The cash-strapped country's richest municipal corporation is struggling to meet revenue targets at a time when the receivable outstanding receipts are huge in value. To boost its revenue collection for fiscal 2021-22, the civic body has been aggressively following up with the state government departments for outstanding dues of Rs 5,274 crore and with SRA for the outstanding dues of Rs 1,600 crore.
Following the financial crisis, the civic body has expressed its plans to withdraw from its reserve funds, a trend that the elected representatives in the civic body say can prove to be very dangerous for the BMC in the near future.
If the BMC continues to dip into its available reserves of Rs 50,952.27 crore in every budget, the reserves are sure to run dry in about a decade with the civic body’s increasing expenditures and low revenue generation, corporators have said.
There are three major factors contributing to BMC’s revenue coming under such stress. Firstly, the introduction of the Goods and Services Tax (GST), octroi being discontinued and low revenue from the property tax collection. Besides civic body has failed to recover huge sum of money from SRA, MHADA and even various departments of the state government, which the civic body has mentioned in its budge document terming it as sources of revenue for fiscal 2021-22.
"Even though in the current year, there are shortfalls in revenue collection from Property Tax and Development Plan (DP) charges, BMC has adequate resources to tide over this temporary cash flow issue. Up to January 2021, we received Rs 8,154 crore as octroi compensation from the state government and we expect to receive a total of Rs 9,799 crore by March 31, 2021. Considering the drop in revenue collection, BMC has already revised the budget for 2020-21 to a total size Rs 31,182 crore reducing Rs 2259 crore," said BMC commissioner Iqbal Singh Chahal.
He further said that drop in property tax collection is a temporary phase and they expect property tax collection to come to normalcy soon. "We are continuously following up with State government departments for outstanding dues of Rs 5274 crore and with SRA for the outstanding dues of Rs.1600 crore. We expect to receive this amount from the government in the year 2021, as the proposals are under active consideration," said Chahal.
Therefore, all eyes are now glued on the civic administration whether they will be able to recover the outstanding amount from the state government.
A major chunk of the arrears worth Rs 3,500 crore is in the civic educational programmes/grants. Besides there are arrears towards water supply by BMC to various state government offices and government residences. It is also mandatory for the government to pay property tax for these properties. However, the state government offices have not deposited property tax and water bill for the last several years. Also, the state government provides subsidy to the municipality. Of the total outstanding amount of Rs 5,274.16 crore, Rs 1,645 crore is due towards property tax and water bill, while remaining Rs 3,629.83 crore towards various subsidy to be paid to the BMC.
"We have been following up with these departments from time to time, however the arrears which has accumulated over the past several years are still pending," said a BMC official.