IMC budget 2006-07: Lies and red tape

DEVIATING FROM the past practice of merely fudging budgetary figures, the Indore Municipal Corporation (IMC) has resorted to lies to cover its fiscal nakedness in circa 2007.

india Updated: May 18, 2006 14:41 IST

DEVIATING FROM the past practice of merely fudging budgetary figures, the Indore Municipal Corporation (IMC) has resorted to lies to cover its fiscal nakedness in circa 2007.

The most blatant cover-up pertains to octroi compensation. The FY 2007 budget lists earnings under this head for the previous fiscal at nearly Rs 65 crore per annum, just over Rs 5 crore each month. What it conveniently omits is that only half of the monthly installment actually landed in the IMC kitty.

The remainder - almost Rs 2.5 crore - was forwarded directly to the MP State Electricity Board (MPSEB) by the State Government each month to cover the Corporation’s unpaid electricity bills.

The misleading figures are, however, only a tiny flourish in the fiscal legerdemain exercised by IMC to duck the million dollar, or Rs 736 crore, question: Where will it get the money to fund its share in JNNURM and ADB projects?

Civic body mandarins claim that, apart from octroi compensation, the cash shortfall will be met by seeking a share in commercial tax surcharge levied by the State Government, funds generated through the newly-imposed export tax and boosting revenue collection efficiency. The first is a total non-starter as commercial tax, and the surcharge levied thereon, will soon be abolished now that the Value Added Tax (VAT) regime has been implemented.

Although the Centre will compensate the State Government for revenue losses caused by VAT the possibility of these monies being forwarded to civic bodies seems remote.

Moving to export tax, both Mayor Dr Uma Shashi Sharma and the current budget claim that the tax imposed on locally manufactured goods exported outside municipal limits would net the Corporation Rs 10 crore annually.

As the highest export tax slab is one per cent, City-based manufacturers would have to achieve an annual turnover of Rs 1,000 crore, if the mayoral projections are to be met. Highly unlikely, given that most manufacturers based within municipal limits produce low-cost edibles like pickle and savouries.

Grants received from the XI and XII Finance Commissions and State Finance Commission are listed as other potential money-spinners by the budget. While the grants contribute a significant amount to the civic body’s coffers they are used up in establishment and other costs and it is doubtful whether they can be used to bankroll ADB and JNNURM projects.

Consider this - the Corporation’s total income stands at nearly Rs 200 crore with Rs 85-90 crore being generated through taxes and the rest in the form of governmental grants. In the year gone by, for instance, the Corporation generated Rs 87.20 crore internally through its revenue, health and account departments.

Government grants including octroi compensation (Rs 64.82 crore), commercial tax share (Rs 16 crore), road maintenance (Rs 5 crore), State Finance Commission (Rs 4.15 crore), XI Finance Commission (Rs 5.11 crore), passenger compensation tax (Rs 2.43 crore) and stamp duty (Rs 7.42 crore) brought in another Rs 104.93 crore. Thus making for a total of Rs 192 crore against the budgeted amount of 2005-06, which stood at Rs 407 crore.

Now that the FY 2007 budget has crossed the Rs 700 crore mark, how will the IMC bear expenses for Jawaharlal Nehru National Urban Renewal Mission (JNNURM) projects?

It may be noted that the Corporation has to bear 30 per cent costs of projects funded by the Mission with the Centre and State pitching in with 50 and 20 per cent respectively. IMC share in the Rs 24.75 crore Yeshwant Sagar capacity enhancement project recently cleared by the Centre, for instance, works out to Rs 7.42 crore.

Additionally, it will have to shell out Rs 97.5 crore as its share in the Rs 325 crore sewerage proposal, Rs 12 crore for the Rs 40 crore garden beautification programme and Rs 34.15 crore for the Rs 115 crore road infrastructure project if they come through in the current fiscal. A grand total of Rs 151.07 crore.

Although the Corporation has made budgetary provisions of Rs 60 crore for the sewage proposal and Rs 3 crore for the Yeshwant Sagar project it hasn’t quite shown us the money.

First Published: May 18, 2006 14:41 IST