Mumbai: Income remains a problem for cash-rich BMC

The Brihanmumbai Municipal Corporation (BMC) has not succeeded in increasing its revenue through various sources mentioned in the previous budget (2022-23). While property tax, the BMC's fixed source, dwindled, the civic body wasn't able to increase revenue despite implementing user fee for solid waste management, seeking reimbursement of COVID-19 expenditure worth Rs 2,500 crore from district collectors or even through pending dues from the state government.

Though the fixed deposits of the BMC increased over the period due to non-implementation of projects announced in the budget, the fact is, that the cash rich corporation hasn't been able to find a constant source of income after octroi was abolished in 2017.

Main sources

The major sources of revenue for the year 2022-23 were compensation in lieu of octroi - Rs 11,429 crore, income from property tax - Rs 7,000 crore, income from DP Department - Rs 3,950 crore, income from interest on investments - Rs 1,128 crore, and income from water and sewerage charges - Rs 1,597 crore.

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Apart from these regular sources, the municipal commissioner had announced the generation of revenue through reimbursement of COVID expenditure, levying user fee under solid waste management, and digital advertisements apart from pending dues from the state government. But the BMC failed to increase its income through these sources also.

Municipal Commissioner Iqbal Singh Chahal insists the BMC income has not decreased. File pic/Shadab Khan

However, Municipal Commissioner Iqbal Singh Chahal insists the BMC income has not decreased. "When I joined the BMC in 2020, the fixed deposits were around Rs 77,000 crore which have now increased to Rs 88,000 crore despite spending on infrastructure projects, so it is not correct that the income has decreased. We estimated Rs 7,000 from property tax by considering revision of 17 % but the state government did not approve it. We even crossed our estimated income through DP and getting compensation of octroi also," said Chahal.

The civic chief had said in his budget speech last year that BMC spent huge amounts on various measures during the pandemic. A claim of Rs 1,417 crore and Rs 1,348 crore for the expenditure up to September 2021 was submitted to the Mumbai city and suburban district collectors for reimbursement from the State Disaster Response Fund (SDRF). But the BMC hasn't received a paisa from the collectors. "We haven't received any response from them. We raised the issue with the state government and will keep pursuing it," said Chahal.

The BMC was expecting Rs 200 crore from ‘user fee' and processing and disposal charges. But the decision is still pending. The BMC hasn't received a substantial amount even through digital advertising.

Grant pending

The BMC was planning to correspond with various departments of the state government for pending dues which were Rs 6,788 crore till December 2021 including Rs 4,840 crore grant from the education department. "The BMC received a very minor share of grant from the state government this year and the pending grant amount is more than Rs 4,500 crore," said a BMC official.

The BMC is still dependent on the compensation from the state government in lieu of octroi and the dependency has been increasing year after year with almost 50 per cent income coming from it. On the other hand the major source of property tax has been decreasing and the BMC couldn't meet the target in the past seven years. Even this year despite tall claims in last year's budget, the BMC hardly collected 50 per cent of estimated Rs 7,000 crore till the end of January. "The proposed Capital Value Revision was supposed to be implemented from 2022-23. But it wasn't approved by the state government," said a BMC official. It has an impact on the income from property tax. But the BMC also did not succeed in imposing a penalty on unauthorised construction.

Last year, in 2021-22, the BMC received a whopping Rs 14,000 crore through the Development Plan Department after the state government declared a 50% concession in premium payable to BMC. But the concession was for a limited period and the BMC had estimated around Rs 4,000 crore this year.

"The BMC is moving towards a deficit budget. They have already collected all the DP revenue by giving discounts last year. In property tax, they were issued credit notes of Rs 4,500 crore in advance for PAP and new avenues have not been exposed due to fixed deposits. The fiscal management collapsed," said Rais Sheikh, ex-corporator and MLA of Samajwadi Party.

Rs 4,500 cr
Grant pending from the state education department