India’s civic bodies most fund-starved

BMC to draw money from its reserves to fund projects

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Geetanjali Minhas | March 9, 2018 | Mumbai


#BMC   #Municipal Body   #Civic Body   #Municiapl Governance   #Mumbai  

BMC will for the first time draw money from its reserves to fund its ambitious infrastructure projects.

The richest civic body of the country will for the first time tap its fixed deposit resources of Rs 69,000 crore to fund infrastructure projects. ‘The beauty of putting money to capital is to improve quality of life, index and business capacity of citizens. With better highways, roads, water supply and marine environment there is more business, which means better taxation system and  property tax where  citizens start walking out of subsidized education, hospitals etc. as their financial capacity moves up’ said  municipal commissioner, Ajoy Mehta speaking at a discussion organised by ORF.

Talking about rationing of water in the city, Mehta said that by the end of next year, BMC will start water metering in residential individual connections to gauge and stop misuse of water. On management and disposal of garbage the civic chief said while it is important that citizens realise their responsibility towards garbage, modern garbage processing centres will be set up in all 24 wards where major portion of garbage will get processed. He also added that by the end of next year all sewers in the city will be mechanically cleaned thereby making Mumbai the first corporation to end human intervention. 

OSD, Development Plan and ORF Distinguished Fellow, Ramanath Jha said that out of the total revenue  that US collects, 15%  goes to cities, in Brazil it is 8%, Russia 6.5%, South  Africa 7%  and in India 0.75%. There is no other country other than India with most malnourished ULB’s. While the BMC has largest municipal budget no other municipal corporation in the country performs so many functions.

“With GST the situation of municipalities across the country had further worsened because the only substantive tax left to municipalities is property tax which is 22% of BMC revenues. Around the world no country can fetch more revenue than 25%-30% of its entire expenditure. This means that even after putting in all its revenue no city on its own can get more than 50% of its own expenditure that it require to function. These are unfunded mandate functions. So when we say cities are not performing, the crux of the matter is they don’t have money to perform” he said.

Jha also said that with huge migration happening into the cities, the city administration needs to be funded properly and the amount of revenue that has to be shared from centre to the state has not happened.

He further said that The State Finance Commission which was formulated due to 74th Constitutional amendments for carrying out the job has not had any impact nor improved situation. ‘The new Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act of 2013  has made matters worse as to acquire land  BMC needs to pay two times the  Ready  Reckoner Rate. Even after spending their entire revenue of 20 years the municipal corporation will not be able to acquire them. These are the kind of gaps that are developing… it’s not a very easy time for cities of this country, in future  it  going to be  tough…” said Jha.                 
 

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