Dues pile up as Chandigarh MC fails to solve financial crisis

Chandigarh MC had estimated to generate revenue worth ₹633 crore from its own sources in this financial year (as mentioned in budget estimates of 2024-25) but from April 1 to September 30, the civic body could generate only ₹173.25 crore

For the cash-strapped municipal corporation (MC), the inability to recover pending arrears from various sources, worth several crores, has worsened the financial crisis, forcing the MC to halt all development-related works across the city since May this year.

In Chandigarh, commercial and government buildings alone owe the corporation a whopping ₹250 crore in property tax, a major source of its annual revenue. (HT Photo)

After Punjab governor and UT administrator Gulab Chand Kataria refused to release any ‘special grant’ and directed officials to cut down on annual expenses and increase revenue from own sources, the civic body has started to look for ways to recover the pending arrears, especially of pending property tax dues and water bill dues. However, recovery will remain a challenge due to lenient penalties, bylaws and lax enforcement.

In Chandigarh, commercial and government buildings alone owe the corporation a whopping ₹250 crore in property tax, a major source of its annual revenue. Panjab University (PU), Postgraduate Institute of Medical Education and Research (PGIMER), Punjab Engineering College (PEC) and Chandigarh Golf Club are among the major defaulters (see box). The list of defaulters runs long, with 670 buildings of the governments of Punjab, Haryana, Himachal Pradesh and the Centre in Chandigarh. Even UT administration is yet to clear its tax dues. However from the total amount, ₹187 crore is in litigation or is disputed. Besides this, the residential buildings also owe ₹15.8 crore to the civic body.

“Property tax recovery remains a challenge, as MC has only two remedies under the tax bylaws framed under the Punjab Municipal Corporation Act as extended to Chandigarh. For starters, it can issue a notice to the defaulters and thereon, proceed with sealing the property in question if dues remain unpaid- a provision hard to implement on ground. We cannot seal PU, PGI or PEC. Also, MC was working on to enforce stricter property tax bylaws in the city but the new draft is yet to be framed and approved by the House,” said MC officials.

For the corporation, the second highest revenue generation department is water bills from the residents, but approximately ₹46 crore is due from more than 1,500 consumers including arrears. Though repeated notices have been issued to defaulters, the dues continue to pile up.

The city has a total of 10,903 registered street vendors, out of which only 3,595 are paying up their dues on a regular basis. 7,308 vendors owe a whopping ₹75 crore as fee to the MC, which has now given a two-month ultimatum for clearing dues.

Besides, the corporation also has pending arrears from UT administration’s advertisement wing and estate wing, rent from taxi stands, and other departments. MC’s smart parking project has also been left hanging for the past two years, which could also help in generating more revenue with revised rates. In addition to this, most of MC’s rental properties are also lying vacant and unused.

Only ₹173 crore generated in 6 months

The MC had estimated to generate revenue worth ₹633 crore from its own sources in this financial year (as mentioned in budget estimates of 2024-25) but from April 1 to September 30, the civic body could generate only ₹173.25 crore. Major revenue generation sources were water bills and property tax (see box).

The financial crisis is so grave that it has even put on hold the already long-pending road carpeting work. Besides, uncertainty looms over the release of employees’ salaries in the coming months. All development-related works, including road carpeting, laying of paver blocks, renovation and upgrading of community centres, beautification of markets, improvements to public toilets and cremation grounds, and horticulture-related projects, have been stalled.

“MC should cut allowances, entertainment expenses, and unproductive expenses immediately. Also, responsibility for pending dues piling up may be fixed and strict action should be taken so that in future, no one thinks of not paying tax money. Also, the services of outsourced staff should be reviewed on war footing. As much as possible, idle staff should be terminated immediately,” said city resident RK Garg.