Is Chennai's Smart City Mission Accomplished?

CHENNAI: The Comptroller and Auditor General’s (CAG’s) criticism of Chennai’s Smart Cities Mission implementation stems largely from a mismatch between what was approved, what was eventually implemented and how the projects and funds were managed.

CAG’s performance audit, covering the implementation of the Smart Cities Mission in Tamil Nadu from April 2016 to March 2024, examined whether the projects were implemented as envisaged in the approved Smart City proposal, whether changes in priorities followed the prescribed process and whether funds were used for permissible purposes.

For Chennai, the audit found that the city’s original Smart City proposal contained 48 projects, worth Rs. 1,366.25 crore. However, the eventual implementation substantially changed the original project mix.

Eight approved projects, worth Rs. 279.03 crore, were dropped, while 20 projects, worth Rs. 189.66 crore, not part of the original proposal, were taken up.

This was one of the principal reasons for the audit concern. The issue was not simply that projects were added or dropped, but whether such changes were adequately justified and followed the required approval and consultation process.

CAG specifically said adequate justification for dropping the eight projects was not available in the records examined by it.

Among the dropped projects were the proposed streetlight monitoring system, estimated at Rs. 248.47 crore, and the Intelligent Traffic Management System, estimated at Rs. 100 crore. Both were part of the pan-city component intended to address city-wide requirements.

At the same time, Chennai Smart City Ltd (CSCL) took up projects such as waterbody restoration, a biogas plant, modernisation of the Kannamapettai crematorium, smart classrooms, traffic parks and a green building that were not part of the original proposal.

CAG flagged these projects because they represented a change in the approved priorities, and observed that they were taken up without adequate public consultation.

The audit also questioned the geographical deviation from the Smart Cities Mission’s area-based development (ABD) approach.

Thirteen projects, costing Rs. 76.32 crore, were implemented outside Chennai’s approved ABD area, CAG said.

The ABD model was a core element of the mission, under which a defined area was selected for concentrated and integrated development. Therefore, implementing projects outside the approved area was flagged as a deviation from the sanctioned framework.

CAG also examined whether money allocated to CSCL was used for its intended purpose.

It found that Rs. 16.23 crore was diverted from funds earmarked for administrative and office expenses.

The expenditure included Rs. 66.58 lakh on Tamil Nadu government advertisements, Rs. 18.44 lakh paid to consultants for non-Smart City projects and Rs. 5.14 lakh on workshops and printing.

A major component was Rs. 15.33 crore spent on shifting and resettlement of 268 families associated with a Villivakkam project.

The audit flagged these expenditures as being outside the permissible use of funds under the Smart Cities Mission framework.

Another reason for CAG’s criticism was the implementation of certain projects without obtaining required statutory or other approvals beforehand.

The audit cited the biogas plant, Kannamapettai crematorium modernisation and restoration of the Villivakkam tank / suspension bridge.

For CAG, the absence of mandatory approvals pointed to shortcomings in project preparedness and internal controls.

The audit also examined whether CSCL had the financial structure envisaged for a special purpose vehicle (SPV).

The Smart Cities Mission framework envisaged adequately capitalised SPVs. However, CAG found that CSCL had paid-up capital of only Rs. 10 lakh, against the prescribed Rs. 200 crore.

This raised questions over whether the SPV had been constituted and operated with the financial capacity envisaged under the mission.

The audit records that 49 projects, worth Rs. 946.18 crore, were completed in Chennai.

But CAG’s concern was not whether Chennai completed projects at all. It was whether those projects were the projects approved under the mission, implemented in the approved areas, financed through permissible mechanisms and executed after following the prescribed procedures.