The Hindu        28.12.2011

BBMP on verge of defaulting on loan repayment

Staff Reporter

The financially starved Bruhat Bangalore Mahanagara
Palike (BBMP) is on the verge of defaulting on interest repayment to the
tune of Rs. 750 crore. If the civic body fails to repay the amount by
the end of this month, all its bank accounts are likely to be frozen.

The
Rs. 750 crore is towards repayment of hundi payments and soft loans
borrowed through over 600 accounts from 12 different financial
institutions totalling about Rs. 3,800 crore. (Hundi system is a
temporary agreement with the banks to clear the bills of contractors).

Revealing
this in the BBMP council on Tuesday, Commissioner M.K. Shankarlinge
Gowda said the civic body’s credit rating had dropped due to mounting
debts. Asked if the BBMP would take up any development work this fiscal,
he said the BBMP was now making efforts to mobilise resources and repay
loans.

He added that the State Government had noted
that the BBMP’s 2010-11 budget was “unrealistic.” The Government had
pointed out that contrary to the revised budget estimate of Rs. 8,848
crore, revenue generation from all sources was just Rs. 3,517 crore. It
had directed the BBMP to put new projects on hold, besides reconsidering
the work codes and tenders that were in various stages.

He
said that according to indications, the BBMP would be able to collect
Rs. 1,000 crore by the end of this fiscal from all sources. “Of this,
around Rs. 500 crore will be spent on development works. While old wards
will get Rs. 2 crore, the new wards will get Rs. 3 crore. Officials
have been instructed to draw up a programme of works within this limit,”
he said.

Realistic budget

Meanwhile,
to prevent embarrassment in future, the BBMP would present a realistic
budget within the stipulated time as per the Karnataka Municipal
Corporations Act, 1976.

He said that the budget draft would be submitted to the Standing Committee for Taxation and Finance by February 15.

“We
will ensure that the BBMP budget is presented soon after the State
Budget so that a realistic budget can be presented,” he added.

Mr.
Gowda said he had written to the Government on December 14 stating that
the BBMP was now in a better financial position to take up a few
projects.

Earlier, the Opposition parties — Congress and Janata Dal (S) — demanded that the “unrealistic budget” be withdrawn.

On Tuesday, elections were held to 37 vacant posts in the 11 Standing Committees. All the members were elected unanimously.