Archive · 8 Sep 2026
CAG Finds Tamil Nadu Smart City SPVs Lacked Autonomy
The CAG examined how Smart Cities Mission projects were managed in Tamil Nadu.
It found that the special companies created for the mission did not have enough independence.
They had far less capital than required, and most sampled cities did not have full-time chief executives.
Many projects were built outside the areas approved for smart-city development.
Some mission money was used for regular municipal needs, such as street-cleaning machines and electricity bills.
Several parking facilities, shops, and a tourism plaza were unused or only partly used.
This meant that expected income from these projects was not earned.
The CAG also said municipal corporations kept revenue that was supposed to strengthen the special companies.
The CAG said Smart Cities Mission SPVs in Tamil Nadu lacked the operational independence required by mission guidelines.
SPVs had only Rs 10 lakh in paid-up capital instead of the mandated Rs 200 crore, while six of seven sampled cities lacked full-time CEOs.
Seventy projects costing Rs 655.43 crore were executed outside approved development zones, and 44 unplanned projects worth Rs 623.86 crore were undertaken.
Commercial assets, including parking facilities and markets, often remained idle or underused and failed to generate projected revenue.
Municipal corporations retained Rs 57.72 crore in revenue from completed smart-city assets instead of crediting it to the SPVs.
- Who
- The Comptroller and Auditor General of India, Tamil Nadu Smart Cities Mission Special Purpose Vehicles, and municipal corporations.
- What
- A CAG performance audit found that Smart Cities Mission SPVs lacked autonomy, funded projects outside approved zones, and struggled to make money from completed assets.
- When
- The report was tabled in the Tamil Nadu Assembly on September 7.
- Where
- Tamil Nadu, including Chennai, Tirunelveli, Madurai, and Salem.
- Why
- The audit found weak SPV structures, diverted funds, unplanned projects, incomplete facilities, and revenues retained by municipal corporations.
- Paid-up capital
- SPVs had Rs 10 lakh instead of the mandated Rs 200 crore.
- Leadership
- Six of seven sampled cities did not appoint full-time chief executive officers.
- Projects outside zones
- Seventy projects costing Rs 655.43 crore were executed outside approved Area-Based Development zones.
- Unplanned projects
- Forty-four unplanned projects worth Rs 623.86 crore were undertaken; 21 were entirely outside Area-Based Development limits.
- Commercial assets
- Multi-level parking facilities and commercial complexes in four cities cost Rs 115.92 crore but could not be fully used.
- Madurai tourism plaza
- A Rs 2.62-crore tourism plaza remained idle and unmaintained for more than three years.
- Retained revenue
- Municipal corporations retained Rs 57.72 crore generated by completed smart-city assets.