With polling for the 227-member BrihanMumbai Municipal Corporation ending on Thursday, the major issue being discussed within the political parties is how to manage the finances of India’s richest civic body.
BrihanMumbai Municipal Corporation has an annual budget of Rs 22,000 crore.
It is going to be a major task for the winning coalition — the Congress-NCP and the Shiv Sena-BJP-RPI are the contenders — to increase revenue, especially when nearly 70 per cent of the expenses are incurred on establishment and administration. Only Rs 6,000 crore annually is left for the development works in the metropolis.
Parties sing the common tune of abolition of octroi. But the fact remains that octroi is a major source of revenue for the civic body. Of the Rs 22,000-crore budget, about Rs 6,500 crore comes from octroi. The civic body collects over Rs 4,000 crore as property and building taxes.
The civic body has huge expenses to meet. BMC’s annual spending on health care is Rs 2,000 crore. It also spends Rs 1,500 crore on education, Rs 1,800 crore on solid waste management projects, and Rs 1,250 crore on roads and other infrastructure works.
Chief Minister Prithviraj Chavan said during campaigning that if voted to power, the Congress-NCP alliance will give due attention to housing, transportation and drinking water. He said projects worth Rs 1,00,035 crore were under implementation in Mumbai in transportation, drinking water, housing, tourism and railways. Chavan did not forget to reiterate that the government will seriously take up the issue of abolition of octroi. But he admitted that an alternative source of revenue is must to have adequate revenue.
The Nationalist Congress Party has assured a single electricity rate for Mumbaikars if voted to power, while the Shiv Sena-BJP-RPI combine blamed the Congress-led government for not transferring its due share to the civic body. Further, Sena-BJP-RPI also assured that they will make the city livable.
Dr C S Deshpande, executive director, Maharashtra Economic Development Council, said BMC has to go in for massive PPP projects in transportation, housing, water and other infrastructure projects to mobilise necessary funds.
“India’s richest civic body with an annual budget that is far more than several states’ can also weigh the option of going to the markets by issuing bonds, as has been done by some civic bodies in the past. More important, BMC needs to heavily prune the current spending on establishment and administration through efficient use of its revenues,” he said.
Yomesh Rao, director, YMS Consultants said BMC, despite challenges of managing the growing population and other problems, can increase its revenue collection through massive computerisation and improving tax collection.
“Already, BMC has carried out computerisation of octroi and property taxes. But it (computerisation) needs to be increased as it will bring in transparency and reduce corruption. Further, the civic body is overstaffed and it has to do something about this,” he added.
Vaijayanti Pandit, senior director, Federation of Indian Chamber of Commerce and Industry (western region), made a strong pitch for the removal of octroi and for streamlining revenue utilisation.
“It is a high time that octroi be scrapped and an alternative taxation introduced to help mobilise more funds. At the same time, the civic body should decide short-term, medium-term and long-term strategies for making the city an international one,” she added.
