The Times of India  21.10.2010

PUNE: For the second consecutive year the development works enlisted in the annual civic budget are likely to suffer due to paucity of funds.

After the first six months of implementing the civic budget for 2010-2011, the Pune Municipal Corporation (PMC) has earned only Rs 1,168.15 crore against a targeted revenue of Rs 2,461.77 crore (36.59 per cent).

It is clear that the civic body will not be able to meet the target in the next six months either. Development works earmarked in the annual budget will be affected and many works will have to be deferred, admits the civic administration.

The civic administration has already admitted before the standing committee that the PMC has issued tenders for works worth Rs 852 crore, while the already committed expenses of the civic body is Rs 1,300 crore. This takes the total expenditure to above Rs 2,100 crore.

While the civic body's total income last year was just Rs 1,951.54 crore. In its Rs 3,196-crore budget for the year 2010-11, the PMC has earmarked Rs 1,987 crore (44 per cent) for capital expenditure and development work.

Municipal commissioner Mahesh Zagade on Friday proposed a hike in civic taxes and imposition of austerity measures to tackle the weakening financial condition of the PMC.

While approving this year's budget, the standing committee and the general body (GB) have already passed the 11 per cent tax hike proposed in the 2010-11 civic budget which is being implemented from April 1.

Accordingly, the 11 per cent hike in the service tax structure is in effect with a steep hike on property tax for the IT sector and charging of octroi on gold and silver on the basis of Value Added Tax (VAT).

"It would be impossible to execute the budget considering the financial condition of the PMC. It is also unlikely that politicians give nod for tax hike as they have to face civic elections in December 2011. A tax hike has already been approved and second hike within a year will not go down well with the citizens," said one of the senior civic officials, who also admitted that there is no option left before the civic administration than to cut the capital works listed in the budget.

After approving the annual budget of Rs 3,027.41 crore for 2009-10, the PMC was able to implement only 60 per cent of the budget works till date as the civic administration could achieve a revenue collection of only Rs 1,951.54 crore against the total target.

The municipal commissioner clarified at the GB meeting that if the PMC has to carry development works on loans, the money needs to be utilised carefully. Replying to the debate over the incomplete 2009-10 budgetary works, Zagade had told the GB that it was not possible to implement 40 per cent of the budget as the revenue collection was not at par with the target.

Standing committee chairman Arvind Shinde said that the committee has not taken any decision. Municipal commissioner Mahesh Zagade on Friday proposed a hike in civic taxes and imposition of austerity measures to tackle the weakening financial condition of the PMC. "We have deferred the proposal and it will be discussed in the next meeting of the standing committee," said Shinde.

The Deccan Herald  21.10.2010

State government leaves mendicant BBMP in lurch

Bangalore, October 20, DHNS:

The cash-strapped Bruhat Bangalore Mahanagara Palike (BBMP) is in for a rude shock with the state government asking the civic body not to expect any grants from it. The Palike had expected Rs 1,300 crore by way of special grants.

The budget approval letter dated October 8, 2010 from the government has come with a rider: “The BBMP should not expect any grants from the state government.” The letter also states that the BBMP should enhance its revenue generation capacity to ensure that there is no shortfall of funds, and to streamline property tax recovery. 

Apparently, the ‘denial’ of funds coupled with the uncertainty over the Akrama Sakrama scheme, which could have generated an additional revenue of Rs 800 crore, has led to grave concern in officials and corporators over the fate of projects proposed in the budget.  “While there might not be any direct impact as for the present, the pinch will certainly be felt with little funds at our disposal, collected as property tax,” sources told Deccan Herald.

Tenders on cards

However, Chairman for the Taxation and Finance Committee, P N Sadashiva expressed confidence that the state government will indeed provide Palike with the special grants. “We have already initiated the process to call tenders with the anticipation of receiving funds from the government. The tenders will be called for in the first week of November,” he said.

Meanwhile, BBMP Mayor, S K Nataraj has stated that the Chief Minister B S Yeddyurappa would declare the quantum of funds to be released in the Palike Council, shortly.

With outstanding payments to contractors totalling to Rs 1,600 crore, the Palike is now reeling under debt. And overhead costs including staff salary and grants for ward-level projects are sure to be a financial burden in the absence of State grants.

JnNURM funds

 Apart from special grants, the state government grant amount to Rs 1,866 crore including sops and SFC assistance of Rs 403 crore.

The grants were to constitute nearly 23 per cent of the anticipated revenue for the present financial year. As if to add insult to injury, the BBMP is yet to receive 35 per cent contribution of the Union government under the Jawaharlal Nehru National Urban Renewal Mission (JnNURM).