A performance audit by the Comptroller and Auditor General (CAG) has revealed widespread misuse and diversion of Smart City Mission funds across Tamil Nadu between 2015 and 2023. The audit, which examined seven of the state's 11 Smart Cities, found that 52 approved projects worth ₹1,602.2 crore were not implemented, while 44 unplanned projects worth ₹623.86 crore were undertaken instead.
Investigators discovered that ₹23.83 crore was diverted for impermissible expenses, including the purchase of cars, computers, furniture, and legal fees. Furthermore, the state diverted at least ₹1,127 crore into personal deposit accounts of state departments in violation of project guidelines. The report also highlighted that 93 projects were initiated without mandatory clearances, and Special Purpose Vehicles (SPVs) were established with only ₹10 lakh in capital, far below the required ₹200 crore, to avoid statutory provisions.
Specific instances of fund diversion included the use of money for government advertisements, consultant fees for non-Smart City projects, and the renovation of conference halls. Additionally, the audit noted that most SPVs lacked full-time CEOs, leading to conflicts of interest as municipal commissioners managed the projects. Corporations were also found to have floated limited tenders on behalf of SPVs, undermining the intended financial oversight of the mission.
