Deccan Chronicle 09.12.2009
Bankrupt BBMP will go for broke
December 9th, 2009 By Our Correspondent
Dec. 8: The cash-strapped Bruhat Bangalore Mahanagara Palike (BBMP) which is going to the polls on February 21, 2010 after an eight year gap is being compelled by the ruling BJP to apply for a loan for a whopping Rs 5,000 crore; a move that many say is a recipe for disaster.
With elections looming, the ruling BJP is leaving nothing to chance, pushing BBMP to launch all its projects before January 15, 2010 in a bid to impress the electorate and beat the election code of conduct that comes into effect on that day.
Highly placed official sources said the BBMP is negotiating with a nationalized bank for a loan against the government’s letter of support and a guarantee to escrow income from the Sakarama scheme and property tax with the banker.
“This money is being raised to be spent on the Rs 22,000 crore worth projects announced for Bengaluru by the B.S. Yeddyurappa government. A tender was called by BBMP to rate its credit worthiness to go for loans on November 14th, with a deadline of just one week for submission. It was done so discreetly and hurriedly that tenders were opened that day itself.
Now that the State Election Commission has announced a calendar of events, the BBMP is in last minute discussions before it inks deal with the nationalised bank,” sources said.
Reeling out further details, the official said that the BBMP has ambitious plans of raising over Rs 10,000 crore through the newly packaged Sakrama scheme that allows regularization of unauthorized constructions.
“There is a fundamental problem with this scheme — rewarding violators and punishing those who have abided by the law. This being the case, the scheme has failed to take off twice, once in 2005 and 2007. There are hundreds of batches of petitions pending before High Court on Sakrama scheme and there is very little chance for this new scheme to sail through as the court has taken objection to the scheme on several occasions.
As such the very repayment procedure is set to collapse. Eventually, the BBMP will have to depend on property tax funds, which is also being escrowed in the same bank, else it will have to raise another loan to service this loan and end in a debt trap,” sources explained.
On the property tax front too, the BBMP has fallen back dramatically. For 2007-08 the BBMP collected a record Rs 750 crore whereas for 2008-09, the corporation has so far collected only Rs 520 crore. “Compared to previous years, the tax base has increased by over 30 percent. With each and every detail of all the 18 lakh properties available on GPS, the tax collection could have been more effective.
But unfortunately it has turned out to be the other way round as revenue has dipped by over 50 percent as against a target of Rs 1,300 crore, thanks to lacklustre revenue officials. With the financial health of BBMP in red, how prudent is the authority in going for huge loans is the big question,'' the officer said.
