New housing scam in Karnataka: Contractors get funds, but beneficiaries get work

India Today

8 hours ago

A large-scale housing scam has come to light in Karnataka's Haveri district, where contractors allegedly received payments from the Housing Department for the construction of homes, but made beneficiaries build the structures themselves. This came to the fore during a recent meeting held with Haveri district in-charge Minister Shivanand Patil, who then ordered an official inquiry into the matter. The findings, accessed exclusively by India Today, are based on an official inspection report submitted to the Deputy Commissioner in May 2025.advertisementThe Housing Department, acting on behalf of the Karnataka Slum Development Board, had been tasked with constructing housing units in Haveri district under the Pradhan Mantri Awas Yojana - Housing for All (PMAY-HFA) scheme. According to protocol, the department is meant to complete construction and hand over the homes to the Slum Development Board, which in turn allocates them to beneficiaries.However, the inspection report submitted to the Deputy Commissioner in May 2025 reveals widespread irregularities across Savanur, Shiggaon, and Bankapur taluks. Many contractors reportedly informed beneficiaries that they would only be providing building materials and labour equivalent to 350 square feet, with the onus of actual construction falling on the beneficiaries. Even this support was only partially provided in many cases, with materials supplied only up to 50 per cent and labour charges left unpaid.advertisement
In Savanur, where 696 houses were sanctioned at a total cost of Rs 43.71 crore, 545 houses were completed while 151 were still in progress. Work began in October 2021 and was executed by M/s Nakshatra Infrastructure under contractor Selvi Shanmuga. Although Rs 28.97 crore has been released so far and Rs 10.54 crore disbursed to 527 beneficiaries under the Gruha Bhagya scheme, the report notes that many homes remain incomplete. During site inspections, officials found that plastering and electrical connections were still pending, and the actual construction was carried out by beneficiaries themselves with only partial assistance.In Bankapur, 454 houses were sanctioned with an estimated cost of Rs 27.76 crore. Contractor G Chandregouda began work in October 2021. At the time of the inspection, only 100 houses were completed, 154 were still under construction, and 200 were pending due to site clearance issues. Financial progress stood at Rs 12.32 crore, of which Rs 7.57 crore had been released. Rs 3.74 crore was disbursed to 187 beneficiaries under Gruha Bhagya. Here too, the same pattern was reported: beneficiaries received partial material, no labour payment, and electricity was unavailable in several homes. Some beneficiaries had built homes beyond the approved size, reportedly without official support.advertisementShiggaon had two packages of housing works. In the first package, 500 houses were sanctioned at a cost of Rs 26.54 crore, with work starting in July 2021 by contractor Krishnamurthy & Co. While 474 houses were completed and 26 remained in progress, only Rs 17.92 crore had been released out of a financial target of Rs 25.35 crore. Rs 3.42 crore was distributed to 171 beneficiaries. Here too, contractors were reportedly absent during inspections. Beneficiaries said they built the houses themselves with partial support and no labour cost provided. Despite construction, several homes had no electricity, with contractors unresponsive to complaints.In the second package for Shiggaon, 350 houses were sanctioned with a budget of Rs 20.77 crore. Contractor TN Paramesh of Chair Ventures LLP began work in July 2021. As per the report, 160 houses were completed and 190 were in progress, with Rs 11.96 crore released and Rs 4.65 crore disbursed to 242 beneficiaries. The inspection found similar concerns: contractors were missing from the sites, beneficiaries reported incomplete support, and officials were informed on the spot of the lack of contractor engagement.Across the three taluks, the report identifies a consistent pattern of malpractice: contractors allegedly billed the full amount while providing only partial materials, failed to pay labour charges, and often remained absent or unresponsive. Beneficiaries were left to complete construction on their own, sometimes building beyond the approved area. Basic amenities such as plastering and electricity connections were often missing.advertisementThe official report, dated May 8, 2025, was submitted by the Sub-Divisional Officer of Savanur along with Executive Engineers from the Public Works Department, Panchayat Raj Engineering Division, Rural Water Supply and Sanitation Department, and the Karnataka Slum Development Board. The report called for necessary action and was sent to the Deputy Commissioner of Haveri for further proceedings.The revelations come in the wake of a political storm triggered by a leaked audio clip purportedly featuring Congress MLA BR Patil in which he accuses officials of the Rajiv Gandhi Housing Corporation of large-scale corruption, including bribery in house allotments.In the clip, Patil is heard accusing officials linked to the Rajiv Gandhi Housing Corporation of widespread corruption, alleging that houses were allotted only to those who paid bribes. He also claims that recommendation letters from elected representatives were routinely ignored. The conversation is reportedly between Patil and Sarfaraz Khan, personal assistant to Housing Minister Zameer Ahmed Khan.- Ends
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