Hindustan Times 05.02.2010

BMC cash crunch may pinch you

If the Brihanmumbai Municipal Corporation (BMC) does not implement cost cutting and revenue boosting measures, it could run into a deficit of Rs 4,512 crore in the next five years.

These were the estimates in a confidential report given by the finance department to the standing committee two months ago.

A deficit budget indicates that the expenditure is more than the revenue. The civic budget for 2010-11 did not propose any tax hikes.

But Mumbaiites cannot celebrate yet. A look at the methods the BMC plans to adopt to mobilise more funds shows that citizens may end up being burdened.

The cash crunch is due to a dip in octroi revenue and increased salary expenditure.

Expecting a revenue shortfall of up to Rs 6,000 crore, the BMC is mulling over a hike in octroi, revising property tax and charging builders a premium on additional floor space index above 0.33. Increase in octroi means prices of commodities will rise. A revision of property taxes will lead to a 100 per cent hike in tax for the island city and 75 per cent for suburbs.

A premium on additional FSI will cause real estate prices to escalate. “Superficially, the administration is saying that there will be no increase in taxes, but by adopting all these measures it will end up burdening the common man,” said Congress corporator Sameer Desai. Budget 2010-11 has been raised by proposing a loan of Rs 6,000 crore from internal and external sources.

The BMC’s internal special funds have been exhausted. “We have decided to cut establishments costs to 40 per cent from 65 per cent. Many development projects will be undertaken on build-operate-transfer basis,” said Municipal Commissioner Swadheen Kshatriya.

Next year’s deficit is expected to be Rs 603 crore. The BMC last had a budget deficit of Rs 644 crore in 1999.