Phenyl at Rs 33,500, lights at Rs 11,800: inside MP's procurement scandal

• AI-assisted analysis flags suspected price inflation in Rs 1,134 crore of municipal purchases across Madhya Pradesh.

• Action is initiated against contractors, suppliers and officials, with recoveries and dismissals reported.

• Lokayukta and EOW data expose prolonged investigations, pending sanctions and delayed convictions.

A bottle of phenyl bought for Rs 5 in one municipality was recorded at Rs 33,500 in another. A garbage truck costing Rs 2 lakh in one urban local body (ULB) cost Rs 6 lakh elsewhere, with just four additional dustbins. A 60-watt LED light bought for Rs 306 cost Rs 11,800 in Bhopal. 

These were among glaring price disparities in Rs 1,134 crore worth of purchases made by 374 Madhya Pradesh ULBs over three years through the government e-marketplace (GeM). Launched by the Union ministry of commerce and industry in 2016 to make public procurement transparent, efficient and less vulnerable to corruption, GeM appears to have delivered the opposite in Madhya Pradesh. 

Last week, a video recorded six months ago went viral. Sanjay Dubey, additional chief secretary of the urban development department, confronts municipal officials with suspected procurement irregularities. “Necessary to scare you all a bit so you don’t fall asleep,” he says. Dubey later clarified that the clip was from a routine, half-yearly training session covering monitoring systems, quality standards, new techniques and warnings against financial irregularities and unnecessary expenditure. 

The message was blunt: the government knew what municipalities bought, what they paid and where prices appeared inflated. The difference, Dubey alleged, was pocketed by officials. Some municipalities bought garbage vans costing Rs 1.5 crore each despite having too few wards to justify them. Bhopal’s streetlight order, at inflated prices, was worth Rs 3.78 lakh.   

Dubey said purchases need not be made at the lowest possible price. Even average market rates, he argued, could have saved the state over Rs 250 crore. Suspected irregularities were flagged in Bhopal, Gwalior, Indore, Ratlam, Ujjain, Jabalpur, Sagar, Rewa, Guna and Chhindwara. 

The analysis covered around 1,200 vendors. Jabalpur was the biggest purchasing ULB, with procurement worth Rs 66 crore; the Jabalpur division accounted for Rs 202 crore. Barodiya Kala bought octagonal poles worth Rs 97 lakh, within total purchases of Rs 29.29 crore. “I don’t even know if there is enough space to install that many poles, but they kept buying them,” Dubey said. 

The presentation itemised Rs 65 crore for garbage tipper dumpers, Rs 49 crore for streetlights, Rs 27 crore for octagonal poles and Rs 18 crore for disinfectants. 

It also flagged Labor Industry, allegedly operating under two business identities. One supplied goods worth Rs 38 crore, the other Rs 12 crore. Together, they executed 201 contracts across 21 municipalities, often concentrating business in the same places. In Barodiya Kala, one accounted for Rs 11 crore and the other Rs 8-9 crore. Khurai in Sagar district and Mandsaur were also cited. 

Officials said AI-assisted analysis identified identical products listed under different names or spellings. Phenyl, for instance, appeared under alternative descriptions, allowing the system to compare prices. The method could also be applied to e-tenders and newspaper quotations. 

Following the video’s circulation, Lokayukta police began examining the analysis. “We are probing this matter,” said Yogesh Deshmukh, director-general of the special police establishment. On 25 October, Dubey said action had been initiated against more than 80 contractors and suppliers and 392 officials, including 135 chief municipal officers. Seven officials had been dismissed and over Rs 3 crore recovered. 

But detecting suspicious purchases is only the first step. Who approved the spending? Will the guilty be punished? Will loopholes remain exploitable? 

Lokayukta data presented by the state government in the Assembly in February 2026 reveal the accountability gap. Between 2018 and January 2026, the police received 37,967 complaints; only 3,716 (9.77 per cent) were admitted. They registered 2,041 criminal cases and dismissed the remaining complaints. 

A total of 979 criminal cases remained under investigation, while 1,123 investigated cases awaited disposal in special courts. In 2024, the Lokayukta filed 176 charge sheets, mostly in cases registered between 2012 and 2017. The average time from case registration to charge sheet was four years. 

Delays erode accountability: witnesses become harder to trace, records tougher to reconstruct, punishment loses its bite. Prosecution may also require official sanction. If the competent authority is complicit, will approval ever come? 

Of 1,063 Lokayukta criminal cases in the reported dataset, 393 investigations were complete; 134 awaited prosecution sanction. The data recorded 208 charge sheets and seven convictions. These figures are not a final conviction rate: cases vary in age and stage. Yet pending sanctions raise a fundamental question about accountability when approval rests within the same government whose officials are under investigation. 

The Economic Offences Wing faces similar challenges. Between 2020 and January 2026, it received 19,775 complaints; 2,624 were formally registered in the relevant category, and criminal cases were registered in 566 instances. Of 70 cases reaching a verdict between 2020 and 2025, 40 ended in conviction and 30 in acquittal. The average time to judgment was 13 years and seven months. 

A 57 per cent conviction rate among decided cases may look encouraging, but excludes unresolved complaints and cases yet to reach trial. A conviction after 13 years hardly constitutes real accountability. For the accused, it means prolonged uncertainty. For the public, it means delayed recovery of monies, delayed punishment and delayed correction of the failures that allowed the infractions. 

RTI activist Ajay Dubey puts it plainly: detection is not justice. AI-assisted analysis can expose suspicious spending, and watchdogs can investigate and prosecute. But inflated prices do not automatically establish criminal wrongdoing, just as registering a case does not guarantee a timely conviction.