BMC rolls out the red carpet for private players

From swimming pools to hospitals, the BMC is outsourcing key public assets to private organisations. Is it going too far?

MUMBAI: Before the late Ratan Tata breathed his last, he bequeathed the BMC a final gift: an offer to maintain the median of the 10.58-km-long Coastal Road. A gesture that was well received, it also planted the seed for an even greater private offering. It encouraged the BMC to outsource the development of the newly created land along the Coastal Road – expected to cost upwards of ₹400 crore – to private players. The winning bid went to Reliance Industries Limited (RIL).

A file photo of the Brihanmumbai Municipal Corporation (BMC) building in Mumbai. (HT photo)

This step set the tone for a new revenue model being pursued aggressively by the civic administration. Over the last two years – and now with renewed urgency – the BMC has been on a spree of outsourcing municipal services through public-private partnerships (PPP).

From a smart parking app and running parking lots, to developing a sports complex, a textile museum on old mill lands, maintenance of swimming pools and cycling tracks, and even outsourcing essential services in nine peripheral hospitals, the BMC has been rolling out the red carpet for private organisations.

The rationale offered by the BMC is that the PPP model does not require the corporation to invest public money in the outsourced services, thus saving precious resources. Rather, it even earns from some of these outsourced offerings, such as the parking app. And there’s always a payoff for the private player – either profits earned from the services per se, or advertising rights, or even through CSR funds.

The BMC’s push down this path isn’t just about fiscal prudence. The corporation has been making huge capital investments in big-ticket infrastructure projects such as the extension of the Coastal Road till Dahisar; building the Goregaon Mulund Link Road; setting up multiple sewage treatment plants, dams and desalination plants; its road concretisation initiative, etc – amounting to a whopping ₹40,000 crore.

“When the final bills start coming in over the next three years, we’ll need to explore ways to strengthen our fiscal resources. Instead of taking on too many projects, we’ll focus on a few important ones,” municipal commissioner Bhushan Gagrani had told HT. “I’ve instructed my team to be selective in taking up capital works. I don’t approve budgets lightly, and once engineers realise their budgets won’t be approved easily, their cost estimates also come down. That’s how it works in any organisation.”

The BMC began to see red flags early on. For one, it has been dipping into its fixed deposit corpus, which went from ₹91,690 crore in 2021-22 to ₹79,498 crore, as per an RTI response to civic activist Godfrey Pimenta. While not yet concerning, it got the civic administration to sit up and take a closer look at its bottomlines.

Rather than the BMC bleeding money on running its services, the private player will have to share a portion of its earnings from the enterprise with the BMC – from the swimming pools, parking lots (minimum 25% of the profits), etc. While not strictly a PPP project, the BMC has also roped in contractors to clear abandoned vehicles from the streets. They can earn from selling the spare parts, a revenue project which has given the BMC a modest ₹1.5-1.8 crore.

Public assets, private players

While the BMC justifies its privatisation spree, critics question the wisdom of handing Mumbai’s public assets to private players. Opinions are divided. “As long as the private player provides the services efficiently, and accessibility is ensured, there is no harm in looking to them for fulfilling municipal services,” said Milind Mhaske, CEO of the Praja Foundation. “The BMC must ensure safeguards in the system and continue to retain ownership over public amenities. They should ensure transparency in the process of choosing the private player, so that citizens get the best offer,” Mhaske says.

Some point to the development of the Coastal Road’s reclaimed open spaces as an example of a grey area. The policy here includes a clause that allows for commercial activity to offset expenditure, pending approval from the Supreme Court.

However, privatisation of hospitals and medical services has stirred an intense debate, even as the BMC charges ahead with its plan to run two of its hospitals, in Govandi and Mankhurd, on a PPP basis. This would leave only a fraction of subsidised beds, thus excluding low-income patients from availing essential healthcare services.

Abhay Shukla, national co-convener of the Jan Swasthya Abhiyan, says, “This approach undermines the very idea of public healthcare, where services should be accessible and affordable to all.”

Ravi Raja, a former corporator, concurs, “PPP arrangements are suitable for discretionary spends but not for services the BMC is obligated to provide, like healthcare.”

The privatisation push, which began around two years ago, is set to gather momentum, said a senior civic official with the gardens department. When the BMC was lining up private operators to run and maintain its swimming pools a couple of months ago, the official had called it a “trial run”. “If this works, many other services will be outsourced too,” he had said.

Shukla has a word of caution for the civic administration. He argues that privatised hiring dilutes accountability, while opening doors for powerful lobbies to gain control over the city’s services, including its healthcare system.

Is there an alternative? “Given that the BMC is one of the richest municipal corporations in the country, the administration can well afford to strengthen essential healthcare and other services without shifting the burden onto private parties.”