‘Exorbitant Profits on Operator Wages, Excess Spending’: CAG Flags Irregularities in Use of Funds in Updating Process of Assam NRC

A CAG report about the updating process of the National Register of Citizens (NRC), which was tabled in the Assam legislative assembly on Saturday, has flagged several irregularities including exorbitant profits on operator wages to the tune of crores as well as haphazard development of software risking data security.

The auditor has suggested penal action against the system integrator, Wipro Ltd, and accountability fixed against the state coordinator for the NRC. Assam chief minister Himanta Biswa Sarma said appropriate action will soon be taken.

The compliance audit, conducted on the accounts of the state coordinator for the NRC and covering the period from December 2014 to December 2019, covered contract management and expenditures incurred on different activities in the updating process of the NRC.

Here are the findings of the CAG report:

  1. Exorbitant profit of Rs 155.83 crore on operator wages
  2. A contract deviation resulted in unauthorised expenditure of Rs 10.20 crore for the evaluation of third-party monitoring consultants and an excess expenditure of Rs 1.78 crore for process management expenses
  3. Excess expenditure on generators, hardware, and consumables
  4. Temporary misappropriation of Rs 1.20 crore against 128 additional generation sets
  5. Misappropriation of the development of software applications
  6. Deviation from RPF – an acceptance of multiple change requests indicating the haphazard development of new software, applications, or utilities
  7. Misappropriation to the tune of Rs 7.10 crore in the software development change report
  8. Haphazard development of NRC software with risk to confidentiality and integrity of data
  9. Irregular expenditure amounting to Rs 9.01 crore on doubtful data movement to NSK.

What went wrong?

The NRC in Assam commenced in December in 2014 with the initial project cost of Rs 288.18 crore with a deadline to be completed within 14 months in February 2016. The timeline for the project, however, kept extending leading to the publication of the final draft in August 2019.

The project’s cost increased from Rs 288.18 crore to Rs 1,602.66 crore by March 2022 due to time overruns and a significant change in the scope of the originally conceptualised NRC updating software. A test check of records by audit disclosed various irregularities in the use of funds, including excess and unallowable payments to vendors.

In the NRC updating process, highly secure and reliable software was required to be developed; the audit, however, observed a lack of proper planning and haphazard changes to the core software. These were done without following due process in either software development or the selection of vendors through eligibility access following a national tendering process, the report stated.

Haphazard development of software and utilities for NRC data capture and correction posed the risk of data tampering without leaving any audit trail. The audit trail could have ensured accountability for the veracity of NRC data.

The intended objective of preparing a valid error-free NRC has not yet been met despite direct expenditures of Rs 1,579.78 crore as well as the manpower cost of the deployment of a large number of government servants ranging from 40,000 to 71,000.

What has CAG recommended?

The CAG has recommended penal action against the system integrator, Wipro Ltd, for paying operators less than the minimum wage. The accountability of the SCNR, as the principal employer, should also be fixed for not ensuring compliance with the Minimum Wage Act.

The legal battle

Assam Public Works (APW), an NGO and key petitioner in the NRC case, had earlier mentioned that the accountant general of Assam earlier revealed that Wipro Ltd of (Assam, Northeast) was involved in misappropriating a huge amount of public money during the updating of the NRC, which was published in August 2019.

The NGO has written a letter to Azim Premji, chairperson of Wipro Technologies, informing him of the company’s role in the updating process of the NRC in Assam during the period 2015-2019. Wipro was entrusted with being one of the prime software installation companies by the then NRC directorate headed by coordinator Prateek Hajela.

According to APW, based on an RTI response, a bill of Rs 1.27 crore was submitted by Wipro (system integrator) for procurement of ‘Oracle Standard One Edition’ and ‘Oracle Intelligence Server Enterprise Edition’, which was paid from February to August 2017.

But in the ground report of National Institute of Smart Governance (NISG), submitted to the office of the accountant general of Assam, no such system was installed and used for updating the NRC in the state. The amount was cleared by the then NRC directorate by indulging in conspiracy and mutual understanding with Wipro Ltd, as is revealed from the report.

APW had also filed a police complaint against Hajela and Wipro citing massive corruption in the NRC updating process. In mid-2022, the Assam National Register of Citizens (NRC) Authority registered a case against Hajela. The FIR filed with the Criminal Investigation Department or CID also names some other officials and staff involved in the NRC updating exercise.

The outgoing NRC state coordinator, Hitesh Dev Sarma, had accused Hajela and others of “criminal and anti-national activities”. In his letter to the CID, he mentioned that in the NRC updating exercise, the “family tree matching” procedure was adopted to check fraudulent practices used to make false linkage claims with persons residing in Assam before 1971.

Since the NRC updating exercise involved large manpower, a provision for quality checks to avoid erroneous entries in the NRC before ‘family tree matching’ was introduced. But the procedure did not have any quality check system.

Sarma alleged that the software was deliberately designed to avoid quality checks and accused Hajela of intentionally doing this, which in turn, gave a free hand to some officials for including doubtful citizens in the NRC list. According to him, this can be seen as an anti-national act affecting national security.

Hajela was also accused of violating a Supreme Court order in 2018, which did not permit the NRC state coordinator to review the office verification of documents already completed for 24,89,745 people. But the letter to the CID stated that Hajela allowed the review exercise defying the top court’s directive.

In September 2019, the Assam police registered two cases against Hajela and some unidentified officials over allegations of discrepancies in the NRC list. The data of the Assam NRC lists published in 2019 has not yet been officially notified by the Registrar General of India.

On August 13, 2019, the SC – which is monitoring the Assam NRC process – directed that an “appropriate regime be enacted on lines similar to the security regime provided for Aadhaar data”.

The final NRC list in Assam, published in August 2019, had found more than 31.1 million people eligible to be included. But it had left out over 1.9 million people, setting off a massive controversy.

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