Revenue dips, but Mumbai civic body’s budget ambitious

While its revenue was affected by the Covid-19 lockdown in 2020, the Mumbai civic body presented an ambitious budget of ₹39,038

While its revenue was affected by the Covid-19 lockdown in 2020, the Mumbai civic body presented an ambitious budget of ₹39,038.38 crore, although there are no clear signs of increase in the revenue.

BMC Commissioner Iqbal Chahal (R) with Standing Committee chairman Yashwant Jadhav while presenting the BMC Budget 2021-22, at BMC Headquarters. (Bhushan Koyande/ Hindustan Times)

The Brihanmumbai Municipal Corporation (BMC) is relying on money to be received from the state and its agencies like Slum Rehabilitation Authority to meet its expenditure and an internal loan to fund its infrastructure projects partly. The budget presented by municipal commissioner Iqbal Singh Chahal on Wednesday reported a drop in the civic body’s income in 2020 by ₹5,876.17 crore. In 2020-21, the BMC earned ₹22,572.13 crore, against the estimated ₹28,448.30 crore. The 2021-22 budget is 16.74% more than last year’s budget which was ₹33,441.02 crore. Moreover, the capital expenditure has shown increased by a whopping 71% at ₹18,750.99 crore, in comparison to the previous year when it was pegged at ₹10,903.58 crore. BMC’s revenue expenditure for 2020 is pegged at ₹20,276.33 crore, as opposed to last year’s allocation of ₹19,096.74 crore.

As the lockdown resulted in closure of many small and large commercial units, the property tax collection in the previous year was ‘adversely affected’, the budget said. Moreover, the slowdown in real estate due to lockdown, and migration of labour during lockdown months led to decrease in revenue of the development plan department. The property tax department earned ₹4,500 crore, less than the estimated ₹6768.58 crore. The development plan department earned ₹1,199.99 crore, instead of ₹3879.51 crore estimated in budget 2020.

The state in January announced 50% reduction in construction premiums to give impetus to real estate projects, which resulted in a loss of over ₹2,000 crore for the BMC’s DP department. Subsequently, the BMC revised its budget, reducing it by ₹2,259 crore, at a total size of ₹31,182 crore, instead of ₹33,441.02 crore.

Chahal has maintained that BMC continues to be in a sound financial position. He said, “This is not a loss in revenue. This money is recoverable, as arrears. The BMC’s financial position is strong. That is why we could increase the size of the budget this year. The BMC has not dipped into its reserves for this.”

The BMC has proposed to raise ₹5,876 crore as internal loan to meet its budget requirements. Chahal said, “This money will be drawn from the separate fund of ₹14,000 crore, generated from fungible FSI premiums. This is separate from our reserves.”

The BMC presently has ₹50,953.27 crore in reserves, that are linked to various infrastructure projects, and ₹26,682.95 crore locked in for pensions, provident funds and gratuity of its staff.

In 2021, BMC expects an income of ₹7,000 crore from the property tax department, ₹2,000 crore from the development plan department, and ₹10,583.08 crore from compensation from the government for octroi, apart from income from water and sewage charges, interest from investments and sewage charges.

To recover its revenue, the BMC is banking on ₹1,600 crore expected from land premiums and infrastructure development charges from SRA. The state also owes BMC ₹5274.16 crore until December 2020, for property tax, water charges, sewage charges, and BMC’s share in various taxes collected by the state. The BMC is also considering setting up of a fee revision authority to ensure timely revision of all taxes, whose decision will be binding on the civic body.