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BMC’s earnings shrink

The two major sources of revenue — property tax and octroi — of the county’s richest municipal corporation are on a downward slide, reports Sujit Mahamulkar.

mumbai Updated: Apr 01, 2010 00:59 IST
Sujit Mahamulkar

The two major sources of revenue — property tax and octroi — of the county’s richest municipal corporation are on a downward slide.

While property tax revenue fell by almost Rs 278 crore compared to last year, octroi collection increased only by Rs 6 crore, to Rs 4,520 crore. That is not even a 1 per cent rise over last year’s octroi revenue of Rs 4,514 crore.

“While octroi collection has risen over last year’s figure, it’s actually not remarkable given that the department normally posts at least a 10 per cent rise over the previous year,” said an official from the department on condition of anonymity.

However, SS Shinde, joint municipal commissioner, said: “We are achieving our target revenue. The recession was a factor but we have recovered more than we expected”.

The octroi department

contributes one fifth of the municipal corporation’s annual budget.

The octroi department has been the prime revenue-generating department for the BMC, followed by property tax.

This year, the BMC expected Rs 2,887 crore from property tax, but reached only Rs 2,609 crore.

Civic officials had set optimistic targets for property tax collections based on their perception of improving market conditions.

Their failure to meet those targets will likely mean cuts in funding for water supply, road construction and other civic projects.

The BMC, with a budget over Rs 20,000 crore for this year, is facing a financial crunch having seen a roughly 15 per cent dip in its revenues and a 31 per cent increase in establishment costs due to hikes in staff salaries.

Fearing a cash crunch, the BMC has decided to focus on its primary functions, including water supply and sanitation, with other services getting less resources.

Now, civic officials are hopeful that with the economy picking up, their collections for the next financial year 2010-11 will improve.

“We increased octroi vigils at our five check posts, which is how we achieved out targets,” said Shinde.