The Comptroller and Auditor General (CAG) has pointed out diversion of funds of around Rs 115 crore and ineligible beneficiaries of Jawaharlal Nehru National Urban Renewal Mission (JNNURM). Only 22 of the 1,517 housing projects approved under JNNURM were completed by the due date of March 31, 2011.

The report on Performance Audit of JNNURM, which was tabled in Parliament on Thursday, observed that a total of 1,517 and 1,998 housing and infrastructure projects respectively were approved for implementation between 2005 and 2011. However, only 22 of the 1517 approved projects were completed within the deadline.

The 103-page report observed that the objective of bringing about reforms in the governance of Urban Local Bodies (ULBs) could not be achieved through the scheme.

The status of dwelling units within the housing projects was also low as only 26 percent of approved units have been completed. Regarding urban infrastructure projects, the report observed that out of the 1,298 projects approved, only 231 projects (18 percent) were completed.

The report pointed out that there were eight cases of diversion of funds in Urban Infrastructure projects in Andhra Pradesh, Chhattisgarh, Haryana, Jharkand, West Bengal and Himachal Pradesh. The amount diverted was Rs 114.68 crore.

The diversion was for purposes other than those admissible under JNNURM and in some cases even for non-JNNURM purposes. In one instance, funds were utilised for payment of salary to the municipal staff.

The report also said that there were also deficiencies in selection of beneficiaries of houses for urban poor which led to risks of ineligible beneficiaries getting the benefit.

The report noted that the union ministries were “not equipped” to monitor a project of this magnitude. The CAG said the centre must identify the deficiencies in monitoring the scheme both at the central and the state level and address them during the next two years. The report said that the government should monitor the execution of projects to stop diversions to ineligible beneficiaries.

It also suggested that the ministry of urban development and the ministry of housing and urban poverty alleviation should introduce a "zero tolerance policy" at all levels in case of irregular expenditure and diversion of funds with greater financial discipline. The report said that against an allocation of Rs 66,084.66 crore by the planning commission, the government of India had only made an allocation of Rs 37,070.15 crore of which only Rs 32,934.59 crore had been released by the due date.

The CAG said that JNNURM guidelines had been deficient in giving adequate advisory to states regarding parking of funds and there was no uniformity in utilising interest earned on parked funds.

JNNURM is a central government scheme launched in December 2005 for fast track development of cities across the country. It is implemented by the ministries of Urban Development and Housing and Urban Poverty Alleviation.