In this season of AI euphoria, reality checks are in order. Not just the kind that have grabbed headlines, such as organisational bloopers at the India AI Impact Summit 2026 and those by participants like Galgotias University. The more searching scrutiny should be of whether the quality of digitalisation that the country has achieved today warrants the great leap forward into an Artificial Intelligence-driven future that the Narendra Modi government is envisioning, or whether that would be premature. India has tech talent and has expanded its digital public infrastructure over the past decade, but have these enabled corruption-free governance?
One does not have to look far for evidence. Even as the country was gearing up for this event over the past couple of months, a constitutional authority was releasing reports on what digital governance has achieved since 2015. There was a time when reports by the Comptroller and Auditor General of India made an impact, enough to eventually bring down the government of the day when the second United Progressive Alliance regime was in power. Media amplification had no small role to play in that outcome. But today, among the Indian media’s many abdications, is its reluctance to scrutinise the quality of governance, particularly serious lapses such as those thatCAG audit reports released in December 2025 and January 2026 have pointed out. They are reported as news and then dropped, even as the AI Impact Summit gets ceaseless coverage.
All these audit reports are for a period covering 2015 to 2022, ending in 2023, and are quite damning. Several of them paint a truly dismal picture of serious lapses in direct benefit transfers in welfare schemes, leading to fraud, mismanagement and leakage. Digital systems were meant to end corruption. Instead, the audit reports show how they enable ghost beneficiaries, fake records, cyber fraud and misreporting involving hundreds of crores of rupees. The Comptroller and Auditor General, K. Sanjay Murthy, warned on December 18, 2025 that hundreds of crores of rupees were flowing through direct benefit transfer systems without mandatory checks. He said that while India frequently highlights the Jan Dhan-Aadhaar-mobile trinity as the backbone of financial inclusion, database maturity and inter-operability have remained far from adequate. He added that although schemes are projected as Aadhaar-based, the level of de-duplication and cross-database verification mandated under the DBT mission is often missing. All of this is a damning comment on the functioning of India’s digital infrastructure. But where are the journalists tracking the issue and picking up on it?
The journalist, Sucheta Dalal, details findings of these reports at some length in a Moneylife Foundation video. The performance audit of the Pradhan Mantri Kaushal Vikas Yojana was tabled in Parliament in December 2025, and revealed that between 2015 and 2022, over 94% of beneficiary records — affecting 9.06 million people — had missing, bogus, or invalid bank details. Thousands of underage and ineligible candidates were certified, and training partners made fake claims such as conducting training on “31st February”. With a total budget of Rs 14,450 crore, the PMKVY aimed to skill 13.2 million youth. Certificates were issued to 11 million individuals but the CAG found that 3.4 million beneficiaries were yet to receive any money. In early 2025, the government approved an additional Rs 8,000 crore to restructure the mission instead of correcting all this.
CAG reports for schemes implemented by state governments are equally damaging. A CAG audit of the Pradhan Mantri Awas Yojana in Uttar Pradesh showed massive implementation gaps. Tens of thousands of poor-quality houses were described as complete but had missing amenities such as water and electricity. A sum of Rs 1,024 crore of Central funds for scheduled caste and scheduled tribe students in Himachal Pradesh was found lying idle due to non-compliance, leading to dropouts. The list is long. CAG reports have also flagged pensions being paid to thousands of deceased beneficiaries in 2023 because databases were not being de-duplicated.
The irony is that earlier, in September 2025, Murthy told a conference of state finance secretaries that AI and machine learning have helped unearth a large number of fraudulent cases in many states during audits of beneficiary schemes, and laid stress on the extensive use of such digital tools in forensic auditing. Apparently, digitalisation is not a solution for fraud — perhaps it even enables it in some way — but you can bring in AI to help catch the thieves.
In the meantime, DBTs have emerged as enablers for political handouts at every election. The large-scale disbursal of freebies has become possible, and indeed become the norm. That perhaps is the only aspect of digital infrastructure use that regularly makes news.
Sevanti Ninan is a media commentator. She also publishes the labour newsletter, Worker Web.