LUCKNOW, Feb. 20 -- The Comptroller and Auditor General (CAG) report tabled in the Uttar Pradesh legislative assembly on Thursday has highlighted major shortcomings in the functioning of the Uttar Pradesh State Industrial Development Authority (UPSIDA), pointing to its operations without approved regulations, irregularities in evaluation of bidding documents, awarding of contracts, and allotment of plots without obtaining financial details or prescribing minimum qualifying marks. The report covers the period from 2017-18 to 2021-22 (updated up to March 2024). The CAG noted that the UPSIDA, which was formed on September 5, 2001 to address difficulties faced by the UP State Industrial Corporation Limited and ensure planned development of industrial areas, did not exercise adequate internal financial controls. The CAG observed instances of deficiencies in decision-making regarding loans (Rs.41 crore taken from the UP government and Rs.450 crore from Noida) and unsecured loans of Rs.52.84 crore granted to two public sector undertakings. Regarding awarding of contracts, the CAG pointed out that 27 contract bonds valued between Rs.1.01 crore and Rs.63.41 crore were awarded to contractors without assessing their bidding capacity. Of these, 11 works were completed with delays ranging from 61 to 2,612 days, while 14 works, incomplete till March 2024, were delayed by 648 to 2,678 days. It was also noted that UPSIDC (later converted into an authority), in its 298th board meeting (January 2018), acknowledged that work could not be executed properly due to award of high-value works to contractors with lower capacity. The CAG further noted that UPSIDA introduced a lenient liquidated damages (LD) clause compared to the UP public works department (UPPWD) in contract bonds executed with contractors. "Due to this, it could withhold a maximum of only one percent of the contract bond value instead of 10 percent," according to excerpts of the CAG observations. "...UPSIDC awarded 13 contracts valuing Rs.143.22 crore of two selected construction divisions. without verification of .experience certificates. Later, these certificates were suspected (June 2017) fake resulting in cancellation (July 2017) of awarded contracts. Similarly, UPSIDC awarded (January 2017) two contracts valuing Rs 112.53 crore. without verification of experience certificates and Fixed Deposit Receipt (FDR). Later, these certificates were suspected to be fake resulting in cancellation (January 2018) of awarded contracts." UPSIDA accepted the observations, and the state government stated (July 2024) that FIRs had been registered and contracts rescinded. Recovery proceedings were initiated against one of the builders and recovery of Rs.139.28 lakh out of Rs.1,265.46 lakh was made, while recovery of the remaining amount was in progress. On allotment of industrial plots, the CAG noted that plots were allotted to ineligible applicants in violation of guidelines. UPSIDA (including UPSIDC) allotted 1,585 industrial plots, plots under five residential schemes and six commercial plots during 2017-18 to 2021-22. Of these, 177 industrial plots, four residential schemes and six commercial plots were selected for detailed examination. The CAG noted that UPSIDC allotted industrial plots on the basis of interviews of applicants (up to June 13, 2017). It was not provided the minutes of the interview committee in the case of two plots, recommendations of the project evaluation committee (PEC) in the case of 21 plots and headquarters committee records in the case of four plots out of the 177 sampled industrial plots. The operation manual (Industrial Area), 2011 stipulates that applications for allotment of land must be complete in all respects and applicants should provide documents supporting financial strength, technical expertise and past experience at the time of interview. The CAG further noted that an applicant in Mathura did not provide project details or means of finance. Despite the incomplete application, the interview committee (May 2017) recommended allotment of the plot. The audit also found no criteria or mechanism to assess the financial strength of applicants. It cited cases in Kosi Kotwan (Mathura) where the total annual income of applicants (in two plots) was Rs.7.24 lakh and Rs.6.36 lakh respectively against proposed project costs of Rs.41.53 crore and Rs.40.25 crore. The report noted that none of the applicants deposited the reservation money (Rs.6.95 lakh each) within 30 days after allotment on February 27, 2020. In another case at Kosi Kotwan, the applicant declared a net worth of only Rs.1.04 lakh against a project cost of Rs.300 crore. However, allotment (March 31, 2021) of the plot and time extension up to September 30, 2024 were granted to the applicant to set up the unit. The CAG has provided separate details of allotment of industrial plots to ineligible applicants....