The Comptroller and Auditor General of India (CAG) has flagged deficiencies in the planning, implementation, land management, financial management and operations of Bengaluru Metro’s Phases 1 and 2, including a Rs 6,603.39 crore increase in land acquisition costs and significantly lower-than-projected ridership.
The findings are part of the CAG’s Performance Audit Report No 7 of 2026 on the implementation of Phase 1 and Phase 2 of the Bangalore Metro Rail Project by Bangalore Metro Rail Corporation Limited (BMRCL), which was placed in Parliament on Monday, August 10.
BMRCL is a 50:50 joint venture between the Government of India and the Karnataka government. Phase 1, covering 42.30 km, became fully operational in June 2017 after commercial operations began in stages from October 2011. Phase 2 operations began in stages between January 2021 and March 2023 for 27.36 km, with the remaining length planned for completion by December 2026.
The audit covered planning, implementation, monitoring and operations of Phases 1 and 2, excluding Phases 2A and 2B, from their inception up to March 2021. Selected contracts were reviewed up to March 31, 2023, according to an official press release.
On planning and technology selection, the CAG noted that the detailed project reports for Phase 2 were prepared without a Comprehensive Mobility Plan, Transit Oriented Development policy or Land Use Policy.
It also found that the Peak Hour Peak Direction Traffic achieved in 2021 for Phase 1 was far below projections, ranging between 6,429 and 8,852 passengers against the 15,000 benchmark. Despite the low ridership, there was no study examining how passenger numbers could be increased to justify investment in Heavy Metro.
The CAG further said the Financial Internal Rate of Return and Economic Internal Rate of Return for Phases 1 and 2 were calculated using ridership figures that appeared to have been overestimated. No detailed study had been undertaken to understand the reasons for low ridership.
The audit also flagged significant shortcomings in land management. BMRCL acquired 62.67 hectares against the projected 45.24 hectares for Phase 1, while it acquired 145.16 hectares against the projected 165.09 hectares for Phase 2. The latter figure included 55 hectares proposed for property development, which had not been acquired as of March 2023.
According to the CAG, improper land estimation and delays in acquisition increased land acquisition costs by Rs 6,603.39 crore — Rs 835.81 crore for Phase 1 and Rs 5,767.58 crore for Phase 2.
The audit also found that BMRCL used non-agricultural land rates for some agricultural land or added attributes applicable to converted land, resulting in excess compensation of Rs 294.72 crore. An additional Rs 186.86 crore was paid as interest at 12% due to delays in issuing final notifications for land acquisition beyond the prescribed 270-day period.
In Phase 2, the use of higher-than-prescribed percentages for certain property attributes resulted in excess compensation of Rs 31.35 crore, the CAG said.
On project execution and contract management, the audit found that BMRCL did not have a Procurement Manual. It also flagged a lack of uniformity in cost estimates and absence of established guidelines on project duration, package size, tender document sale periods, advances to contractors and interest rates on advances.
Taxes amounting to Rs 1,098.28 crore were included in cost estimates of nine civil contracts, increasing project costs by Rs 1,222.40 crore. The audit also found delays in handing over land in 13 contracts, ranging from 12 to 1,305 days, against an allowable period of 90 days.
The CAG also raised concerns over BMRCL’s financial position. Due to insufficient revenue to meet external debt repayment obligations amid continuous cash losses between 2013-14 and 2021-22, BMRCL was completely dependent on the Karnataka government to service project debt as of March 31, 2023.
Property development, which was expected to generate additional revenue, also faced implementation gaps. Of eight identified parcels covering 42.60 acres under Phase 1, only one property, measuring 14 acres, had been developed.
Under Phase 2, income projections of Rs 21,282 crore between 2016-17 and 2041-42 were based on property development on an additional 55 hectares of land that had not been acquired as of March 2023.
The CAG also found that of the 2.46 lakh square feet of built-up area developed at Metro stations for property development, 2.23 lakh square feet had remained vacant for years. This resulted in a loss of potential lease-rent revenue of Rs 38.53 crore between 2019 and 2022.
On operations, the audit found that BMRCL earned Rs 1,758.13 crore in farebox revenue between 2016-17 and 2022-23, just 22.72% of the projected Rs 7,736.70 crore.
The CAG attributed the failure to achieve projected ridership and PHPDT levels even by 2023 to factors including the lack of integration between Metro and the Bengaluru Metropolitan Transport Corporation, inadequate last-mile connectivity and insufficient parking facilities.
It also found that feeder services were poorly organised and lacked connectivity with interior residential areas.
The audit noted that daily BMTC bus footfall fell from 51.30 lakh in 2014-15 to 27.49 lakh in 2022-23. Even after the introduction of Metro, the combined ridership of BMTC buses and Metro remained lower than the earlier BMTC bus ridership, indicating that the Metro had not attracted enough private vehicle users to increase overall public transport ridership.