CAG flags ‘suspected fraud of Rs 414 cr’ in Madhya Pradesh road construction

“We unearthed suspected fraudulent practices worth Rs 414.94 crore in the procurement of bitumen for the construction of PMGSY roads in 71 out of 75 PIUs and 49 out of 51 districts. The contractors submitted fake invoices of the government refineries. The contractors also submitted the same invoices twice or thrice and procured bitumen from private refineries. The Department failed in prescribing mechanism to check the invoices of bitumen,” the CAG report stated.

Detailed scrutiny of 9,903 invoices showed that 3,389 of them, worth Rs 320.75 crore, were fabricated, as per the report. These invoices, submitted as proof of purchase of 0.80 lakh metric tonnes of bitumen, “were not issued by the refineries”, it said.

The CAG flagged that contractors submitted invoices with manipulated dates and reused transporter or seller copies. Some invoices were reused across multiple projects, resulting in payments of Rs 32.47 crore for non-existent bitumen purchases. The CAG said the concerned department has “not taken any action to forfeit the Performance Security from the erring contractors for submitting false documents or to cancel any existing contracts being executed by such contractors”.

PMGSY is a central government scheme that aims to “provide connectivity to unconnected Habitations as part of a poverty reduction strategy”.

The Madhya Pradesh Rural Road Development Authority (MPRRDA), responsible for implementing PMGSY in the state, defended its practices and said that independent monitors and NABL-approved labs ensure quality and quantity compliance. However, the CAG dismissed this argument, stating that due diligence in invoice verification could have prevented the fraud.