In a bid to avoid dispute over the payment of debt, the Delhi government may offer a bailout package to the financially crippled Municipal Corporation of Delhi (MCD).
The civic body owes the government an estimated Rs 1,000 crore, which it has been trying to pay off. When the MCD is split into three separate corporations in April, there will be confusion over which one will be made liable to pay up.
"The Delhi government has , therefore, planned to give a bailout package to MCD so that all three corporations can start their finances on a clean slate," said a senior official of MCD.
He said the proposal would be finalised soon.
More bailout may be on the cards since the MCD also has to pay up arrears of the 6th pay commission for which it has no money.
"MCD owes a lot of money to the Delhi government and the central government. There is a debt of R500 crore that the MCD has taken recently for various projects under the non- plan head. The debt is payable in installments. It owes another R250 crore to the contractors," an official informed, adding there are other smaller debts for various projects.
The cash-strapped MCD had bigger debts in 2008-2009 but had been clearing away parts of it in the last few years after increasing revenue through advertisements and tender duty.
In 2008-2009, the debt ratio to revenue was 63%. At present, it has come down to 30%. Recently, it paid R 250 crore out of the R500 crore it owed to the contractors.