18% increase comes after building premiums reduced by half
Geetanjali Minhas | March 2, 2022 | Mumbai
In a bonanza of sorts, the Brihanmumbai Municipal Corporation fixed deposits have jumped from Rs 78,000 crore to over Rs 92,000 crore during in eight months.
The 18% growth in the FD kitty has come after the state government reduced building premiums by 50%. In financial year 2021-22 BMC estimated Rs 27,811 crore income including Rs 2,000 crore from the development plan. But after the state government of Maharashtra slashed the premium to half, BMC earned an income of Rs 13,543 crore till January 2022 and expected to earn another Rs 1,207 crore by the end of the current financial year. This has resulted in an estimated increase in income from Rs 27,811 crore to Rs 37,538 crore within the current financial year.
Going back, at the end of 2011-12, the BMC had reserves of Rs 26876 crore in FDs. Within the next six years the FD amount increased to Rs 72,000 crore and thereafter remained stagnant due to gradual decrease of income sources like property tax, premium on development work as well as BMC’s infrastructure projects including Coastal Road, construction of roads and bridges among others.
In 2020-2021 due to pandemic, as income reduced for the civic body there was no increase in FD amount and for the first time in a decade the amount reduced by around Rs 450 crore. However, on account of reduction in premiums, by December-end in the current fiscal, the FD amount increased to Rs 87,131 crore and added another Rs 5,504 crore in January to the kitty, thereby increasing the total FD amount over Rs 92,000 by the end of the month. With another month for the financial year to close, the FD has already registered an 18% growth.
BMC Fixed deposits (in Cr)
March 2018: Rs 72,000
March 2019: Rs 76,579
March 2020: Rs 79,116
March 2021: Rs 78,745
January 2022: Rs 92,636
“Due to 50% reduction in premiums charged on building proposals between March 21 to December 21, BMC has a windfall of nearly Rs 14,000 crore of additional income during the last 11 months (due to increase in volumes wherein 2,860 new construction projects got approved – most of which were non-viable with full premiums) resulting in unprecedented jump in BMC reserves from Rs 78,000 crore to nearly Rs 93,000 crore now. A real win-win situation where the real estate sector (the backbone of Mumbai) is on fast track now (despite last two years of Covid pandemic) resulting in tremendous boost in employment in this sector for the next three years at least,” said municipal commissioner IS Chahal.
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