The Comptroller and Auditor General of India (CAG) has flagged a series of planning, land management, financial and operational lapses in Bengaluru’s metro rail project. The audit also pointed to billions of rupees in additional costs and lower-than-expected ridership, as per CAG’s official release.
The findings are part of 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). The report was presented in the Parliament on Monday.
BMRCL is a 50:50 joint venture between the Centre and the Karnataka government. Phase 1 became fully operational in June 2017 over 42.30 km, while parts of Phase 2 became operational between January 2021 and March 2023. The remaining Phase 2 work is scheduled for completion by December 2026.
Ridership never justified the investment
The CAG found that Phase 2 Detailed Project Reports (DPRs) were prepared without a Comprehensive Mobility Plan, Transit Oriented Development framework or Land Use Policy.
The audit also found a substantial gap between projected and actual passenger demand. Peak Hour Peak Direction Traffic (PHPDT) for Phase 1 in 2021 was projected at more than 15,000 but the actual figure ranged between 6,429 and 8,852.
Despite the shortfall, no study was carried out to establish how ridership could be increased enough to justify investment in a heavy metro system, the CAG said.
The audit further observed that ridership figures used to calculate the Financial Internal Rate of Return (FIRR) and Economic Internal Rate of Return (EIRR) appeared to have been overestimated, as the projected passenger numbers were not achieved. BMRCL also did not undertake a detailed study to determine the reasons for low ridership.
Land acquisition cost blowout — Rs 6,603 crore
The CAG found that land requirements for the metro corridors were not properly assessed while preparing the DPRs.
For Phase 1, BMRCL acquired 62.67 hectares against a projected requirement of 45.24 hectares. For Phase 2, it acquired 145.16 hectares against a projected 165.09 hectares. The latter figure included 55 hectares proposed for property development, which had not been acquired as of March 2023.
According to the audit, improper land estimation along with delays in acquisition increased the cost of land acquisition by Rs 6,603.39 crore as of March 2023. This included Rs 835.81 crore for Phase 1 and Rs 5,767.58 crore for Phase 2.
Landowners overpaid?
The audit identified multiple instances where compensation paid for land acquisition exceeded what was considered appropriate.
BMRCL applied non-agricultural land rates to agricultural land in some cases, or added attributes applicable to converted land. This resulted in excess compensation of Rs 294.72 crore being paid to landowners.
The corporation also paid Rs 186.86 crore as additional compensation in the form of 12% interest because final notifications for land acquisition were issued after the prescribed 270-day period.
In Phase 2, the audit found that higher percentages were applied to properties having features such as frontage or two roads, beyond the limits prescribed by the Karnataka government. This resulted in another Rs 31.35 crore being paid as excess compensation.
Tax calculation added Rs 1,222 crore to project cost
The CAG also flagged shortcomings in BMRCL’s contract management and cost estimation practices.
The corporation did not have a Procurement Manual and lacked uniform procedures for preparing cost estimates. There were also no established guidelines for determining project duration, package size, the period for sale of tender documents or the release of advances to contractors and interest rates on such advances.
BMRCL included taxes worth Rs 1,098.28 crore in the estimates of nine civil contracts, which resulted in an increase of Rs 1,222.40 crore in project cost, according to the audit.
The CAG also found delays in handing over land in 13 contracts, ranging from 12 days to 1,305 days beyond the permissible 90-day period.
BMRCL remains dependent on Karnataka government
The audit found that BMRCL remained dependent on the Karnataka government to service the debt raised for the metro project because of insufficient revenue and continued cash losses.
Between 2013-14 and 2021-22, the corporation incurred continuous cash losses, leaving it unable to meet external debt repayment obligations from its own revenue.
The CAG also highlighted weak non-fare revenue generation. While BMRCL’s non-fare revenue as a proportion of actual farebox revenue ranged from 8.85% to 49.54%, its non-fare revenue compared with the projected farebox revenue was only between 1.39% and 8.62%.
Vacant metro station space costs Rs 38.53 crore in lost revenue
The audit also flagged poor utilisation of commercial opportunities around the metro network.
BMRCL developed 2.46 lakh sq ft of built-up space at metro stations for property development, but 2.23 lakh sq ft remained vacant for years. This resulted in an estimated loss of Rs 38.53 crore in lease-rental revenue between 2019 and 2022.
The CAG also noted that BMRCL did not have an Asset Management Policy to guide the monetisation of vacant station spaces and other areas identified for property development.
In Phase 1, only one of eight identified property development parcels, covering 42.60 acres in total, had been developed. For Phase 2, BMRCL had projected income of Rs 21,282 crore from property development between 2016-17 and 2041-42, including development on an additional 55 hectares of land that was yet to be acquired as of March 2023.
Metro failed to lift overall public transport ridership
The CAG also highlighted a broader concern over the metro’s ability to increase overall public transport usage in Bengaluru.
BMRCL failed to achieve the projected ridership and PHPDT even by 2023, with the audit attributing the shortfall to factors including the lack of integration between the metro and Bangalore Metropolitan Transport Corporation (BMTC), inadequate last-mile connectivity and insufficient parking facilities.
The feeder services connecting the metro with interior residential areas were also found to be poorly organised.
At the same time, BMTC’s daily bus ridership fell from 51.30 lakh passengers in 2014-15 to 27.49 lakh in 2022-23. The CAG noted that even the combined ridership of BMTC buses and the metro remained lower than BMTC’s bus ridership alone before the metro’s expansion.
The finding indicates that the metro has not attracted enough private vehicle users to produce an overall increase in public transport ridership, according to the audit.