Rs 6,770 crore audit gaps in local bodies

CHENNAI: Tamil Nadu's local bodies are facing a staggering Rs 6,770.79 crore in audit observations for 2024-25, with the Local Fund Audit Department flagging revenue leakages, mounting deficits, property-tax lapses and procurement violations across the Greater Chennai Corporation (GCC) and other urban local bodies.

The Greater Chennai Corporation fared badly with an income of Rs 4,431.80 crore against expenditure of Rs 5,295.01 crore in 2024-25, resulting in an annual deficit of Rs 863.21 crore. Its accumulated deficit stood at Rs 3,567.52 crore as of March 31,

The department raised 1,82,450 audit observations during the year, but only Rs 1.28 crore had been recovered in cash against objections settled as of May 31, 2026. Of the 4,229 institutions due for audit, scrutiny was completed in 4,217.

The audit identified seven major GCC observations totalling Rs 2.76 crore, including tender-procedure violations, delays in property-tax assessment and in the revision of demands, payments for road renovation work, deployment of conservancy workers for office duties, excess payment to a contractor, and expenditure on closed Micro Compost Centres.

Procurement practices also came under the scanner. The audit questioned Rs 20.09 crore spent through quotation-based procurement and execution of works in GCC zones and schools, instead of the open e-tender process prescribed under the Tamil Nadu Transparency in Tenders Act and Rules.

Procurement for the Chief Minister's Breakfast Scheme was also flagged. The audit found that vegetables and other raw materials were procured through quotations rather than directly from the designated government agencies, as prescribed. The GCC maintained that the purchases were made through the Tamil Nadu Civil Supplies Corporation and the Tamil Nadu State Palm Jaggery and Fibre Sales Cooperative Federation, citing Chief Secretary's guidelines. The objection remains pending for government orders.

The financial strain was not confined to Chennai. The 24 other city Municipal Corporations together recorded Rs 6,200 crore in revenue against Rs 7,560.81 crore expenditure, resulting in a combined annual deficit of Rs 1,360.80 crore. Their accumulated deficit stood at Rs 1,526.35 crore, while debt liability stood at Rs 3,055.24 crore, and recoverable tax stood at Rs 2,420.09 crore.

A key audit finding involved an estimated Rs 389.55 crore revenue loss across corporations due to the short collection of water supply and underground sewerage charges, with commercial and industrial buildings allegedly being charged residential rates.

Avadi was separately flagged for failing to levy property tax from the half-year in which CMDA completion certificates were issued, resulting in a reported revenue loss of Rs 75.71 lakh.

The audit also found cases where collections through cards, cheques and demand drafts were either not credited or short-credited to Corporation accounts. The combined amount involved in the affected corporations was Rs 2.54 crore, with Tambaram among those flagged.

There were wide differences in the financial performance of the 24 corporations. Tambaram recorded an annual surplus of Rs 168.78 crore and an accumulated surplus of Rs 573.52 crore, while Avadi posted an annual deficit of Rs 31.21 crore despite an accumulated surplus of Rs 31.66 crore. Several other corporations ended the year with both annual and accumulated deficits.

The report also recorded an annual deficit of Rs 527.86 crore and an accumulated deficit of Rs 3,007.56 crore among 137 municipalities.