As the Brihanmumbai Municipal Corporation (BMC) - known as the country's richest civic body, grapples with finding new sources of revenue, it has expressed its plans to withdraw from its reserve funds. A trend that the elected representatives of the Mumbai 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. 50952.27 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.
Every year, the municipal corporation keeps aside 2% of the total budget in its contingency fund. Over the years, the amount had reached Rs 1,000 crore. Then the Covid-19 pandemic broke out and a lockdown was imposed. Civic officials said that less than Rs 30 crore now remain in the contingency funds.
Currently, there is a total amount of Rs 77,635.22 crores held in reserves by the civic body. As mentioned in the Budget 2021-22 document presented by the civic body on February 3, Rs. 26682.95 crore are being held by BMC in reserves which cannot be dipped into even in emergency situations as it has been allotted for committed liabilities like provident fund, pensions, gratuity and other deposits. The remaining Rs 50952.27 crores have now been linked to various infrastructure projects. "This will ensure that reserves are funnelled towards Capital Expenditure to improve infrastructure for citizens in Mumbai," said a BMC officer.
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 a huge sum of money from SRA, MHADA, and even various departments of the state government, which the civic body has mentioned in its budget document terming it as sources of revenue for fiscal 2021-22.
"BMC needs to rethink over its revenue collection, increase sources of revenue. Making budget allocations based on its reserve funds is a very dangerous trend. There was no need for an increase of 16.47 per cent in the budget. Hardly 48 per cent of funds allocated to various development projects have been spent. They should have made the same allocations. The idea of setting up dabbawala bhavan is good, but is it BMC's job when it is facing a financial crisis? It is just a food for thought," said Ravi Raja, senior congress corporator and Leader of Opposition in the BMC.