CAG audit finds financial lapses, delays in Polavaram project

Vijayawada: A performance audit by the Comptroller and Auditor General (CAG) identified multiple discrepancies across financial, procedural and implementation aspects in the Polavaram irrigation project. The report flagged poor budget utilisation, environmental violations, and delays in land acquisition and rehabilitation. The report also highlighted mismatches in expenditure reporting to the tune of Rs 1,492 crore.While the chief engineer reported the expenditure as Rs 14200 crore, the expenditure booked in finance accounts was only Rs 12707 crore. The expenditure reported by the Polavaram Project Authority (PPA) was Rs 12,137 crore, which also did not match the expenditure reported by the CE or the expenditure booked under finance accounts. Overall project spending was over-reported by ₹1,492 crore by the CE between 2017 and 2023.
The report showed the project remained far behind schedule even after 17 years. Headworks were only 67% complete by March 2023, while the hydropower component registered 12% physical progress. Land acquisition stood at 67%, and just 11% of the 1.06 lakh project-displaced families were resettled.The audit recorded systemic financial lapses during the audit period, including low budget utilisation of 21–66%, pendency of bills worth ₹2,097 crore despite available allocations, and mismatches in expenditure reporting. The second revised cost estimate of ₹5,5548 crore remained unapproved due to incomplete socio-economic surveys and pending distributary network designs.CAG flagged major planning failures, including non-use of project monitoring tools such as PRIMAVERA and deviations from the construction schedule that led to the collapse of the diaphragm wall. The wall, built at a cost of ₹399.77 crore, was damaged due to non-adherence to the construction schedule as per the DPR and due to the non-existence of a contract agency to mitigate flood situations.The audit found contract management issues, including awarding works on a nomination basis, restrictive tender conditions that resulted in single-bidder outcomes, and interest-free advances to contractors in violation of rules. Bank guarantees worth ₹321 crore expired without encashment, and special imprest and revolving funds caused unrecovered interest losses of over ₹33 crore.On canals, the CAG pointed to wasteful expenditure due to alignment changes, increased unit rates, and delays in allotting National Highway crossings, which increased costs by over ₹113 crore. Spoil earth worth an estimated ₹1660 crore lay unaccounted for at work sites, with theft reported in several packages.The audit highlighted environmental non-compliance, including failure to construct protective embankments in Odisha and Chhattisgarh, inadequate plantation, and execution of 2 lift irrigation schemes without statutory approvals, leading to National Green Tribunal penalties.The report detailed serious shortfalls in land acquisition and R&R: discrepancies in land records, payments to ineligible beneficiaries, excess land-to-land allotments, delayed awards leading to higher compensation, and incomplete R&R colonies lacking basic amenities such as water, drainage, schools, health centres, and fair price shops. In beneficiary surveys, 40% reported not receiving land awards, and 24% did not receive R&R compensation.