AAP versus BJP: Explaining the municipal funds crisis
The dispute over allocation of funds for the municipal corporation in Delhi stems from the unique constitutional position of Delhi -- a Union Territory with a legislative assembly, the trifurcation of the erstwhile Municipal Corporation of Delhi (MCD) and the flow of grants from the Centre to the Delhi government, experts have said.
While the Delhi government says that it has paid all dues to the three BJP-ruled MCDs, the municipal leaders claim that the AAP dispensation still owes thousands of crores to the civic bodies. The cash-strapped corporations have been facing protests by their employees who have not been paid for months.
The Delhi government on Monday said that the Centre owes the corporations Rs 12,000 crores. On Tuesday, chief minister Arvind Kejriwal reiterated his government’s stand. “The Centre gives grants to all municipal corporations across the country, based a formula of Rs 485 per person of the population. However, it is not paying grants to the three MCDs for the last 10 years.”
However, North corporation mayor Jai Prakash said there was no such provision in the current financial rules. “When there is no such financial provision currently, how can the Centre release the funds? The CM is diverting from the issue. As per provisions, the Delhi government has to pay Rs 13,500 crore to municipal corporations as per the recommendations of the Delhi finance commission (DFC).”
The government’s position is based on the recommendations of 14th Finance Commission’s report in which the Centre gives a grant of Rs 2.87 lakh crore to state governments of which Rs 87,144 crore is meant for municipalities.
But Delhi doesn’t get a share from this fund as it is a Union Territory, said a senior official with the North Delhi Municipal Corporation.
A senior East DMC official explained that the Delhi government releases funds to the civic bodies under the Basic Tax Assignment (BTA), which is meant to pay salaries. According to him, the Delhi government was yet to pay the funds under BTA for the second quarter. The official said while East civic body has got only Rs 94 crore of the total Rs 961 crore, the north corporation has got only Rs 212 crore of the total Rs 850 crore allocation.
Experts said what has worsened the situation this year is the fact that the government has slashed the BTA component by 57% due to a drop in revenue collection because of the Covid-19 pandemic.
Kejriwal also said on Tuesday the three corporations owed the government Rs 3,800 crore in the form of a loan.
The corporations said that the East and North corporations had to take loan to streamline its functioning post-trifurcation in 2012.
Former Delhi chief secretary Rakesh Mehta, who was also the commissioner of erstwhile unified MCD from 2002 to 2007, said, “The Centre has never paid directly for the functioning of the civic bodies in the past. It used to give funds for various schemes such as education, health etc. but that fund used to come via the Delhi government.”
The devolution of funds till 2019 was based on the recommendations of the 3rd Delhi Finance Commission (DFC), which had no provision for a trifurcated municipal corporation. While the municipalities are demanding implementation of the recommendations of the 4th DFC, a government spokesperson said that it could be done only after the Centre increases Delhi’s share in the central pool of taxes.
Calling the current crisis unfortunate and avoidable, Mehra said, “It is unfair that the corporations were paid funds for a long time as per the 3rd DFC. The fund allocation to the corporations has to be reviewed and revised every five years, as the cost of providing municipal services increases due to inflation and increase in rate of material.”
He also said that the corporations have to do their bit to boost their revenue. “The municipal corporations also have to think of revamping the revenue model to boost collection. They have to look for new sources of revenue and increase the taxes on services. For example, areas where the Metro network is there, the property tax rates should be hiked.”