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Municipal Finance

Civic body aims to plug revenue leaks

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The Hindu       23.02.2012

Civic body aims to plug revenue leaks

Karthik Madhavan

In a bid to end cartels stymieing Corporation's efforts to lease its assets for a higher amount, the civic body's Finance and Taxation Committee has decided to initiate a couple of measures.

The first of these is increasing the margin for the assets that are placed for re-tender. Deputy Commissioner S. Sivarasu said that for the first re-tender the civic body would increase the margin by 10 per cent, another 10 per cent for the second re-tender and by 20 per cent for the third re-tender.

At the end of the third re-tender the margin would have increased by 40 per cent, deterring cartels. At present, the cartels, to thwart the lease of the assets being awarded to persons outside their group, quote five per cent more than the highest bid to force the civic body to re-tender the same. They keep doing the same so that the members of the cartel continue to retain the assets. The committee led by Chairman R. Prabhakaran approved of the move to increase the margin and place the same before the Council for approval. “The aim is to increase Corporation's revenue,” he said.

Mr. Sivarasu complemented him saying that the civic body hoped to increase its revenue from non-tax sources, which mainly involved income from lease, from Rs. 15 crore to Rs. 30 crore.

The second of the measures is preparing a list of assets that are ready for tender after completion of nine years. He said that for assets that had completed nine years, the Corporation was of the view that it was prudent not to extend the lease for another three years for the same leasee by hiking the lease amount by five per cent but float fresh tenders for the same by assessing the market price. Citing an example, he said that an asset that was leased at Rs. 1,000 nine years ago, if extended, would now fetch only around Rs. 1,400. If the same was leased afresh based on market price, it would get fetch around Rs. 5,000 or Rs. 6,000 depending on the location. This would also prevent the asset being sub-let for a higher cost, the Deputy Commissioner said and added that the market price would be based on the Public Works Department's Schedule of Rates.

The Finance Committee then passed a few resolutions regarding fixing lease price for its assets, held over a few subjects to take a price review and decided to refer a few subjects to the Council.


Sitting councillors to get Rs. 15 lakh as ward funds

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The Hindu         01.07.2011

Sitting councillors to get Rs. 15 lakh as ward funds

Staff Reporter

The Chennai Corporation will release only Rs.15 lakh each to the sitting councillors under the Ward Councillors Development Fund, as their term gets over in October.

Corporation Commissioner D.Karthikeyan said the funds will be allocated proportionately. “Some councillors have already submitted proposals for utilising the funds. We have proper guidelines based on which funds would be released.”

In 2010-11, councillors spent only Rs.25 crore of the Rs.38.75 crore allotted to them. Some wards, especially those in north Chennai, are very small and the councillors had unspent funds.

A case in point is that of Ward 77 councillor Dravidanadu Munusamy. He said that in the last two years he was unable to spend the entire amount as the area was very small. “There is no land belonging to the government or the corporation in the ward. There is no major road either. I was able to spend the smaller amounts allocated in the first three years.” The Ward Councillors Development Fund was increased in phases from Rs.10 lakh in 2006-07 to the present Rs.30 lakh.

Mayor M.Subramanian said: “Around 85 per cent of the councillors had enough area and projects to utilise the funds in their wards. Some councillors wanted to know if their funds could be spent for other wards, but that was not possible. We hope that the proposed ward reorganisation during expansion of the city limits would result in bigger wards.”

Leader of Opposition in the Council Saidai P. Ravi said that for councillors to spend their funds until October, estimates must have been drawn up in March itself. “Very few councillors have submitted proposals for this year. We have just four months to spend Rs.15 lakh. Our term gets over by October 21. Due to elections and increase in cost of construction material, works which had been awarded to contractors are yet to be taken up,” he said.


Corporation under severe financial crunch

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 The Hindu        02.03.2011

Corporation under severe financial crunch

S. Sundar

It faces difficulty in execution of several works

Severe financial crunch has placed the Madurai Corporation in a predicament, says the Outcome Budget 2011-12 presented by Mayor G. Thenmozhi here on Monday.

The Corporation has presented a Rs. 8-crore deficit budget. But the budget note reveals that difficulty in execution of several works under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) because of the financial constraint.

The Corporation has to pay at least Rs. 15 crore towards provident fund and insurance of its employees and terminal benefits to retirees.

The local body is pinning its hopes on huge grants and a long term, interest-free loan of Rs. 427.84 crore which it has sought from the State Government to “ensure completion of all the schemes” during 2011-12 which is the Mission year.

The Corporation was sanctioned several projects at an outlay of Rs. 2,496.98 crore under the Mission in 2006.

“It had no other alternative except to divert the available amounts in the scheme and by obtaining loan from funding agencies to the total required amount of Rs. 427.84 crore,” the budget note said.

The Union Ministry has laid a condition that execution of all the schemes under the Mission with the 3rd instalment of the fund will only make it eligible for the fourth instalment of Rs. 134 crore.

“The inevitable gap in getting administrative and technical sanctions on revision of estimates due to escalation in cost and tender premiums has caused this status of affairs”, the note said.

Grant sought

The corporation has sought from the State Government Rs. 127.19 crore as grant instead of interest-free loan as its share for the mission.

Besides, it sought Rs. 131.83 crore as grant towards tender premium and cost escalation and the balance of Rs. 168.32 crore as interest-free long-term loan from the State Government to ensure final completion of all the schemes before the end of the Mission year of 2011-12, the note said.

Among them, the second Vaigai Water Supply Scheme (Rs. 71.23 crore), construction of three check dams across the Vaigai river (Rs. 13.38 crore) have been completed and construction of underground drainage in leftover places and renewal of sewage treatment plants (Rs. 252 crore) has been partially completed.

Only one-third of the project of construction of concrete retaining walls for 52 km of 11 channels and stormwater drainage canals for 822 km (total cost Rs. 348.82 crore) have been completed. Solid waste management (Rs. 75.99 crore) and construction of 22,766 houses for urban poor (Rs. 307.18 crore), too were incomplete.


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