Karnataka government incurred a loss of ₹47.76 crore between 2018-19 to 2022-23 due to the procurement of goods at a higher rate without analysing the market rate, said an audit of the transactions and procurements conducted by the Indian Audit and Accounts Department, pointed out IT/BT Minister Priyank Kharge and KEONICS chairperson Sharath Kumar Bache Gowda.

Addressing a press conference on Wednesday, they cited the audit report, which pointed to the procurement of various items by various client departments of the State government at inflated rates between 38% to 1577%, which resulted in undue benefit to the vendors and extra expenditure to client departments.

The release of this document comes amid accusations of delays in payments made by the vendor community against the State government. In this regard, they recently wrote to President Droupadi Murmu and Prime Minister Narendra Modi. Mr. Kharge and Mr. Gowda blamed the previous BJP government for this financial mismanagement and said that the present government was trying to correct it.

The audit report stated that a payment of ₹76.5 crore was made without conducting third-party inspection during the period between 2018 and 2023. In fact, third-party inspection is mandatory with respect to all goods and equipment contracts estimated to cost more than ₹50 lakhs. However, on scrutiny of records it was observed that out of 304 test checked tenders, in 162 tenders a payment of ₹76.55 crore was made without conducting the third party inspections. That means more than 50% of the tenders were paid without a third-party inspection or confirmation of the delivery of the goods, the study found.

The audit also found several other discrepancies. Some payments were made, and bills were accepted based on forged and fake third-party inspection reports. This resulted in irregular payments of ₹.9.98 crore for the non-supply/supply of low-quality materials.

‘’It is clear from the above the vendor has drawn that money by creating fake delivery challans/false third-party inspection reports, and materials were supplied after receipt of the payment. It is evident from the above that both the vendors that the vendors have drawn the amount by submitting fake delivery challans and false third party inspection reports,’‘ observed the study released in response to vendors’ allegations.

The audit also suggested that action may be taken against the third-party inspector for submitting an inaccurate third-party report based on which the government departments made wrong payments.

In respect of the procurement of the “digital learning classroom”, they have fixed the basic rate as ₹5,10,000 instead of ₹4,25,500, which the Department of Minorities approved. As standard practice, the vendors quoted ₹4,84,500, i.e. 5% less than the basic rate of ₹5,10,000. For the total quantity of 192 digital learning classrooms, KEONICS paid ₹ 9,30,24,000 to the vendor. ‘‘It was noticed that there was no basis on which the basic rates were calculated, and also, the reason for the adoption of a higher rate was not on record. Hence, adoption of a higher rate has resulted in excess payment of ₹1,55,04,000 to the vendor and therefore an extra burden to the state exchequer,’‘ the report stated.

In connection with the procurement of some other items, it was found that within a span of six months, the difference in the rates ranged from 12% to 88%. ‘‘Adopting an inflated rate has resulted in an excess burden of ₹2 crore to the government which requires justification,’‘ the audit remarked.