CAG: Undue benefits to contractors in Ayodhya development project

These projects included the one for development of Ayodhya; development of Sinquerim-Aguada Jail, Goa; Himalayan Circuit, Himachal Pradesh; Heritage Circuit, Telangana; development of Rangpo-Singtam, Sikkim; and Buddhist Circuit, Madhya Pradesh.

Giving a detailed account of the undue benefits made to contractors in the Ayodhya development project, the CAG report noted: “The contractor engaged by the implementing agency viz., Uttar Pradesh Rajkiya Nirman Nigam, was required to submit performance guarantee at the rate of five per cent of the contract price of Rs 62.17 crore, which worked out to Rs 3.11 crore. However, the contractor submitted a lesser amount of performance guarantee i.e., Rs 1.86 crore only, at the time of its renewal (September 2021) without citing any reason on record.”

“Work at Guptar Ghat, Ayodhya was split into 14 lots of equal sizes and works were awarded to different private contractors. However, the executing agency (Irrigation Department) did not take due care in making comparative analysis of the financial bids/rates offered by the contractors and awarded works of similar nature and sanctioned costs to the same contractors but at varying rates resulting in failure to save Rs 19.13 lakh,” the report said.

“GST registrations of three contractors were cancelled by the state government suo motu after awarding of works to them. Thus, they were no more registered contractors and were not entitled to collect GST. However, a total of Rs 19.57 lakh was irregularly paid to one contractor against his GST registration and in case of other two contractors, it was pending for payment, whereas full amount of GST was liable to be deducted and deposited by the executing agency (Irrigation Department) itself,” it said.

The CAG has also provided a case study in its report, showing irregular payment to contractors for works not executed for development of Guptar Ghat.

“The work of development of the Guptar Ghat included work of 23,767 sq.mtr ‘supplying and fixing of stone patia’ at the rate of Rs 1,447.50 per sq.mtr. This work included the cost of MS clamp (supply and fixing) at Rs 216.88 per sq.mtr. (Rs 136.88 for supply and Rs 80.00 for fixing). The work was executed and payment was made to the private contractors at the rates quoted by them in their respective agreements,” the report said.

“During site inspection, it was observed that no MS clamps were fixed. However, work was measured, including supply and fixing of MS clamps, against which an amount of Rs 51.55 lakh (excluding GST at 12 per cent) was paid to the contractors. Since no work of supply and fixing of MS clamps was done at site, the cost of the same should have been deducted from the bills of the contractors. Thus, non-deduction thereof resulted in excess payment of Rs 57.73 lakh (including GST at 12 per cent) to contractors in the final bill,” the report said.

“During the Exit Conference held (July 2022) with the Tourism Department and Irrigation Department (executing agency), Government of Uttar Pradesh, the State Tourism Department accepted the audit observation and directed the executing agency to initiate recovery of excess payment,” the report said.

The CAG also highlighted wasteful/excess expenditure of Rs 8.22 crore in the implementation of the Ayodhya development project.

“The state government failed to exercise due care in assessment of actual amount payable towards centage, GST and Labour cess. Thus, excess amount of Rs 6.07 crore was sanctioned due to considering incorrect cost (estimated cost instead of actual cost) of the works carried out by implementing agencies and out of this, Rs 3.98 crore was also released (Irrigation Department: Rs 1.18 crore and Uttar Pradesh Rajkiya Nirman Nigam: Rs 2.80 crore), resulting in excess payment,” the report said.

“Executing agency (Uttar Pradesh Rajkiya Nirman Nigam) did not reduce the cost of the works by five per cent towards departmental savings in the estimates being government work in terms of State government orders. Thus, the sanctioned cost of the works was found overestimated by Rs 3.86 crore,” it said.

The report also highlights the lack of a monitoring mechanism in the initial years of the project.

“As per the scheme guidelines, the state government was to appoint a state level monitoring committee (SLMC) for monitoring and timely implementation of the project. However, the committee was formed (August 2019) after a delay of two years from the date of sanction of the project. Further, no progress report was sent to MoT (Ministry of Tourism) prior to February 2021 and even after that financial and physical progress reports were not sent on monthly basis to MoT indicating inadequate monitoring by the state government,” it said.

The Ayodhya development project is part of the Ramayana Circuit under the Swadesh Darshan Scheme. It was sanctioned with a cost of Rs 127.21 crore on September 27, 2017, of which Rs 115.46 crore have been released. Apart from Ayodhya, Chitrakoot and Shringverpur are two other projects under the Ramayana Circuit in Uttar Pradesh.