‘Continue GST compensation beyond 2022’

Reeling under financial trouble, the Brihanmumbai Municipal Corporation (BMC) has asked chief minister Uddhav Thackeray to continue Goods and Services Tax (GST)

Reeling under financial trouble, the Brihanmumbai Municipal Corporation (BMC) has asked chief minister Uddhav Thackeray to continue Goods and Services Tax (GST) compensation beyond 2022, after the expiry of the first five years as mandated by the Constitution.

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This will enable the civic body to partially fund its big-ticket long-term infrastructure projects planned for the city, such as the Goregaon-Mulund Link Road (GMLR), the Gargai and Pinjal Dam projects, the Deonar waste management project, and the Coastal Road project.

During the chief minister’s visit to the BMC headquarters last week, the administration expressed concern at the depleting finances of the civic body on the one hand, and the line-up of big infrastructure projects on the other.

Mayor Kishori Pednekar said, “The administration expressed their concern to the chief minister over the financial condition of the civic body, especially after 2022, when GST compensation will stop coming. The CM was positive about continued support to the civic body.”

In December 2018, the Central government indicated that it will continue GST compensations for states for three more years after the mandatory five year period, up to 2025, instead of 2022, after a review of deficit in state beyond the first five years.

In the year 2019-20, BMC is to get ₹9073.28 crore as grant in aid on account of compensation in lieu for octroi from the state. This is a third of its total estimated revenue income of ₹24,983.82 crore for 2019-20. Other major sources of revenue income for the civic body are property tax amounting to ₹5016.19 crore, development plan (DP) department amounting to ₹3453.64 crore, interest on investments amounting to ₹2332.36 crore, and water and sewerage charges amounting to ₹1459.13 crore.

Confirming the development, municipal commissioner Praveen Pardeshi said, “We spoke to the CM about continuing aid so that BMC can fund infrastructure projects in the city.”

Pednekar said the issue was discussed as CM Uddhav Thackeray took a review of all infrastructure projects on Thursday. She added, “These were preliminary discussions, and there has been no official request yet, from BMC.” Signs that the civic body’s finances are depleting were made evident by the administration over the past six months. On September 30 this year, the municipal commissioner had issued a ‘very urgent’ circular that read, “It is likely that BMC will face financial crisis in the near future, due to increase in expenditure, and rapid decrease in its income.” The circular listed a six-point agenda to increase BMC’s revenue.

Earlier, in a bid to increase its revenue, BMC invited applications to hire financial consultants to advice the civic body on more dynamic investments, such as in shares, forex, debt capital investment and commodity trading.