenues both for the States as well as the ULBs. There is apparent lack of
communication between the Ministry and the States. While many States were
reluctant to reduce the stamp duty rates to the level of 5 percent apprehending a
fall in the States revenue, the Ministry included this reform for implementation
under JNNURM after realizing that high rates of stamp duty lead to undervaluation
of properties resulting in substantial loss of revenue to the States and ULBs. These
facts clearly reveal that no appreciable effort had been initiated by the Ministry
during the first few years of JNNURM to convince the States/UTs to implement
and achieve the reforms. The Committee denounce these failures in the strongest
terms. As an afterthought, however, the Ministry are stated to have embarked
upon a Rapid Training Program on Governance and Reforms and more than 3800
persons have undergone training. The Committee would like to know if the aforesaid
reforms are achieved in all the Mission Cities/States/UTs concerned at the end of
the extended period of Mission in March, 2014.
15. Absence of Linkages between City Development Plans and Detailed Project
Reports : The Committee note that preparation of City Development Plans and
Detailed Project Reports by States/UTs/ULBs/Parastatals for every identified
Mission City were crucial stages for approving projects under JNNURM in order
to achieve its objectives. The MoUD had also developed toolkits for preparation of
CDPs and DPRs. While CDP was a comprehensive document for the planned urban
perspective framework for a period of 20-25 years with 5 yearly updates within
which projects were identified, DPRs depicted all relevant information; detailed
drawings; topographical survey and soil investigation; economic and financial
analysis; planning and design criteria; environmental impact assessment; map of
city showing existing and proposed flyovers and road network; schedule of rates,
detailed measurement and basis of adoption of rates, operation and maintenance
cost; phasing of expenditure etc. DPR was to be scrutinized together with CDP
during appraisal of projects at Central level. Despite these clear cut instructions,
the Committee find much to their consternation that in the selected States/UTs, the
CDPs and DPRs were not always comprehensive and complete and in •some cases,
the DPRs of individual projects had no co-relation with the CDPs. Other deficiencies
like lack of details about availability of land, non preparation of DPRs, inflating of
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costs, implementation of projects in non-Mission Cities were also noticed by Audit.

The Committee were informed by the Ministry in this connection that many States
and cities had not prepared DPRs as these were capital intensive and allocation
within the JNNURM was not sufficient for taking up these works. This is untenable
since the Mission had specific components including various works which could
not be undertaken without proper DPRs. Moreover, the Ministry also could not
provide any convincing reply for such serious lapse as approving deficient and
incomplete DPRs by their appraisal agencies. The Committee observe that very
often the root causes of this lapse was carelessness of the authority responsible for
preparing CDPs and DPRs, untimely transfer/removal of such an authority and
non-involvement all the stakeholders in the whole exercise. Besides, there had been
instances of unrealistic town planning by the Consultants who were not aware of
the pulse of the city and prepared the plan while remaining detached from the
ground realities. The Committee feel that approving deficient/incomplete DPRs is
not less than an act of grave negligence and responsibility should be fixed on the
officials concerned. The Committee also urge the Ministries to provide all necessary
assistance to the States and prevail upon them to involve all the stakeholders in the
preparation of CDPs and DPRs so that there is no further lapse in the matter. The
Committee further recommend both the Ministries to consider excluding
incorrigible States/Mission Cities from the next phase of JNNURM.
16. Lapses in Implementation of Housing Projects : The Committee are
concerned that implementation of housing projects under JNNURM had been
extremely tardy and beset with lapses and deficiencies. As of September, 2014, 41.5
percent of the total 14,41,231 DUs either remained incomplete or curtailed primarily
for want of land and out of the 8,44,062 DUs completed, as many as 2,23,988 DUs
had not been occupied. In 6 major States i.e. Andhra Pradesh, Gujarat,
Maharashtra, Tamil Nadu, Uttar Pradesh and West Bengal, which had taken the
lion's share i.e. 69 percent of the total ` 11,349.48 crore released as ACA for BSUP
and IHSDP project as of June 2011, the progress of housing projects was slow. In
these States, 56 per cent and 66 per cent of DUs under BSUP and IHSDP respectively
remained incomplete. The Committee were apprised that the slow progress of
completion of DUs was due to large cost escalations, imposition of unrealistic cost
ceiling at ` 80,000 to ` 1 lakh per DU, inability of States/ULBs to fund the enhanced
cost, difficulties in relocating slum dwellers, inability of beneficiaries to contribute
their share etc. This is another manifestation of lapses and negligence of the
authorities concerned in the MoHUPA right from the approval of DPRs to sanction
of funds and the monitoring of the projects. The Committee deplore the Ministry
for this lapse especially for approving the housing projects without ensuring
litigation free land for the projects and imposing unrealistic cost ceiling per DU,
which was not based on actual market conditions and did not accommodate cost
escalations. However, the Committee find that the delay in completion of the DUs
played a crucial role in causing cost escalations. While there is a need to fix a more
realistic cost ceiling, every care and precaution also needs to taken to prevent
artificial inflation of cost which is rampant in Government projects and if possible,
to reduce the per Unit cost. For this, more economical technologies and
methods suitable for the Country's climatic conditions and arrangement for
building DUs should be explored. If feasible, Such a scheme should be opned to
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private sector and Philanthropic organisations for their contribution. Regarding

low rate of Occupation i.e. 53 percent of the completed DUs, the Committee have
been informed that the delay was mainly on account of beneficiaries' reluctance
to shift to a new location. This signifies that the slum dwellers or urban poor feel
somewhat alienated from the Mission, especially the housing projects. The
Committee impress upon the Ministry to advise the States to earnestly involve
the slum dwellers who are the main stakeholders of the Mission while planning
such projects as issues concerning their livelihood and homestead impact their
willingness to shift to new locations. To increase the occupancy of the completed
DUs, the Committee also recommend the Ministry to find innovative measures,
as in the case of Chandigarh, where JNNURM houses have been given on rent to
the slum dwellers.
17. Lapses in Identification of Beneficiaries for Housing Projects : In many
cases in Arunachal Pradesh, Bihar, Himachal Pradesh, Gujarat, Karnataka,
Puducherry, Uttar Pradesh, Kerala, Nagaland, Haryana, Chhattisgarh,
West Bengal and Tamil Nadu, either the beneficiaries of housing projects had
not been identified or there were deficiencies in the process of selection of
beneficiaries leading to the risks of ineligible beneficiaries getting the benefits of
JNNURM. To illustrate, in the IHSDP Project in Ramnagara, Karnataka, there
were 444 beneficiaries in the DPR but the project proposal was for construction
of 1800 houses. Under BSUP/IHSDP projects in Lucknow and Ghaziabad, Uttar
Pradesh, 295 houses constructed under the scheme were allotted to the
beneficiaries other than those mentioned in the DPR. In respect of BSUP, Kochi
Phase-II-Individual houses, Kerala, the beneficiaries of three colonies
(Panayapally, Pattathiparampu and Chilavannur) were corporation employees
with regular source of income who were not eligible for assistance under the
scheme. The Committee believe that the importance of identifying the correct
beneficiaries is absolutely critical for attaining the objectives of the scheme. In
order to prevent the risk of ineligible beneficiaries deriving benefits of this scheme
intended for the urban poor, the Committee recommend the Ministry to make
concerted efforts to encourage the use of bio-metric identification procedure by
the States as well as to give wide publicity to schemes and their beneficiaries
through local newspapers and social media and introduce community audits to
ensure that only the eligible beneficiaries are provided housing under JNNURM.
Further, the Ministry should review the status of all housing projects, step up the
efforts to make allotment to eligible beneficiaries and consider giving incentives
to the successful States. The Committee also desire to be apprised whether the
houses given to the ineligible beneficiaries identified by the C&AG could be
transferred to the eligible beneficiaries by the States concerned. They would also
like to know whether allotment policy on the matter has since been formulated/
formalized in all the States including NCT of Delhi.
18. Action Programme for Controlling Mushrooming of Slums : The Committee
note that a new mission called Rajiv Awas Yojana is being implemented for the period
2013-2022 by the MoHUPA as replacement of JNNURM with an aim to control the
mushrooming of slums in various towns. This scheme reportedly is based on an
appropriate, corrective and promising approach to cure and prevent the ills of
Uncontrolled slum growth in towns especially after the JNNURM debacle. It aims to
construct 1 million houses with a unit cost limit of upto ` 4lakh. The Committee,
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however, doubt the efficacy of this scheme given the fact that almost all the towns
are not yet equipped with matching manpower and resources to realize the
objectives of such a scheme. The Committee would like the Ministry concerned
to take enough precaution, learn suitable lessons from their experience of
implementing JNNURM and also take into account the Observations and
Recommendation of the Committee on the subject so that all the necessary ground
work is properly done, suitable mechanisms put in place well in advance and a
seamless monitoring and implementation of Rajiv Awas Yojana is ensured. The
Committee desire to be apprised of the budget and targets set under the Scheme.
19. Delay in the Implementation of Urban Infrastructure Projects : The
Committee are perturbed to note that implementation of urban infrastructure
projects under JNNURM such as Water Supply; Storm Water Drainage; Solid
Waste Management; Urban Transport including Roads and Flyovers, MRTS;
Heritage Development of Area; Preservation of Water Bodies; Urban Renewal;
and Parking Lots and Spaces was delayed because of non availability of land,
requirement of clearences from various authorities like Railways, NHAI, Defence,
Environment and Forests, lack of capacity of ULBs, delay in procurement process
etc. As on 31st August, 2014, only 242 out of 539 UIG projects and 454 out of 806
UIDSSMT Projects had been completed with an overall completion ratio of
52 percent taking both sub components. To give scheme-wise details, out of the
projects selected for Audit scrutiny, 61 percent and 36 percent of Water Supply
Projects under UIG and UIDSSMT respectively; 55.5 percent of Solid Waste
Management Projects; 57 percent of Sewerage Projects; 58 percent of Roads/
Flyovers/Rail over Bridges/Mass Rapid Transport System and other Transport
Projects remained incomplete while many others either did not start or were
abandoned/withdrawn/closed. There were other cases of lapses and failures in
the implementation of urban infrastructure projects. For example, the benchmark
laid down by the MoUD requiring 100 percent water supply connection supplied
all through 24 hours in 5 Mission Cities of Kolkata, Asansol, Dhanbad, Greater
Mumbai and Patna could not be achieved. In 4 cases of Solid Waste Management
Projects in 3 States, JNNURM funds of ` 3.41 crore remained blocked due to
non-utilisation of equipment following non-construction of compost plant,
shortage of staff, purchase of vehicles without requirement and non-completion
of solid waste plant. In Rohtak, Haryana, the site of a solid waste management
project was changed midway rendering an expenditure of ` 1.76 crore infructuous.
In respect of Sanitary and Sewerage System for Bilaspur, UIDSSMT,
Chhattisgarh, an undue benefit of ` 62.51 lakh was extended to the contractor,
however, at the instance of Audit, it was agreed to recover the amount. In the
Sewerage Project, UIDSSMT, Mussoorie, Uttarakhand, interest free mobilization
advance of ` 1 crore was given to the contractor against the provisions of
Uttarakhand Procurement Rules, 2008. An amount of ` 26.15 crore was also
paid as mobilization advance to the two contractors in violation of the terms of
contracts of UIDSSMT — Sanitary and Sewerage System for Bilaspur and
Sewerage Treatment Plant. In respect of Sewerage Treatment Plant work of
Ahmedabad Municipal Corporation in Gujarat, injudicious, rejection, of tender
at ` 22.84 at just 2.15 percent above the prevailing Market rate and acceptance
of another Offer at ` 24.11 crore in less than 90 days resulted in
avoidable expenditure of ` 1.27 crore. In this Connection, the Ministry
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Submitted before the Committee that the projects were implemented by the States
and thus they were responsible for the delays, lapses and failures in the
implementation of Urban infrastructure projects. This is untenable in the
Committee's view. While it is a fact that the delays, lapses and failures were due
to improper planning and implementation by the implementing agencies, the same
were approved, assisted, funded and guided by the Ministry and hence the
Ministry cannot shirk their share of responsibility for miserably failing in these
aspects. Even when the Committee enquired about any responsibility fixed on
serious matters like change of Solid Waste Management project site in Rohtak,
Haryana, no reply was furnished by the MoUD. Thus, the Committee observe
that the current system of implementing urban infrastructure projects under
JNNURM is faulty and needs to be introspected and recast. The Committee,
therefore, urge upon the Ministry to make concerted efforts to analyse the causes
of delays, lapses and failures more intensely and find their solutions. Strict follow
up action also needs to be taken to ensure timely completion of projects under
the Schemes. As the Committee were assured that initiatives in the field of recycling
solid waste for 4 types of wastes were being contemplated, they would also like to
have a note on its progress till date.
20. Need for introducing e-tendering : The Committee observe that timelines
and implementation of urban infrastructure projects was severely affected by
the problems arising out of the present tendering process, which is widely
considered as complex and non-transparent. If there is transparency and the
Ministry formulate a clear cut system of giving tenders, much of the problems
would be solved resulting in faster implementation of projects. The Committee,
therefore, recommend the Ministry to make it incumbent upon the States to switch
over to e-tendering at the earliest. As the Ministry of Finance have already framed
a mechanism for the same in 2012, the Committee would like to be apprised of
the States which have since adopted it for undertaking works meant for JNNURM.
21. Lapses and Deficiencies in Operating Buses under JNNURM : The
Committee are concerned to find various lapses/deficiencies in implementing the
programme pertaining to operation of buses under JNNURM across the States/
UTs. Even after purchasing buses by the States and announcing that a certain
number of buses will be allocated to such and such districts, nothing had happened
in reality. The Secretary, Urban Development while admitting in evidence that
they were reviewing the matter, explained that when the buses came, SPV which
was essential for operating the buses was not ready and when SPV was ready, the
State Government regulated everything regarding recruitment of Staff leading
to delay. The Committee feel that these issues had arisen due to lack of concerted
efforts by the Ministry and absence of coordination with the States. The Committee
would like the Ministry to speed up their efforts to remove the impediments in
this regard and put in a place a suitable mechanism for ensuring better
coordination with the States. The Committee have also been informed that there
had been acute shortage of bus manufacturers and bus availability, specially the
low floor buses with convenience features for senior citizens. The Committee do
not see this as a major problem since there has been a substantial increase in the
number of companies manufacturing buses in the Country in recent years. Even
in the worst case, the Committee feel that such a problem can be sorted out by
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entering into special agreement/contracts with bus manufacturers even by floating

global tenders. Further, keeping in view the varying physical features and
conditions of the Country's cities and towns, particularly the limited capacity of
roads to accommodate heavy/large vehicles, even in cities like Delhi, the Committee
would also like to stress the need for consulting experts on urban transport on
using buses of convenient sizes/capacities and urge the Ministry to take fast action
on the matter.
22. Inadequate Urban Renewal Projects : The Committee disprove the fact
that even though urban renewal is one of the cardinal objectives of JNNURM,
only 11 such projects were approved out of 532 projects under UIG upto
2010-11. Even out of these 11 projects, only 2 projects had been completed as in
2012. In respect of UIDSSMT, out of 766 projects approved upto 2010-11, only a
meager 10 urban renewal projects had been approved and out of these 10 projects,
only 1 project could be completed by 2012. No appreciable improvement took
place in the succeeding years as only 4 out of 10 urban renewal projects sanctioned
under UIG had been completed as on 20th October, 2013. The Committee cannot
accept the contention of the MoUD that it was for the States to conceptualize and
prioritize the projects and submit the same to the Ministry for consideration/
approval since 'Urban Renewal Projects' was one of the principal objectives of
the Mission. The Committee feel that in almost all major cities, old heritage areas
are in a state of total neglect and thus, the Ministry should have undertaken
proper handholding exercise to guide the States for taking up projects concerning
re-development of old city areas. Terming it as a major lapse, the Committee like
to caution the Ministry not to repeat such mistakes in future and if possible take
suitable action even at this stage to get the pending projects completed with due
prioritization under JNNURM.
23. Delay in Release of ACA After Approval of Project : As a matter of concern,
the Committee find that there had been delays in releasing Additional Central
Assistance from 2 to 27 months to the States/SLNAs in the test-checked cases and
the guidelines did not contain any directions to stipulate the time within which
such releases should be made. The MoUD submitted that release of funds to the
projects is recommended in accordance with the stipulation of guidelines and
based on utilization, financial and physical progress and that effort was made to
ensure early release of fund within approved guidelines. They further submitted
that after their approval of a project, immediate requests were sent to the Ministry
of Finance for release of Government of India share as ACA to the States and the
delay in release of ACA was mostly due to delay in submission of the requisite
documents by the States. The MoHUPA submitted that since release of ACA
involved various divisions of the Ministry, it was not possible to specify any
timeframe but the Ministry had been recommending release of ACA as soon as
projects along, with the Compliances are approved. In few cases, however, When
the project/instalment is conditionally approved, the recommendation of ACA is
made only on receipt of compliance report from the States/SLNAs, which results
in delay in release of ACA. Further, as funds under ACA are available with and
released by the Ministry of Finance this Procedural aspect could also be attributed
as a reason for delay. The Committee are of the opinion that the best way to cut
delays is to shift to an on-line system of submission of progress of projects by the
States as well as monitoring in the Ministries of Finance, UD and HUPA for a
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simultaneous and synchronized approach. As most of the States and the Central
Ministries are implementing e-Governance, the Committee expect that now the
JNNURM funds would be released immediately after the approval of the
respective projects.
24. Non-release of matching share by State Governments : The Committee
are worried that implementation of JNNURM projects in some States had been
severely affected by non-release of mandatory matching share by the State
Governments to the implementing agencies. The Ministry of Urban Development
claimed that they took effective steps to ensure that matching share was released
by the States by making the release of State's share as one of the requisite
parameters for processing claims of the States for release of subsequent instalments
of ACAs to the States. The Ministry of Housing and Poverty Alleviation submitted
that procedural delays on account of inadequate provision in budget, submission
of Utilisation Certificates etc. had been reasons for delay in release of fund by the
State Government. Admitting that it was difficult for them to enforce strict
timelines on the States and monitor the same, the Ministry informed that while
releasing the next instalments, they ensured that matching share of the State
Government was already released to ULBs without which the Ministry did not
release their share. The Committee observe that some States genuinely face
financial crunch and thus are unable to release their matching share for JNNURM
projects. Consequently, the implementation of JNNURM projects in these States
had been severely hit despite spending initially huge sums of money. In view of
the crisis emanating from this issue, the Committee desire that in its extended
period, JNNURM should be implemented in a phase-wise manner across the
length and breadth of the Country, involving first those States which have put in
place a well evolved mechanism as well as reforms to ensure its successful
implementation.
25. Diversion of JNNURM Funds : The Committee notice that the Audit
had found 7 cases in 7 States/UTs where the JNNURM funds to the tune of 9.86 crore
meant for housing projects were diverted for inadmissible purposes even for non-
JNNURM purposes. In another case, JNNURM funds worth ` 1.22 crore were
distributed amongst 407 unverified beneficiaries under the IHSDP project, Parole
(Kathua), Jammu and Kashmir. Further, JNNURM funds to the tune of ` 114.68
crore meant for urban infrastructure projects had been diverted for non
admissible purposes in 8 cases in 6 States and the Ministry failed to obtain reasons
therefor from the defaulting States. Considering such cases a grave violation of
financial procedures and guidelines, the Committee desire that all these cases of
illegal diversion of JNNURM funds should be probed and appropriate action
taken against the erring officials and the State Governments concerned. The
Committee desire to be apprised of the progress on the matter and recoveries
made so far. Further, the Committee recommend that the monitoring of the
execution of projects should be strengthened so that there is no fund diversion to
in-eligible beneficiaries/schemes.
26. Financial Mismanagement : The Committee are perturbed that there
had been a plethora of cases of mismanagement of JNNURM funds thereby
indicating that both the Ministries failed to enforce fiscal discipline on the States/
ULBs. The Revolving Fund meant to be created from 10 per cent of the funds
released by SLA, for leveraging market funds to finance further investment in
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infrastructural projects in the case of UIG/UIDSSMT and to be utilized for

meeting Operations and Maintenance expenses of assets created in the case of
BSUP and IHSDP, had not been created by the SLNAs in 25 States/UTs. Though
it was created in very few States, yet the same was utilized not for its original
purpose but for meeting expenses for preparation of DPRs/Project Management
consultancy charges, etc. Audit had also found that in 9 cases in 9 States/UTs,
JNNURM funds to the tune of ` 637.23 crore were parked by SLNAs or ULBs
instead of releasing those to the implementing agencies. Audit pointed out that
the States had earned interest of ` 226.58 crore upto 31st December, 2011. The
Ministry could not intimate the details of utilisation/adjustment of this amount
or its being credited into the Head meant for interest receipt of the Government
of India; as per guidelines of the Ministry of Finance. Subsequently, both the
Ministries submitted that they did not have the figure of total interest earned
on JNNURM funds deposited in the banks. Thus, the Committee observe that
the JNNURM guidelines were not accompanied by appropriate advisory to the
States regarding parking of funds and the utilisation of interest earned thereof.
The Committee also find that an amount of ` 44.79 crore released as ACA for
projects which were later abandoned was not refunded to the Government of
India and in respect of the withdrawn projects, the quantum of such amount
was `309.29 crore. Later, the Ministry claimed that a major part of this amount
had been recovered/adjusted. The MoHUPA also failed to verify adherence to
the conditions/guidelines for release of ACA prior to the release of the first
instalment in any of the test checked 29 projects. Further, the flow of funds
showed that there was a rush of expenditure ranging from ` 19.2 per cent to
100 per cent in the last quarter and particularly in the month of March at Central
level during the years 2005-06 to 2012-13, much against the General Financial
Rule 56(3). As funds were being released by the Ministry of Finance/Ministry
of Home Affairs at the fag end of the year, the State/UT Governments were in
turn releasing the same to the implementing agencies very late leading to delays
and problems in the implementation of the projects. Furthermore, Utilisation
Certificates amounting to ` 10,032.13 crore were pending with the MoUD and
the MoHUPA. An analysis of the causes of these financial irregularities indicates
lack of concerted efforts from both the Ministries : While these facts, established,
beyond doubt, that the financial management under, JNNURM had
comprehensively failed and required innovative remedial measures and
restructuring, in almost all these cases, the Ministries have merely issued
advisories for rectifying the lapses, deficiencies and shortcomings, that too only
at the instance of Audit. It also showed that the Ministries' internal mechanism
could not detect the financial mismanagement of the Mission funds, despite
being well-aware of the very limited capabilities of the States to handle the
scheme. Since observing fiscal discipline is paramount for success of any scheme,
the Committee desire that both the Ministries should introduce a zero tolerance
policy at all levels in respect of fiscal indiscipline, monitor the fund flow
arrangement in real time from the Centre to the implementing agencies via the
SLNAs/States/UTs as per ground level progress of projects, to ensure minimum
unspent/excess amount outside Government accounts. Further, the Committee
would like the Ministries to reiterate the provisions of timely submission of the
Utilisation Certificates and advise the States/UTs to strictly comply with them.
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The Committee would like to be apprised of the total amount released and
unutilized/unrefunded amount of ACA, if any, left at the end of the extended
period of JNNURM in March, 2014.
27. Inadequate Monitoring by the Ministries due to paucity of Staff : The
Committee are shocked to find that the requisite personnel for monitoring of the
implementation of JNNURM remained hopelessly inadequate throughout the
entire period. Even the Mission Directorates in both the Ministries had not been
equipped with adequate staff to oversee and monitor a project of this magnitude.
The Ministries' efforts to get more staff were hardly successful as can be gauged
from the fact that the MoUDs' proposal for additional staff was made in 2008
while the scheme was launched in 2005 and till August, 2007, only 1 Director/DS
had been holding the additional charge of JNNURM in addition to other work in
the MoHUPA. Surprisingly for such a mega project, the Ministry of Finance
agreed to sanction only 28 posts against the requirement of 69 posts in the MoUD
and 13 posts against the bare minimum requirement of 22 posts in the MoHUPA.
The Committee understand the need for observing austerity measures in the
Government but in this case, it was at the cost of compromising the overseeing
and monitoring of a mega scheme like JNNURM which cater to hundreds of
cities and towns throughout the Country. The Committee feel that the Ministries
should have taken up the matter of staff at the highest level to prevail upon the
Ministry of Finance. They expect so when similar situations arises in the next
phase of JNNURM/such other scheme so that adequate manpower is made
available for ensuring proper monitoring of a scheme of such magnitude.
28. Lapses in the Monitoring of JNNURM : The Committee are pained to
observe that monitoring of the implementation of JNNURM was not effective.
There were not only delays in receipt of Quarterly Progress Reports by the
Ministries from SLNAs but also cases of non-receipt of the same. The objective
of constitution of Technical Advisory Group (TAG) was not achieved. Against
60 TAG meetings required to be held during March, 2006 to March, 2011, only
37 meetings were held. Peoples' participation in the Mission could not be taken
forward as City Voluntary Technical Corps were created in only 14 out of
65 Mission Cities. The National Technical Advisor, who was the chairperson of
TAG, had not been invited in CSMC/CSC meetings of BSUP and IHSDP, quite
against the requirement. While the Independent Review and Monitoring Agency
(IRMA) and Third Party Inspection and Monitoring Agency (TPIMA) had not
been appointed in many States/UTs, the same had not been properly utilized in
the States/UTs where they had been appointed. As such, the mechanism of IRMA
to be utilized for better project quality; time and cost control; value for money
procurement; improved Budgeting planning and funds flow in the project; and
measurement of project outputs and impact was not used by the MoUD in an
effective manner. Similar situation happened in the case of TPIMA. On the use
of technology, though the MoUD had emisaged a web-enabled Programme for
Monitoring and Evaluation stem (PMES) which would have captured the physical
and financial progress of JNNURM projects in reality, the System did not succeed
due to inadequate response of the States and ULBs. Ironically, by the time PMES
was made operational in 2008, more than 300 UIG projects had already been
approved under JNNURM. Further, sufficient number of meetings of the State
 108

Level Sanctioning Committee and State Level Coordination Committee were not
organized for monitoring the implementation of the projects and reviewing the
progress of urban reforms in many States/UTs especially in Haryana, Delhi,
Madhya Pradesh, Puducherry, Assam, Daman and Diu etc. Peculiarly, the MoUD
attributed all these lapses and failures to the States and maintained that there
was no lapse in monitoring of the projects as far as Government of India is
concerned as they had sent unlimited number of communications to the States/
UTs to expedite completion of projects and achievement of reforms within the
stipulated guidelines. This is untenable since the Ministries were supposed to
keep a close watch on the implementation of JNNURM by the States/UTs at every
stage, identify problematic areas, find ways and means and guide them to ensure
successful implementation of the scheme, but they miserably failed to do so.
Interestingly, the above stand of the MoUD is contradicted by the MoHUPA when
they submitted that one of the reasons for inadequate monitoring was paucity of
staff at the Ministry. The Committee consider this paucity of staff as a major
failure of both the Ministries as they should have pursued the matter with adequate
reasoning and convincing explanation when the Ministry of Finance refused to
sanction the requisite number of staff for monitoring JNNURM. The Committee,
therefore, urge both the Ministries to sincerely introspect the lapses, deficiencies
and failures in monitoring JNNURM both at the Government of India as well as
at the State/UT levels and address the same at the earliest.
29. Need for Emulating States/UTs which have been Successful in
Implementing JNNURM : The Committee observe that some of the States like
Andhra Pradesh, Arunachal Pradesh, Gujarat, Himachal Pradesh, Karnataka,
Manipur, Rajasthan and Tamil Nadu had been relatively successful in so far as
implementation/completion of projects vis-à-vis total number of projects approved
are concerned. The Committee would like both the Ministries to study the success
stories and best practices of these States, refine them and make the remaining
States/UTs adopt them so as to ensure successful implementation of JNNURM
across the country.
30. Need for Different System in North Eastern and Himalayan States :
The Committee observe that the condition of development of an municipal
life, the type of Municipalities and management that is needed in the
North-Eastern and the Himalayan States are very much different from those
in the plains and the economically advanced States. The MoUD themselves
admitted that most of the Municipalities in the North-Eastern or the
Himalayan States have been formed very recently and are still learning and
comparatively more depended on the State Governments. In comparison,
the municipalities in more developed States like Gujarat, Maharashtra and
Andhra Pradesh were formed long back and have evolved over time and
gained competence in managing municipal affairs on their own accordingly,
JNNURM had considered bracketing the North-Eastern and the Himalayan
States under Special Category and relaxed some norms for achieving reforms.
For example, cities is these States had to recover only 50 per cent of Operation
and Maintenance charges as compared with 100 per cent cost recovery
mandated for the rest of Mission Cities. Further, as per the Government
 109

decision of 31st May, 2012, achievement of reforms was delinked for ongoing
UIDSSMT projects in North-Eastern States and Jammu and Kashmir. While
welcoming such initiatives, the Committee would like the Ministries
concerned to have a different system for North Eastern and Himalayan States
in implementing a scheme like JNNURM so that these backward States are
given a level playing field.
31. Measures for Ensuring Better Implementation of JNNURM Projects :
The MoHUPA claimed that a number of consultations with States/UTs, ULBs
along with research institutions, think-tanks, bilateral-multi lateral agencies,
practitioners in the field, NGOs/CBOs and civil society organisations have been
held in formulation of the scheme and periodic revisions/amendments in the
scheme. Guidelines/toolkits, best practices etc. have been compiled based on
the feedback from various stakeholders. Further, formulation of plans mandate
the participation of all stakeholders within the city/ULB jurisdiction and
community participation at every stage is encouraged by the Ministry in
implementation of the scheme. In spite of all these, JNNURM turned out to be
a trial and error exercise thereby putting a question mark on the authenticity
of the claims made by the Ministry. The Committee believe that professionally
skilled and strengthened Mission Directorate which can give handholding to
the States and ULBs was a pre-requisite for implementation of JNNURM. Along
with this, handholding of the States would be required at the inception stage
which would then ensure a capacity building at the ULB level i.e. project
identification, identification of problems, surveys, project conceptualization,
preparation of DPRs, implementation of projects and asset management. The
ULBs also require efficient staff with expertise in financial, technical and
administrative matters to implement all the reforms in a time bound manner.
The creation of Municipal Cadre and professionalization of Municipal services
in the ULBs are keys to urban governance on which despite the Ministry's
advisory, very few States took interest. All these should have been ideally ensured
before launching JNNURM. Nevertheless, the Committee would like both the
Ministries to make concerted efforts at least now to ensure that these measures
are successfully implemented and a paradigm shift in the overall implementation
of JNNURM is achieved. Mission Directorates in both the Ministries need to
work in synchronization for optimal achievement of targets. The Committee
also find that the total allocation for JNNURM is comparatively less and is
insufficient for the ambitious targets on urban infrastructure as well as
increasing urban population in view of fast urbanization. This was one of the
key factors for imposition of unreasonable artificial ceiling and consequent
cost escalation with cascading effect. However, it is disheartening to note that
the Union Budget 2015-16 proposes to decrease the allocation of JNNURM, in
view of its tardy progress. Considering these constraints and inability of many
of the States/UTs/ULBs to comply with the guidelines/instruction/advisories of
the Central Government, the Committee feel that though JNNURM had a
laudable objective of revitalizing the Indian cities and towns, yet the Ministries
concerned and participating States/UTs could not evolve a well coordinated
 110

mechanism to implement and monitor the same. Neither any clear-cut benchmarks
and standards were put in place nor any real-time check was carried out to assess
the capacity of States to handle a Scheme of this megnitude. As the Scheme
likely to continue, the Committee urge both the Ministries to study best
international practices in implementing a scheme like JNNURM for urban areas
and suitably formulate and assimilate those in implementing such schemes in
the Country in future.

NEW DELHI; PROF. K.V. THOMAS

27 April, 2015 Chairperson,
7 Vaisakha, 1937 (Saka) Public Accounts Committee.
 ANNEXURE I
STATE-WISE LIST OF MISSION CITIES UNDER JAWAHARLAL NEHRU
NATIONAL URBAN RENEWAL MISSION (REFERS TO
PARAGRAPH NO. 3 OF THIS REPORT)

Sl. Name of the State Name of the City

No.
1 2 3
1. Andhra Pradesh Hyderabad
2. Andhra Pradesh Tirupati
3. Andhra Pradesh Vijayawada
4. Andhra Pradesh Vishakhapatnam
5. Arunachal Pradesh Itanagar
6. Assam Guwahati
7. Bihar Bodhgaya
8. Bihar Patna
9. Chandigarh Chandigarh
10. Chhattisgarh Raipur
11. Delhi Delhi
12. Goa Panaji
13. Gujarat Ahmedabad
14. Gujarat Porbunder
15. Gujarat Rajkot
16. Gujarat Surat
17. Gujarat Vadodara
18. Haryana Faridabad
19. Himachal Pradesh Shimla
20. Jammu and Kashmir Jammu
21. Jammu and Kashmir Srinagar
22. Jharkhand Dhanbad
23. Jharkhand Jamshedpur
24. Jharkhand Ranchi
25. Karnataka Bangalore

111
 112

1 2 3
26. Karnataka Mysore
27. Kerala Cochin
28. Kerala Thiruvananthapuram
29. Madhya Pradesh Bhopal
30. Madhya Pradesh Indore
31. Madhya Pradesh Jabalpur
32. Madhya Pradesh Ujjain
33. Maharashtra Greater Mumbai
34. Maharashtra Nagpur
35. Maharashtra Nanded
36. Maharashtra Nashik
37. Maharashtra Pune
38. Manipur Imphal
39. Meghalaya Shillong
40. Mizoram Aizawl
41. Nagaland Kohima
42. Orissa Bhubaneshwar
43. Orissa Puri
44. Puducherry Puducherry
45. Punjab Amritsar
46. Punjab Ludhiana
47. Rajasthan Ajmer-Pushkar
48. Rajasthan Jaipur
49. Sikkim Gangtok
50. Tamil Nadu Chennai
51. Tamil Nadu Coimbatore
52. Tamil Nadu Madurai
53. Tripura Agartala
54. Uttar Pradesh Agra
55. Uttar Pradesh Allahabad
56. Uttar Pradesh Kanpur
57. Uttar Pradesh Lucknow
58. Uttar Pradesh Mathura
 113

1 2 3
59. Uttar Pradesh Meerut
60. Uttar Pradesh Varanasi
61. Uttarakhand Dehradun
62. Uttarakhand Haridwar
63. Uttarakhand Nainital
64. West Bengal Asansol
65. West Bengal Kolkata
 ANNEXURE II
GLOSSARY OF TERMS

SI. Abbreviation Full Form

No.
1 2 3
1. ACA Additional Central Assistance
2. BBMP Bruhat Bengaluru Mahanagara Palike
3. BDA Bangalore Development Authority
4. BMTPC Building Materials and Technology Promotion Council
5. BSUP Basic Services to the Urban Poor
6. C&AG Comptroller and Auditor General
7. CAA Constitution Amendment Act
8. CCEA Cabinet Committee on Economic Affairs
9. CDP City Development Plan
10. CPHEEO Central Public Health and Environmental Engineering
Organisation
11. CPWD Central Public Work Department
12. CSC Central Sanctioning Committee
13. CSMC Central Sanctioning and Monitoring Committee
14. CSR Corporate Social Responsibility
15. CVTC City Voluntary Technical Corps
16. DEA Department of Economic Affairs
17. DEAS Double Entry Accounting System
18. DPC District Planning Committee
19. DPR Detailed Project Report
20. DU Dwelling Unit
21. EIA Environment Impact Assessment
22. EMP Environmental Management Plan
23. EWS Economically Weaker Section
24. FAR Floor Area Ratio
25. FCA Forest Conservation Act

114
 115

1 2 3
26. GDP Gross Domestic Product
27. GFR General Financial Rules
28. GIS Geographic Information System
29. GMC Guwahati Municipal Corporation
30. GoI Government of India
31. GoK Government of Karnataka
32. HUDCO Housing and Urban Development Corporation
33. IA Implementing Agency
34. IHSDP Integrated Housing and Slum Development Programme
35. IRMA Independent Review and Monitoring Agency
36. JNNURM Jawaharlal Nehru National Urban Renewal Mission
37. KUIDFC Karnataka Urban Infrastructure Development and Finance
Corporation
38. LIG Lower Income Group
39. MIS Management Information System
40. M/o Ministry of
41. MOA Memorandum of Agreement
42. MoHUPA Ministry of Housing and Urban Poverty Alleviation
43. MoUD Ministry of Urban Development
44. MPC Metropolitan Planning Committee
45. MPR Monthly Progress Report
46. MRTS Mass Rapid Transport System
47. NGO Non Governmental Organisation
48. NHAI National Highways Authority of India
49. NOC No Objection Certificate
50. NPV Net Present Value
51. NSDP National Slum Development Programme
52. NTA National Technical Advisor
53. O&M Operation and Maintenance
54. PDL Public Disclosure Law
55. PIU Project Implementation Unit
56. PMC Patna Municipal Corporation
57. PMES Programme Monitoring and Evaluation System
58. PMIS Project Monitoring and Information System
 116

1 2 3
59. PMU Programme Management Unit
60. QPR Quarterly Progress Report
61. RAA Reform Appraisal Agency
62. RAY Rajiv Awas Yojana
63. RTI Right To Information
64. RTP Rapid Training Programme
65. SEAC State Expert Appraisal Committee
66. SEIAA State Environment Impact Assessment Authority
67. SLCC State Level Coordination Committee
68. SLEC State Level Expert Committee
69. SLNA State Level Nodal Agency
70. SLSC State Level Steering Committee
71. SOR Schedule of Rates
72. SPV State Purpose Vehicle
73. STP Sewage Treatment Plant
74. SWM Solid Waste Management
75. TAG Technical Advisory Group
76. TCPO Town and Country Planning Organisation
77. TOR Terms of Reference
78. TPIMA Third Party Inspecting and Monitoring Agency
79. UC Utilisation Certificate
80. UD Urban Development
81. UIDSSMT Urban Infrastructure Development Scheme for Small and
Medium Towns
82. UIG Urban Infrastructure and Governance
83. ULBs Urban Local Bodies
84. UT Union Territory
85. VAMBAY Valmiki Ambedkar Awas Yojana
 APPENDIX I
MINUTES OF THE ELEVENTH SITTING OF THE PUBLIC ACCOUNTS
COMMITTEE (2013-14) HELD ON 11TH SEPTEMBER, 2013
The Public Accounts Committee sat on Wednesday, the 11th September, 2013
from 1500 hrs. to 1645 hrs. in Committee Room 'D', Parliament House Annexe,
New Delhi.
PRESENT
Dr. Murli Manohar Joshi — Chairperson
MEMBER
Lok Sabha
2. Shri Anandrao Adsul
3. Shri Ramen Deka
4. Dr. M. Thambi Durai
5. Dr. Sanjay Jaiswal
6. Shri Abhijit Mukherjee
Rajya Sabha
7. Shri Prakash Javadekar
8. Dr. V. Maitreyan
9. Smt. Ambika Soni
SECRETARIAT
1. Shri Devender Singh — Joint Secretary
2. Shri Abhijit Kumar — Director
3. Shri S.L. Singh — Under Secretary

Representatives of the Office of the Comptroller and Auditor General of India

1. Ms. Usha Sankar — Dy. CAG (Commercial and
Chairman, Audit Board)
2. Shri Gautam Guha — Director General of Audit
(Commercial - I)
3. Shri A.M. Bajaj — Principal Director (Economics &
Service Ministries)
4. Shri Purushottam Tiwary — Principal Director (PAC)

117
 118

Representatives of the Ministry of Urban Development

1. Dr. Sudhir Krishna — Secretary
2. Dr. Ashok Singhvi — Joint Secretary (UD)
3. Shri Naresh Salecha — Joint Secretary & FA

Representatives of the Ministry of Housing and Urban Poverty Alleviation

1. Shri Arun Kumar Misra — Secretary
2. Shri Sanjeev Kumar — Joint Secretary & MD (JN&RAY)
3. Shri V.P. Baligar — CMD. HUDCO
4. Dr. Shailesh Kr. Aggarwal — ED, BMTPC
5. Ms. Usha P. Mahavir — GM (Projects), HUDCO
2. At the outset, the Chairperson welcomed the Members and the representatives
of the Office of the Comptroller and Auditor General of India, the Ministry of Urban
Development and the Ministry of Housing and Urban Poverty Alleviation to the sitting
of the Committee. Apprising that the meeting had been convened to take oral evidence
of the representatives of the Ministry of Urban Development and the Ministry of
Housing and Urban Poverty Alleviation on the subject `Jawahar Lal Nehru National
Urban Renewal Mission' based on the C&AG Report No. 15 of 2012-13, the Chairman
impressed upon the witnesses not to disclose the contents of the deliberations of the
Committee to any outsider, especially to the members of the print and electronic media.
3. The Secretary, Urban Development then gave a brief background and the
implementation of the Mission. With the permission of the Chairman, he made a power
point presentation highlighting different aspects of the Mission pertaining to his Ministry
viz,, objectives, components and structure, approval status of UIG and UIDSSMT
projects, Performance Audit observations and responses, urban transport, structure of
project implementation, implementation of reforms, implementation of urban
infrastructure projects, financial management, monitoring and evaluation etc.
4. Thereafter, the Secretary, Housing and Urban Poverty Alleviation explained
the issues concerning housing infrastructure projects being implemented under the
Mission.
5. Expressing dissatisfaction over non-benchmarking of different towns/cities
for the project implementation of the Mission, the Chairman sought to create a
different system for development in these towns and cities, prioritization of projects
keeping in view the limited resources to meet the main demands and find ways and
means to reduce the cost of construction of houses under the scheme.
6. Thereafter, the Committee raised various queries on the lapses, deficiencies
and shortcomings in the implementation of the Mission particularly on the delay in
completion of housing and urban infrastructure projects, cost escalation, deficiency in
the monitoring of projects etc. The representatives of the Ministry of Urban
Development and the Ministry of Housing and Urban Poverty Alleviation attended to
the queries raised by the Committee.
 119

7. As some queries required detailed and statistical reply/information, the

Chairman asked both the Secretaries to furnish the requisite written reply
expeditiously. The Secretaries assured that they would comply.
8. As the evidence remained inconclusive, the Committee decided to take further
evidence of the representatives of the Ministry of Urban Development and Ministry of
Housing and Urban Poverty Alleviation based on the appraisal of post-evidence replies
from both the Ministries.
9. The Chairman, then thanked the representatives of both the Ministries for
appearing before the Committee and furnishing the available information on the
questions asked. The Chairman also thanked the representatives of the office of the
C&AG of India for providing valuable assistance to the Committee in the examination
of the subject.
The witness, then, withdrew.
A copy of the verbatim proceedings of the sitting was kept on record.
The Committee, then, adjourned.
 APPENDIX II

MINUTES OF THE FIFTH SITTING OF THE PUBLIC ACCOUNTS

COMMITTEE (2014-15) HELD ON 08TH OCTOBER, 2014.

The Committee sat on Wednesday the 08th October, 2014 from 1430 hrs. to
1540 hrs. in Room No. '62', Parliament House, New Delhi.

PRESENT

Prof. K. V. Thomas — Chairperson

MEMBERS

Lok Sabha
2. Shri Nishikant Dubey
3. Shri Bhartruhari Mahtab
4. Shri Janardan Singh Sigriwal
Rajya Sabha
5. Dr. Satyanarayan Jatiya
6. Shri Shantaram Naik
7. Shri Sukhendu Sekhar Roy
SECRETARIAT
1. Shri A. K. Singh — Joint Secretary
2. Shri Jayakumar T. — Additional Director
3. Shri S.L. Singh — Under Secretary

Representatives of the Office of the Comptroller and Auditor General of India

1. Dr. Prasenjit Mukherjee — Dy CAG
2. Shri P. Sesh Kumar — Director General
3. Shri P.K. Mishra — Director General
4. Shri A.M. Bajaj — Principal Director
5. Shri P. Tiwary — Principal Director

120
 121

Representatives of the Ministry of Urban Development

1. Shri Shankar Aggarwal — Secretary
2. Shri Durga Shankar Mishra — Addl. Secretary
3. Shri Neeraj Mandloi — Joint Secretary (UD & MD)
4. Shri C.K. Khaitan — JS (UT)
5. Shri Praveen Prakash — JS (W)

Representatives of the Ministry of Housing and Urban Poverty Alleviation

1. Ms. Anita Agnihotri — Secretary
2. Shri K.B.S Sidhu — JS (Housing)
3. Ms. Jhanja Tripathy — JS & FA
2. At the outset, the Chairperson welcomed the Officers of the C&AG of India
and the representatives of the Ministries of Urban Development and Housing and
Urban Poverty Alleviation to the sitting of the Committee. Apprising that the meeting
had been convened to have further oral evidence on the subject "Jawaharlal Nehru
National Urban Renewal Mission (JNNURM)" based on the C&AG Report No. 15 of
2012-13, Union Government (Performance Audit), he observed that the JNNURM
laid the foundation of systematic development of infrastructure from the perspective
of integrating the poor with the service delivery system and the intent and willingness
of the Government got reflected in the importance accorded to the Mission in terms of
fund allocation. However, there had been clear lack of administrative will to convert
this popular vision into reality. Further, outlining various lapses/shortcomings/
irregularities/deficiencies in the implementation of the Mission, the Chairperson clearly
pointed out that the Mission need to strengthen the participation of community in the
planning as well as implementation of the Mission activity at the slum level. He
also observed that though the responsibility of the implementation lied with the
State Governments, it was for the Ministries to have — (a) strong monitoring system;
(b) clear guidelines for the Mission with zero tolerance policy; and (c) a better
fund-flow arrangements to ensure success of JNNURM. Thereafter, he asked the
Secretaries to give an overview of the Mission and the measures taken by the Ministries
to overcome the shortcomings/deficiencies pointed out by the Audit so as to make the
Mission more effective and useful. The Chairperson also drew the attention of the
representatives to the confidentiality of the matter till the report was presented to the
House.
3. The Secretaries of the Ministries of Urban Development and Housing and
Urban Poverty Alleviation then gave power point presentations on the Audit findings
and the response of the Ministries thereon. Some Members expressed serious concern
that JNNURM involves various State subjects, reforms of which are being initiated by
the Centre. The representatives of the Ministries informed that the main reasons for
delay in execution of the JNNURM projects were litigations, delay in land acquisition,
 122

delay in obtaining statutory permissions/clearances from the Ministries of Defence,

Railways, Environment and Forests, shifting of utilities and inadequate capacity building
capabilities at the level of urban and local bodies. The Secretary, Ministry of Housing
and Urban Poverty Alleviation admitted that if there had to be a Government funded
programme for housing for the urban poor, then the participation of the poor in planning
and implementation of the programme, choosing the location of the projects as well as
the availability of land was very important.
4. The major issues highlighted by the Members inter-alia included — non
issuance of advisories to the State Governments while preparing DPR; approval of
deficient DPR; in-active participation of the Ministries in the implementation of the
Mission; non-pursuing of remedial measures to achieve the reforms of 85 percent
coverage of Property Tax by Urban local bodies; improper monitoring of the projects;
and non-starting of 5 projects out of 37 selected projects for water supply etc.
5. As regards the various initiatives taken under JNNURM, the Secretary,
Ministry of Urban Development informed that the Ministry was taking four big
initiatives which inter-alia included the Swachh Bharat Mission with the aim of making
the entire country clean by 2nd October, 2019; HRIDAY Scheme to rejuvenate the
soul of towns which are culturally important; a new Mission of Urban renewal of
500 cities on the basis of the lessons learnt from JNNURM; and the development of
100 smart cities.
6. The Chairperson directed that all the suggestions made by the C&AG should
be given due consideration while formulating and implementing the new missions of
the Ministries. As some queries required detailed and statistical information, the
Chairperson asked the representatives of the Ministries to furnish written reply to the
Secretariat at the earliest.
7. The Chairperson thanked the representatives of the Ministries for appearing
before the Committee and the representatives of the Office of the C&AG of India for
providing assistance to the Committee in the examination of the subject.
The witnesses, then, withdrew.
A copy of the verbatim proceedings was kept on record.
The Committee, then, adjourned.
 APPENDIX III

MINUTES OF THE NINETEENTH SITTING OF THE PUBLIC ACCOUNTS

COMMITTEE (2014-15) HELD ON 9TH APRIL, 2015

The Committee sat on Thursday the 9th April, 2015 from 1430 hrs. to 1700 hrs.
in Committee Room 'D', Parliament House Annexe, New Delhi.

PRESENT

Prof. K. V. Thomas — Chairperson

MEMBERS

Lok Sabha
2. Shri S.S. Ahluwalia
3. Shri Nishikant Dubey
4. Shri Gajanan Kirtikar
5. Shri Bhartruhari Mahtab
6. Shri Dushyant Singh
7. Shri Janardan Singh Sigriwal
8. Shri Shiv Kumar Udasi
9. Dr. Kirit Somaiya
10. Shri Anurag Thakur
Rajya Sabha
11. Shri Bhubaneswar Kalita
12. Shri Shantaram Naik
SECRETARIAT
1. Shri A. K. Singh — Joint Secretary
2. Smt. Anita B. Panda — Director
3. Shri Jaya Kumar T. — Additional Director
4. Shri S.L. Singh — Under Secretary
5. Smt. Anju Kukreja — Under Secretary

123
 124

Representatives of the Office of the Comptroller and Auditor General of India

1. Shri A.K. Singh — Dy. CAG(RC)
2. Smt. Shubha Kumar — Director General (RC)
3. Shri Satish Loomba — Director General
4. Shri L.S. Singh — Principal Director (PAC)

Representatives of the Ministry of Health and Family Welfare

1. Shri B.P. Sharma — Secretary
2. Dr. Jagdish Prasad — D.G.H.S
3. Shri N.S. Kang — AS&DG (CGHS)

Representatives of the Ministry of Chemicals and Fertilizers (Department of

Pharmaceuticals)
1. Dr. V.K. Subburaj — Secretary
2. Shri Kalyan Nag — Adviser (Cost), NPPA

Representative of the Ministry of Chemicals and Fertilizers (Department of

Chemicals and Petrochemicals)
1. Shri Surjit K. Chaudhary — Secretary
2. At the outset, the Chairperson welcomed the Members and the representatives
of the Office of the C&AG of India to the sitting of the Committee. The Chairperson
then apprised the Members that during the sitting, the Committee would take further
oral evidence of the representatives of the Ministry of Health and Family Welfare and
Ministry of Chemicals and Fertilizers (Departments of Pharmaceuticals and Chemicals
and Petrochemicals) on the subject "Procurement of Allopathic drugs in CGHS" based
on Para No. 6.3 of the C&AG Report No. 19 of 2013 in the first instance. Thereafter,
the Committee would consider three draft Reports for adoption.
3. *** *** ***
4. *** *** ***
5. *** *** ***
6. *** *** ***
The witnesses, then, withdrew.
A copy of the verbatim proceedings of the sitting was kept on record.
7. The Committee then took up the following draft Reports one by one for
consideration:
(i) *** *** ***
 125

(ii) Draft Report on the subject "Jawaharlal Nehru National Urban Renewal
Mission" based on C&AG Report No. 15 of 2012-13; and
(iii) *** *** ***
8. Giving an overview of the issues contained in the draft Reports and comments
of the Committee thereupon, the Chairperson solicited the views/suggestions of the
Members. After some discussion, the Committee adopted the two draft Reports
mentioned at SI. Nos. (ii) and (iii) without any modifications. As regards the draft
Report mentioned at SI. No. (i), the Committee adopted the same with the modifications
as shown in the Annexure.
9. The Committee then authorized the Chairperson to finalize the Reports in
the light of the factual verifications, if any, made by Audit and present them to Parliament
on a convenient date.

The Committee, then, adjourned.

***Matter not related to this Report.

GMGIPMRND—803LS—07.07.2015