Performance Audit on Welfare of Building and Other Construction Workers in Karnataka

The Building and Other Construction Workers (BOCW) Act, 1996 mandates registration of construction workers and provides for welfare schemes (housing, health, education, pension, accident relief). A BOCW cess of 1 per cent is levied on the cost of construction works. Karnataka's BOCW Welfare Board is funded by this cess. The CAG audited the collection of cess and delivery of welfare benefits during 2018-19 to 2022-23. The headline finding is pervasive financial mismanagement: ₹18.12 crore in cess dues accumulated in uncashed cheques and demand drafts since 2007-08 — indicating the Board failed to deposit its own receipts for up to 15 years. The Board also released ₹433.80 crore to the Karnataka Slum Development Board (KSDB) without obtaining utilisation certificates for even ₹76 crore of previous releases. ₹258.80 crore was spent on Preventive Health Care schemes in an unauthorised manner — without any Act or Rule permitting such expenditure. Against a budget provision of ₹10,154.45 crore during 2018-23, the Board incurred expenditure of only ₹6,198.34 crore (61 per cent) — leaving 39 per cent of welfare funds unutilised over five years.

State: Karnataka
Audit period: 1 Apr 2018 — 31 Mar 2023
Presented: 20 Aug 2025

Findings

₹18.12 crore in cess dues sat in uncashed cheques and demand drafts from 2007-08 onwards — some for 15 years — without being deposited. ₹6.06 crore collected by BMTC as labour cess was not remitted to the Board. ₹5.27 crore in remittances could not be traced. The Board's own financial management was so deficient that it could not account for receipts spanning over a decade.
“cheques/demand drafts accumulated since 2007-08, amounting to ₹18.12 crore.”Ch.III §3.2 · p. 23
₹258.80 crore was spent on Preventive Health Care schemes without any legal authority — no provision in the BOCW Act or Rules permits such expenditure. ₹433.80 crore was released to KSDB for worker housing without obtaining utilisation certificates for ₹76 crore of prior disbursements. Workers whose cess contributions funded these amounts had no assurance the money was spent on their benefit.
“to the Act/Rules resulted in irregular expenditure of ₹258.80 crore.”Ch.VI §6.2 · p. 46
Despite budget provisions of ₹10,154.45 crore over five years, only ₹6,198.34 crore (61 per cent) was spent — leaving nearly ₹4,000 crore of worker welfare funds unspent. This chronic under-utilisation is paradoxical: the Board failed to reach eligible workers while simultaneously spending ₹258.80 crore on schemes it had no legal authority to run.
“Against a budget provision of ₹10,154.45 crore during the period 2018-19 to 2022-23, the expenditure incurred during the above period was ₹6,198.34 crore.”Ch.VII §7.1 · p. 57
₹18.12 CrCess dues in uncashed cheques/DDs accumulated since 2007-08
The BOCW Welfare Board had uncashed cheques and demand drafts accumulated since 2007-08 amounting to ₹18.12 crore — receipts that were collected but never deposited into the Board's account, for up to 15 years. The Board also could not trace remittances of ₹5.27 crore from some sources.
“cheques/demand drafts accumulated since 2007-08, amounting to ₹18.12 crore.”Ch.III §3.2 · p. 23
₹6.06 CrLabour cess collected by BMTC not deposited to Board
Bruhat Bengaluru Mahanagara Palike (BMTC) collected ₹6.06 crore as labour cess but had not deposited it to the BOCW Board — meaning workers' welfare contributions were sitting uncredited in the transit authority's accounts rather than funding worker welfare.
“amount of ₹ 6.06 crore being labour cess was collected by BMTC, it had not”Ch.III §3.2 · p. 24
₹258.80 CrUnauthorised expenditure on Preventive Health Care schemes
The Board incurred ₹258.80 crore on Preventive Health Care Training and Checkup schemes without any provision in the Act or Rules for such expenditure — making it entirely unauthorised. This expenditure was incurred without legal backing and to the detriment of other authorised welfare schemes.
“to the Act/Rules resulted in irregular expenditure of ₹258.80 crore.”Ch.VI §6.2 · p. 46
₹433.80 CrReleased to KSDB without utilisation certificates for prior releases
The Board released ₹433.80 crore to the Karnataka Slum Development Board (KSDB) for housing schemes, without obtaining utilisation certificates for ₹76 crore of earlier releases. Money was disbursed to KSDB without accountability for whether it was actually spent on worker housing.
“Records revealed that the Board released ₹433.80 crore to KSDB without”Ch.V §5.1 · p. 43
61% utilised (₹6,198 of ₹10,154 Cr)Budget provision vs actual expenditure on worker welfare (2018-23)
Against a budget provision of ₹10,154.45 crore for worker welfare during 2018-19 to 2022-23, the Board incurred expenditure of only ₹6,198.34 crore — utilising just 61 per cent of available welfare funds, leaving nearly ₹4,000 crore unspent over five years.
“Against a budget provision of ₹10,154.45 crore during the period 2018-19 to 2022-23, the expenditure incurred during the above period was ₹6,198.34 crore.”Ch.VII §7.1 · p. 57

Recommendations

Immediately deposit all uncashed cheques and DDs (₹18.12 crore) and trace and recover ₹5.27 crore in untraced remittances.
Recover ₹6.06 crore in cess collected by BMTC; enforce timely remittance by all collecting agencies through penalty provisions.
Review how Preventive Health Care scheme works are awarded; recover or regularise the ₹258.80 crore of irregular expenditure that arose from splitting works to avoid Cabinet approval.
Obtain the beneficiary list and utilisation certificates for all KSDB releases before making further disbursements; link future releases to verified occupancy of completed worker housing.
Set annual welfare fund utilisation targets of at least 90 per cent; conduct quarterly reviews of scheme delivery to eliminate the chronic under-expenditure pattern.

Fact-checks citing this report

Lacks contextWe will ensure that the interests of labour in the unorganized sector are protected… issue identity cards to the unorganized sector labourers, and arrangements will be made to provide them good quality health and education services… strengthen the Pension and Health Insurance safety nets for all kinds of labourers.

Performance Audit on Welfare of Building and Other Construction Workers in Karnataka

Findings

₹18.12 crore in cess dues sat in uncashed cheques and demand drafts from 2007-08 onwards — some for 15 years — without being deposited. ₹6.06 crore collected by BMTC as labour cess was not remitted to the Board. ₹5.27 crore in remittances could not be traced. The Board's own financial management was so deficient that it could not account for receipts spanning over a decade.

“cheques/demand drafts accumulated since 2007-08, amounting to ₹18.12 crore.”Ch.III §3.2 · p. 23

₹258.80 crore was spent on Preventive Health Care schemes without any legal authority — no provision in the BOCW Act or Rules permits such expenditure. ₹433.80 crore was released to KSDB for worker housing without obtaining utilisation certificates for ₹76 crore of prior disbursements. Workers whose cess contributions funded these amounts had no assurance the money was spent on their benefit.

“to the Act/Rules resulted in irregular expenditure of ₹258.80 crore.”Ch.VI §6.2 · p. 46

Despite budget provisions of ₹10,154.45 crore over five years, only ₹6,198.34 crore (61 per cent) was spent — leaving nearly ₹4,000 crore of worker welfare funds unspent. This chronic under-utilisation is paradoxical: the Board failed to reach eligible workers while simultaneously spending ₹258.80 crore on schemes it had no legal authority to run.

“Against a budget provision of ₹10,154.45 crore during the period 2018-19 to 2022-23, the expenditure incurred during the above period was ₹6,198.34 crore.”Ch.VII §7.1 · p. 57

₹18.12 CrCess dues in uncashed cheques/DDs accumulated since 2007-08

The BOCW Welfare Board had uncashed cheques and demand drafts accumulated since 2007-08 amounting to ₹18.12 crore — receipts that were collected but never deposited into the Board's account, for up to 15 years. The Board also could not trace remittances of ₹5.27 crore from some sources.

“cheques/demand drafts accumulated since 2007-08, amounting to ₹18.12 crore.”Ch.III §3.2 · p. 23

₹6.06 CrLabour cess collected by BMTC not deposited to Board

Bruhat Bengaluru Mahanagara Palike (BMTC) collected ₹6.06 crore as labour cess but had not deposited it to the BOCW Board — meaning workers' welfare contributions were sitting uncredited in the transit authority's accounts rather than funding worker welfare.

“amount of ₹ 6.06 crore being labour cess was collected by BMTC, it had not”Ch.III §3.2 · p. 24

₹258.80 CrUnauthorised expenditure on Preventive Health Care schemes

The Board incurred ₹258.80 crore on Preventive Health Care Training and Checkup schemes without any provision in the Act or Rules for such expenditure — making it entirely unauthorised. This expenditure was incurred without legal backing and to the detriment of other authorised welfare schemes.

“to the Act/Rules resulted in irregular expenditure of ₹258.80 crore.”Ch.VI §6.2 · p. 46

₹433.80 CrReleased to KSDB without utilisation certificates for prior releases

The Board released ₹433.80 crore to the Karnataka Slum Development Board (KSDB) for housing schemes, without obtaining utilisation certificates for ₹76 crore of earlier releases. Money was disbursed to KSDB without accountability for whether it was actually spent on worker housing.

“Records revealed that the Board released ₹433.80 crore to KSDB without”Ch.V §5.1 · p. 43

61% utilised (₹6,198 of ₹10,154 Cr)Budget provision vs actual expenditure on worker welfare (2018-23)

Against a budget provision of ₹10,154.45 crore for worker welfare during 2018-19 to 2022-23, the Board incurred expenditure of only ₹6,198.34 crore — utilising just 61 per cent of available welfare funds, leaving nearly ₹4,000 crore unspent over five years.

“Against a budget provision of ₹10,154.45 crore during the period 2018-19 to 2022-23, the expenditure incurred during the above period was ₹6,198.34 crore.”Ch.VII §7.1 · p. 57

Recommendations

Immediately deposit all uncashed cheques and DDs (₹18.12 crore) and trace and recover ₹5.27 crore in untraced remittances.

Recover ₹6.06 crore in cess collected by BMTC; enforce timely remittance by all collecting agencies through penalty provisions.

Review how Preventive Health Care scheme works are awarded; recover or regularise the ₹258.80 crore of irregular expenditure that arose from splitting works to avoid Cabinet approval.

Obtain the beneficiary list and utilisation certificates for all KSDB releases before making further disbursements; link future releases to verified occupancy of completed worker housing.

Set annual welfare fund utilisation targets of at least 90 per cent; conduct quarterly reviews of scheme delivery to eliminate the chronic under-expenditure pattern.