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BMC budget looks at fewer expenses, more income
MUMBAI To pull the Brihanmumbai Municipal Corporation (BMC) out of its financial crunch, its budget 2020 has tightened its purse on revenue expenditure, and created
MUMBAI To pull the Brihanmumbai Municipal Corporation (BMC) out of its financial crunch, its budget 2020 has tightened its purse on revenue expenditure, and created new avenues to generate income.
One of the most prominent expenditure reduction measures is the BMC’s decision to withhold filling of all vacancies for posts arising from retirement, until its revenue generation shows an upward trend.
On the other hand, the BMC hopes to increase its revenue collection by upping collection of outstanding property tax dues by 10%, increasing charges for civic services such as trade licences and birth certificates by 5% annually, and revising its investment policy to earn more interest. New measures announced include a robust estate policy: renewing expired leases on municipal land, on vacant land tenancy, and by regularising only fungible floor space index (FSI) violations in existing buildings.
Two of the BMC’s prime sources of revenue did not perform well in 2019-20. Until December 2019, the BMC managed to earn ₹1,810.37 crore from property tax, against an estimated income of ₹5,016.19 crore. Similarly, it earned ₹2,067.88 crore from construction premiums and development fees, against an estimate of ₹3,453.64 crores. Moreover, until December 2019, the BMC managed to collect only ₹14,828.07 crore in revenue, against its estimate of ₹24,983.82 crore for 2019-20.
Over confusion of the state government’s announcement of a property tax waiver for houses less than 500 square feet, the BMC did not issue bills to these properties. There was further confusion in the civic body, as many buildings had mixed houses, admeasuring below and above 500sqft.
In January, the BMC sorted the issue, and began to issue bills to houses in such buildings. Moreover, the slump in the real estate department due to economic slowdown has hit BMC badly, as it earns income from FSI premiums and DP fees from new constructions. The transition from Development Control Regulations (DCR) 1991 to Development Control and Promotions Regulations (DCPR) 2034 further added to BMC’s woes.
Municipal Commissioner Praveen Pardeshi on Tuesday presented a surplus budget pegged at ₹33,441.02 crore, which is 8.95% more than last year’s budget, by proposing to draw ₹4,380.77 crore out of its cash deposits. This budget has curtailed revenue expenditure by 2% in comparison to the last budget. It has now pegged its revenue expenditure at ₹18,797 crore in comparison to ₹19,205 crore in the budget 2019-20. On the other hand, the budget has increased BMC’s expected revenue by 13.87%, in comparison to last year.
Pardeshi said, “Despite the burden put on BMC’s finances by the 7th pay commission, our revenue expenditure has reduced by approximately 2%, due to new policies to be adopted, and by revising our spending pattern.” The 7th pay commission has put an additional annual burden of ₹1300 crore on the municipal corporation.
Currently, the BMC’s establishment cost is 50% of its revenue expenditure, in comparison to the state government norms of 35%. The BMC will now hire apprentices instead of full time employees, for a period of six months to one year for basic administrative roles such as clerks, who will be paid a basic stipend by the civic body. These apprentices will have no claim on municipal jobs. Curbing new hiring is expected to save BMC Rs 250 crore annually.
The BMC has also decided against acquiring encroached land for its discretionary duties (gardens, parks, auditoriums). Pardeshi said, “When BMC tries to acquire encroached land, we land up spending thousands of rupees, for project affected persons. No encroached land will be acquired henceforth, unless its reservation falls under an obligatory duty.”
Moreover, the BMC has identified 76 cases of land acquisition, that would have cost ₹8303.79 crore. Atleast 63 of these cases will now be acquired against transferred development rights to be given to the owner. Rehabilitating these PAPs is expected to cost BMC another ₹6751.40 crore.
With its new initiatives, the BMC hopes to generate Rs 1500 crores from outstanding dues of property tax, ₹600 crore from the DP department, ₹800 crore from the government, and ₹500 crore from a revised estate policy mentioned above.
