Unfruitful Expenditure 3.1

Last modified at 10/06/2016 16:29 by Vanijyasachivalaya

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​​​​​​CAG Audit Para 2014-15  : 3.1 Unfruitful expenditure


Absence of a detailed project report, diversion of funds, non-procurement of necessary equipment , etc. resulted in failure in setting up of Gems and Jewellery Training Institute leading to unfruitful expenditure of  Rs. 2.01 crore.

Government of Karnataka (GoK) approved (January 2008) establishment of a Gems and Jewellery Training Institute and Park at Bengaluru and Karwar under Public-Private Partnership (PPP) model to be implemented by Karnataka Small Scale Industries Development Corporation Limited (KSSIDC) and released (March 2009) Rs. 1.01 crore for the training component of the project.  The efforts made by KSSIDC to find private players did not materialise and hence it decided (March 2010) to refund the amount to Government.  The Government Tool Room and Training Centre (GTTC) which was in the field of imparting industrial training programmes offered to take the responsibility for training and implementation of the project in co-ordination with KSSIDC.  The Government accepted (October 2010) the proposal and issued orders for transfer of Rs. 1.01 crore from KSSIDC to GTTC and also released an additional amount of Rs. one crore as per the estimate submitted by the GTTC.  The project cost of Rs. 2.01 crore comprised procurement of computer hardware, software, jewellery laboratory equipment, metrology equipment, furniture, etc.  GoK also stipulated that KTPP Rules  be followed for procurement.
The details of procurement and payment made are given in Table 3.1:

Table 3.1: Procurement and payment details of computer materials

Sl No Description                                           Supplier                           Quantity                                        Amount paid (Rs. in lakh)
1         Siemens PLM  jewellery design software   Meksol India                                 40                                                              49.00
2         DELL Workstations                                   Sam Infoways India Pvt Ltd         40                                                              35.78
3         DELL Laptops                                           Computer Indya                         25                                                              11.90
                TOTAL                                                                                                                                                                              96.68

The jewellery laboratory equipment, metrology equipment, furniture, etc., were not procured. The Governing Council of GTTC (GC) decided (May 2011) to discontinue the establishment of jewellery training institute at Bengaluru and instead suggested the project be taken up as a joint venture with industry association on PPP model because of financial crunch.  The GC proposed (February 2012) setting up of a sub-centre at Mangaluru, in place of Bengaluru, due to space constraints which was approved by the Government in September 2012.  The equipment was accordingly shifted to Mangaluru in November 2014.
Audit scrutiny (September 2014) of records revealed the following:

The computer hardware was procured from different firms without following competitive bidding process as required under the KTPP rules.  

The establishment of the institute was sanctioned without a detailed project report.  No survey was conducted to assess the demand for or requirement for a Gems and Jewellery Training Institute.  Due to lack of planning, the PPP model of implementation had to be scrapped and GoK had to release additional funds. 

Project funds amounting to Rs. 1.04 crore meant for procuring essential equipment were unauthorisedly diverted to meet establishment expenditure. 

Out of 40 workstations procured (October 2010), 10 workstations each were initially supplied to Mangaluru and Belagavi institutes even though they were not approved centres as per the original scheme.  The delivery pattern was indicative of skewed planning.

The Siemens PLM jewellery design software was procured at a cost of ​  Rs. 49 lakh on the basis that it was being used by private jewellery making firms and also by private training institute.  However, Audit noticed that private training institute was imparting training using Rhinocerous and Matrix software.  The Siemens PLM software is commonly used for CAD/CAM application software for imparting training in tool and die making, sheet making and could also be used for jewellery designing. Thus software was purchased without assessing proper requirement.

GTTC procured 25 laptops (cost Rs. 11.90 lakh) which were not as per the requirement.  It was stated that the laptops were being used by officers of the institute.  Thus, the project funds were diverted for other purposes.

The establishment of a jewellery training institute (sub-centre) at Mangaluru did not serve any purpose as there were no takers for the jewellery training programmes offered, thereby rendering the expenditure of Rs. 2.01 crore unfruitful.

On this being pointed out (May 2015), Government stated (October 2015) that it was decided to establish the Gems and Jewellery Centre at Mangaluru since sufficient space was not available in GTTC Bengaluru Centre.  It also stated that efforts were made to conduct Gems and Jewellery design training programmes using computers and software procured for this purpose, but there was no response from the candidates to undergo training.  However, the workstations and software would be used to train Diploma students.  The reply clearly establishes the fact that the project was ill-conceived without proper planning. Even after setting up of the centres, publicity measures were not undertaken to attract potential persons to get training.

Thus, absence of a detailed project report, diversion of funds and poor implementation resulted in non-fulfillment of the objective of establishing a Gems and Jewellery Training Institute even after seven years of sanction by the Government, which resulted in unfruitful expenditure of Rs. 2.01 crore.

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