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HindustanTimes Thu,18 Sep 2014

Bankrupt Bhopal Municipal Corporation

Neeraj Santoshi, Hindustan Times  Bhopal, August 22, 2012
First Published: 14:53 IST(22/8/2012) | Last Updated: 14:58 IST(22/8/2012)

In January early this year, BMC wanted to deliberate on it ailing economy and discuss austerity measures that could be taken to check its expenditure. But surprisingly the special meeting on “financial mess” was held at Ashoka Lakeview Hotel.


Understandably some Congress corporators raised their eyebrows, alleging that it was the antithesis of the very issue for which the meeting had been called. This in general shows the attitude of BMC towards its economy. Unable to generate enough revenue on its own, it mostly looks towards the state and central government for its ambitious projects, apart from taking loans from various agencies.

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First, let us have a look at the BMC’s economy in black and white over the last few years. In 2006-07, BMC’s income was R139.52 crore, while the expenditure was R152 crore. In 2010-11, the income increased to R277.68 crore, while expenditure rose to R284.17 crore. This year too BMC presented a deficit budget for 2012-2013 with a proposed income of R1166.19 crore and proposed expenditure of R1235.80 crore.The deficit is to the tune of R92.07 crore. This is the third budget presented by Krishna Gaur. Last year, she had presented a deficit budget with a proposed income of R1439.22 and proposed expenditure of R1514.52 crore. Last year, the deficit was to the tune of R94.64 crore.

When you ask BMC officers about it, they give various arguments. Overall, the main reasons given by BMC include its financial contribution to many ongoing big projects in the city, paying the interest on the loans and repaying of the loans. BMC is trying its best to reduce unnecessary expenditures, streamline the recovery of taxes and other user charges, seek more finances from the state government and the Centre, initiate projects with public private partnership, but it still has a long way to go. Though some efforts are afoot, but it is yet to be seen how much revenue they finally bring into the coffers at the end of the year.

Some of the steps taken by BMC to improve its finances include charging users for the collection of solid waste from households, government agencies, organisations and industrial units, levying service charges on the Central government properties, levying tax on the new four wheelers being sold within the municipal limits and so on.

BMC’s poor economy affects its budget allocation In this year’s budget, mere R4 crore was allocated for the holistic development of Bhopal. Congress corporators have described the budget as “poor budget of a bankrupt BMC”. Initially the BMC budget proposed that ward development fund for each corporator be decreased from R12 lakh to R5 lakh and the percentage of the property tax revenue to be spent in the ward be decreased from 40% to 25%. However after the Congress corporators, who have a majority in BMC’s council, opposed the move vehemently, the House was forced to amend the budget. The ward development fund for each corporator was increased from the proposed R5 lakh to R15 lakh and percentage of property tax revenue to be spent in the ward was increased from the proposed 25% to 50%.

Not much for improving city roads and lanes

For roads and footpaths, the allocation has been decreased from R60.72 crore in 2011-12 to just R13.47 crore in 2012-13. The condition of roads in various parts of the city is pathetic. Residents wanted adequate funds for improving the network of roads and lanes in the city. Especially people in Old Bhopal wanted repair of dilapidated roads at the earliest as well as initiation of new projects to ease traffic congestion. They are also expecting completion of the BRTS corridor as soon as possible with timely release of funds to the contractors and putting pressure on them to complete the work on time.

Not much for a cleaner Bhopal

For sanitation the allocation has come down from R24.08 crore in 2011-12 to R22.16 crore in 2012-13. Given the fact that Bhopal’s population has swelled to over 18 lakh, this amount is comparatively less. There are many areas in the city where garbage remains littered. Residents want BMC to focus on ensuring proper cleanliness and improving the garbage collection system on modern lines. Also, the development of the ambitious solid waste treatment plant project at Adampur in the outskirts of Bhopal is also being awaited eagerly.

Not much for basic amenities
The primary function of BMC is to provide basic amenities to the residents- regular water supply, good roads, proper sanitation. This year’s budget disappointed people on this front. There has been uneven allocation of funds for development works, roads and infrastructure.

The allocation for some key sectors has been decreased in the budget. For public works the allocation has plunged from R218.44 crore in 2011-12 to R185.16 crore in 2012-13. In case of health sector, the allocation has come down from R8.29 in 2011-12 to 8 crore in 2012-13.

Forced measures: Narmada surcharge without Narmada water
Poor financial condition is also forcing BMC to take some unpopular steps. To ensure commercial viability of the Narmada water supply project in the long run cash-strapped BMC is pushing the case of levying Narmada surcharge in Bhopal before the state government. Many residents are surprised as to how could BMC levy tax in the name of Narmada when they don’t get its supply.

Apart from this, Narmada water, even if supplied on a daily basis, cannot reach all the households in the city given the fact that only over 60 percent of the city’s population has access to piped water supply at present. The Narmada tax would be realised from all those seeking building permission according to the area of construction. For pumping Narmada water to Bhopal through the 74 km long pipe at its full capacity, BMC has to spend around R50 crore as power tariff annually.

Apart from this, BMC has also has to spend some extra crores on the maintenance of the project infrastructure. This has prompted BMC to look for options to improve its finances. Financially ailing BMC forced to take loans BMC wanted to initiate a mega project through Public Private Partnership (PPP) mode, especially R415 crore water distribution project in Bhopal to tide over its financial troubles. But BMC’s ambitious project was recently rejected by the state government. The cash-strapped BMC would now have to look for other sources, primarily taking a loan, for funding the mega project.

The state government’s rejection comes in the backdrop of chief minister Shivraj Singh Chouhan’s statement on July 7 during a function in Bhopal. The CM had announced that the supply of drinking water would not be privatised on PPP model in the state, arguing that “no individual could have monopoly on water and air”.

The decision has disappointed BMC, as it was looking forward to private investment in the mega project. In July, BMC officials had maintained that eight Indian companies had shown interest in the project.

The project envisages 24X7 supply of drinking water and meterisation of 1.3 lakh registered tap connections and nearly one lakh illegal connections in Bhopal.


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