Even as a report by the Rehabilitation Oversight Group (the Shunglu Committee) headed by a former Comptroller and Auditor General (CAG), awaits intense legal arguments in the Supreme Court in the coming weeks, a review of audit reports by the CAG shows that the only basic infrastructure government agencies appear to be committed to are drains that transports taxpayers' money to groups of corrupt officials.

The audit also revealed how affected farmers' petitions before Grievance Redressal Authority (GRA) challenging the faulty level survey were being converted to provide a reason to book more expenditure and spend money unauthorisedly.


 •  Narmada rehabilitation scam exposed
 •  The dams balance sheet

Tabled in the Madhya Pradesh state assembly recently, figures from the latest audit report for state government (civil) for the year ending 31 March 2004 suggest that the Narmada Valley Development Department recorded savings of Rs.507.32 crores as against the Rs.1273.28 crores that were budgeted for. (The report came out after a considerable lapse of time.) While detailing the reasons for such savings, the audit report suggested that saving of Rs 166.56 crores was mainly due to slow progress of land acquisition and rehabilitation work in the submerged area of Sardar Sarovar. The report was signed by J N Gupta, Principal Accountant General (Civil and Commercial Audit) Madhya Pradesh and it was counter signed by the current CAG, Vijayendra N Kaul. ( PDF copy of report)

But on scratching further, deep-rooted corruption amongst Narmada Valley Development Authority (NVDA) officials comse to the surface as the reason for the rehabilitation works lagging behind.

In 2004, during audit of the vouchers of Executive Engineer S N Saxena at Badwani, it was found that in order to escape audit scrutiny, Saxena's division (no.22) had split the payments for the works into thousands of vouchers by keeping the amount below Rs.5000 in each case. On further probe, financial irregularities indicating fictitious and doubtful payments of Rs.5.63 crores were noticed. The division is responsible to carry out land acquisition, survey of affected properties, and develop resettlement sites for the oustees.

In October 2004, Accountant General's (AG) office at Gwalior, which carries out civil and commercial audits of the state government, brought this to the attention of the government and asked it to institute an inquiry into the case. Throughout the year, the AG's office sends communications to the concerned offices on matters of grave importance regarding financial irregularities and lapses in accounts following audit scrutiny. These communications are not in public domain and are referred to as Inspection Reports. In December 2004, the AG's office decided to initiate a special audit of all NVDA field formations by scrutinising vouchers received from 36 divisions of NVDA pertaining to the period between April 2002 and December 2004.

The AG's scrutiny brought to light a rising trend in split expenditure. As mentioned above, at the NVDA Division 22 office in Badwani, payments for works were split into thousands of vouchers by keeping the amount below Rs.5000 each. Whereas in the year 2002-'03 the split expenditure worth Rs.0.4 crore was booked, subsequently in the year 2003-'04 it rose to Rs.3.78 crore and within the first half of the year 2004-'05 it rose upto Rs.2.28 crores!

The probe also revealed that these works were executed through a few contractors selected by the Sub Divisional Officers (SDO). The works were executed without inviting tenders, without sanction of estimates and without entering into any agreement. No record was kept of the progress of works though progress reports for other sanctioned works were being sent to higher authorities regularly!

Dainik Bhaskar's Indore edition of 2 November 2004 had published a short news item reporting that 1 Executive Engineer, 4 SDOs and several others (total 37) were suspended from the NVDA office in Badwani for irregularities. They were Dilip Joshi, P C Dewda, A K Gupta and another officer who has been referred to in the AG's report by just his surname, Modi.

Most importantly, the audit also revealed how affected farmers' petitions before Grievance Redressal Authority (GRA) challenging the faulty level survey were being converted to provide a reason to book more expenditure and spend money unauthorisedly. It was found that as against technical sanctions of Rs.12.60 lakh for survey and Rs.7.52 lakh for grievance redressal works accorded (April – May 2003), Rs .2.92 crore and Rs.67.33 lakh respectively were spent, even when the revised technical sanctions had not been obtained.

Survey work on 25 sites said to be done through 10 contractors, was paid for through 4,747 vouchers bringing the amount paid to Rs.2.92 crores. Similarly, expenditure of Rs.55.13 lakh was shown through 1064 vouchers on supply of labourers for survey work at these sites. But that is not all, there were some 4,649 vouchers bringing the amount paid to Rs.2.32 crores for the work of filling of earth or moorum with watering and compaction of 1,96,610 cubic metres as a combined item at the high rate of Rs.118 per cubic metre. Making a scathing comment on this, the audit report comments, "Being different items, their clubbing and payment on single rate without any rate anlaysis was not justified. The execution of such item in huge quantity without specifying the exact location or site was also highly irregular and the expenditure appeared to be fictitious."

Not just this, without the sanction of a competent authority, expenditure of Rs.67.33 lakhs was incurred for providing vehicles and labourers to look into complaint cases for survey and levelling and rechecking of house property survey. Interestingly, logbooks in respect of hired vehicles were not maintained, even the registration numbers of such vehicles were not on record. This compelled audit report to conclude, "payment of such a huge amount for hiring vehicles without any record and sanction of competent authority was not only irregular but doubtful." Also, the audit scrutiny of the expenditure incurred by Badwani NVDA office revealed abnormally high expenditure of Rs.76 lakhs during April 2002 to December 2004 for petty payments such as photocopying, typing, etc.

The audit also revealed that in addition to Division No.22, the Badwani office, the PWD's NVDA rehabilitation division, Badwani had incurred expenditure of large magnitude (Rs.63 lakh) by splitting vouchers below Rs.5000 each. Similarly, by executing piece work agreements of individual values below Rs.5000 expenditure to the tune of Rs.18.08 lakh was incurred unauthorisedly. Most of the bills were prepared on simple letterhead having no reference to work orders or registration numbers of contractors. The acceptance and payment of such bills were utterly irregular. These bills were not even machine numbered and in the Badwani office, these were not even countersigned by the Executive Engineer!

How was such widespread corruption made possible? Was merely an executive engineer responsible for such a graft? May be we need to read between the lines of a paragraph from this audit report:

"Chief Engineer (PWD), NVDA, Bhopal issued a Letter of Credit (LOC) Rs 18.90 crore to Executive Engineer, Narmada development division No 22 office, Badwani without mentioning the names of various works to be taken up as required under Finance Department order dated 13 December 1984. This facilitated the division to spend the funds on works which were either not approved of for which funds were not allotted."

The logical question that should be asked is what actions have been recommended by CAG against the errant officials. The only information that is given in the said audit report is reproduced below:

Commenting on the absence of follow up action after a CAG audit report of the Manipur state government in an editorial on 8 August in the Imphal Free Press, Pradip Phanjoubam wrote:

"The Comptroller and Auditor General of India, CAG, in its report this year rapped the state government for misappropriating crores of rupees. The problem is, it did very much the same last year, and the year before that and so on ad infinitum.

"Not only this, the CAG has been castigating religiously and without fail every year, practically every state government and in fact the Union government as well for making funds do the disappearing act or else poured down the drain...

"Corruption, or public fund misappropriation if you like, is bad enough but what is equally bad if not worse, is the manner in which an important institution of the democratic establishment, meant as a vital checking and regulating mechanism of the power structure, has been systematically reduced to a caricature."

"On the financial irregularities pertaining to Narmada Development Division No 22 office, Badwani being pointed out in audit, the Government admitted (December 2004) to large scale financial irregularities in the division and said officials found responsible were placed under suspension."

But, if we scratch further, we come across para no 4.4.2 of the audit report that points out at an entrenched culture of corruption resulting in failure of senior officials to ensure accountability. When audit scrutiny by Accountant General's office finds serious irregularity, Inspection Reports (IRs) are issued by audit teams to ensure rectificatory action and ensure accountability for deficiency, lapses, etc. The Heads of Offices and their higher authorities are required to comply with the observations in the IRs, rectify the defects and omissions promptly and report their compliance to the Accountant General. Clearly, this does not happen. The culture of impunity is evident in the last sentence of an audit report which, typically, read, "the matter was communicated to concerned office/dept/ministry during the month...., there was no response till the date......".

A review of IRs remaining outstanding since 1991-'92 to the end of June 2004 suggest that "under Narmada Valley department, 201 IRs pertaining to expenditure worth Rs .464.82 crores on irrigation projects, and 48 IRs pertaining to expenditure worth Rs.97.85 crores on buildings and roads were outstanding". And because many of the IRs remain unreported, those covered in the annual audit reports appear to be a tip of an iceberg.

Now we know the path travelled by monies allocated for the rehabilitation of people affected by the Narmada dams. It will not be completely out of order for the affected persons to demand that these outstanding Inspection Reports be made public. It is also high time that ministers who visited resettlement sites in Madhya Pradesh earlier this year find ways to ensure basic amenities at R&R sites, and not just drains that so swiftly dewater state exchequer of money meant for rehabilitation. Also, given such a state of affairs on the resettlement sites, permission to raise the Sardar Sarovar dam's height to 121 metres should not have been granted. In the light of this fresh evidence from the CAG, V K Shunlgu - a former CAG himself who headed the PM-appointed Rehabilitation Oversight Group - whose report suggested that rehabilitation is complete would do well to re-examine his stand.