The Times of India 03.02.2011
BMC to depend less on loans, more on revenue
MUMBAI: While exploring
fresh sources of revenue to boost income, the BMC’s budget for the
financial year 2011-12 may pump at least 30% of the expected increase
into ongoing infrastructure projects. By doing so, the city’s financial
budget will be able to reduce its dependence on internal loans, which
are already scarce from frequent use to meet past budgetary
requirements, officials said. This augurs well for the financial health
of the BMC and will keep the latest budget realistic.
Over the last two years, the recession-hit BMC regularly withdrew funds
from special funds created as part of its long-term fiscal policy. “To
ensure that we kept our expenditure within the estimated income and
Mumbaikars did not get burdened by additional taxes, a sizeable amount
of Rs 3,105 crore of accumulated surplus and various Special Funds had
to be withdrawn. This helped us to avoid a deficit-like situation,” said
a senior civic official.
Under section 109 of MMC
Act, there are limitations on the loan amount the corporation can raise
internally. Last year, too, the then commissioner had made it clear
“that it was not possible for BMC to regularly meet its capital
expenditure by way of loans”. “This is not the ideal situation for the
country’s richest municipal corporation to be in”, he had said. But all
that could change in the latest budget to be announced on February 4.
With limited borrowing options, the BMC will also have to restrict its
expenditure and introduce cuts in its ‘A’ budget, mostly meant for
operating and maintenance of common services like mechanical and
electrical, laundry transport and others. At least 20% of ‘A’ budget
could be restricted and pumped into capital expenditure, which is used
on ongoing projects. The other options left to raise income are limited,
officials said. The upper cap on road tax has reached its maximum limit
in 1999, education cess too cross the maximum mark in 2002. The only
scope is general tax, by as much as 24% and fire tax by 1%. But both
these options were ruled out in last year’s budget. Though there is also
scope for increase in water charges and street light tax. To overcome a
massive deficit in early 2000, the BMC has revise rates of octroi and
property taxes at least three times.