SRINAGAR: Jammu and Kashmir could complete only 32 of 263 projects taken up under the NABARD Rural Infrastructure Development Fund (RIDF) that were due for completion by March 2023, leaving 231 either incomplete or unstarted, while Rs 461.67 crore of the Rs 844.17 crore released for the projects remained unutilised, the Comptroller and Auditor General of India has reported.
The findings are part of the CAG’s Report No. 03 of 2026 on the Government of the Union Territory of Jammu and Kashmir, which the J&K legislature received on Wednesday. The composite audit report covers public sector enterprises, execution of NABARD-funded works and the Integrated Financial Management System (IFMS).
The performance audit covering the period from April 2018 to March 2023 found that only 12 per cent of the projects due for completion had actually been completed by March 2023. Of the Rs 844.17 crore released during the five years, only Rs 382.50 crore, or 45 per cent, had been spent.
The audit attributed the poor progress to weaknesses in project planning and prioritisation, delays in release of funds, non-commencement or slow progress of works, diversion and misutilisation of funds, execution without technical sanction, defective detailed project reports, improper site selection and inadequate contract management. Periodic field inspections were also either not carried out or not documented.
The CAG said mandatory prerequisites, including availability of encumbrance-free land, forest and statutory clearances, identification of viable water sources and approval of technically sound DPRs, were not ensured before sanction or execution of projects. This resulted in projects being stalled, abandoned or foreclosed.
The audit also found deficiencies in the management of mobilisation advances by the Finance Department, including delays in releasing advances to implementing departments, non-release or excess disbursement and cases where advances were not utilised. The CAG said these deficiencies adversely affected cash flow and timely execution.
Against the Government of India’s consent for raising Rs 3,900 crore in loans from NABARD during 2018-19 to 2022-23, J&K availed only Rs 2,316.37 crore, or 59 per cent. The CAG said NABARD’s disbursement against sanctioned loans ranged between 28 and 84 per cent across tranches, primarily because of slow progress of works, with loans lapsing in several cases because prescribed timelines were not adhered to.
The audit concluded that the intended objectives of improving irrigation and flood management, providing safe drinking water and strengthening rural road connectivity were not achieved within the envisaged timeframes. It said the citizen-centric objective of NABARD funding—to support delayed rural infrastructure projects, bridge the rural-urban gap and promote inclusive growth—was yet to be realised.
The report has also raised questions over the functioning of J&K’s 42 public sector enterprises. As of March 31, 2023, there were 42 PSEs under CAG audit jurisdiction, including 39 government companies, two statutory corporations and one government-controlled company.
Of these, six were inactive and 36 were active. Power accounted for 78 per cent of total investment in the UT’s public sector enterprises. Eleven enterprises were profit-making according to their latest finalised accounts, while 20 reported losses totalling Rs 252.53 crore. The net worth of 14 PSEs had been completely eroded by accumulated losses.
The reported profit of the PSEs, however, rose to Rs 1,286.79 crore in 2022-23 from Rs 566.10 crore in 2021-22. The CAG noted that only J&K Bank among the PSEs had declared or paid a dividend.
The audit has recommended that the UT Government take an early decision on liquidation of inactive PSEs, which it said were neither contributing to the economy nor meeting the objectives for which they were established, and take remedial measures to improve the performance of loss-making enterprises.
The report also found substantial delays in the submission of accounts by public sector enterprises. Of 34 PSEs whose accounts for 2022-23 were due for audit, only four had presented their financial statements to the CAG by September 30, 2023. Nineteen PSEs had accounts in arrears for three years or more, while the accounts of the J&K Road Transport Corporation and J&K and Ladakh Financial Corporation were in arrears for two years or more.
Corporate governance was another area of concern. Of 33 PSEs reviewed, ten were required to appoint independent directors, but only J&K Bank had appointed the required number during 2022-23. Similarly, only J&K Bank had constituted the required Audit Committee and Nomination and Remuneration Committee among the ten enterprises required to do so.
Only two of eight eligible enterprises had appointed a whole-time company secretary. Nine of the 33 PSEs conducted the required number of board meetings, while 24 did not conduct their annual general meetings during 2022-23.
The CAG also found shortcomings in corporate social responsibility. Of nine PSEs that met the statutory criteria for undertaking CSR activities, only four had constituted CSR committees and framed CSR policies. Seven were required to incur CSR expenditure in 2022-23, but only three actually incurred such expenditure.
A separate IT audit of the Integrated Financial Management System revealed that the system, initiated in March 2010, remained substantially incomplete more than a decade later. As of March 2023, only four of the 12 proposed modules were fully operational.
The CAG said deficiencies in the business process re-engineering exercise and failure to revise the detailed project report in accordance with Government of India instructions resulted in J&K losing central assistance of Rs 11.88 crore for implementation of IFMS. It also found that Rs 5.26 crore earmarked for upgrading the State Data Centre remained misutilised, while the IFMS applications were hosted on the NIC Mini Data Centre at Jammu without a supporting backup site.
The audit further found shortcomings in data validation in the BEAMS and JKPaySys modules and a lack of integration between key financial applications, including BEAMS and TreasuryNet. According to the report, these weaknesses resulted in excess expenditure over allocation and left the system susceptible to unauthorised modifications in bill particulars.
The CAG also flagged the absence of robust logical access controls, effective password recovery mechanisms and comprehensive transaction logs. The system did not provide a complete trail showing who inserted or modified records, while the absence of a comprehensive disaster recovery and business continuity plan exposed financial data to risks arising from cyberattacks and operational disruptions.
The report noted that administrative control of IFMS had not been taken over by the Directorate General of Audit and Treasuries even after more than 12 years. It also found that, except for TreasuryNet in 2011, user acceptance testing had not been carried out, while the department had failed to secure certification from the Standardisation Testing and Quality Certification agency.
The CAG has recommended, among other measures, stronger project planning and monitoring, timely release and utilisation of funds, completion of statutory and technical approvals before execution, improved corporate governance in PSEs and a comprehensive overhaul of IFMS, including role-based access controls, multi-factor authentication, audit trails and disaster-recovery arrangements.
