Last budget before BMC goes to polls: Octroi collection badly hit but civic chief announces no new taxes

Budget estimates presented amid hint of need to explore other taxation sources.

Written by Vishwas Waghmode | Mumbai | Published: February 4, 2016 1:42 am
The Budget being presented at the BMC head office on Wednesday. The Budget being presented at the BMC head office on Wednesday.

MUNICIPAL Commissioner Ajoy Mehta on Wednesday sounded a gentle alarm on the Brihanmumbai Municipal Corporation’s (BMC) falling revenues over the past several years, simultaneously stressing the need to consider alternative sources of taxation to broaden tax collections. As expected, with elections to be announced in about 11 months, the commissioner announced no new taxes nor any increase in municipal taxes.

For the year 2015-2016, while the civic body estimated a gross revenue income of Rs 7,900 crore form octroi, by December 31 2015 the collections were only Rs 4,737 crore. “There is a deficit of Rs 1250 crore in the revenue income from this main source of income. Crude oil accounts for a major share of octroi, 39 per cent of collections. Due to a drastic fall in prices of crude oil in the international market, the income expected from octroi is reduced to that extent,” Mehta said.

Considering this, the civic body expects a revenue income of Rs 7,000 crore for 2016-17 as against the budget estimate of Rs 7,900 crore in 2015-16.

On the other hand, Mehta said, the civic body is also seeing a “noticeable downfall” in revenue income from the Development Plan (DP) department as well, especially in revenue income from fungible FSI charged to builders. In the budget estimates for 2015-16, the income from the DP Department was estimated at Rs 5,823 crore, which has now been revised to Rs 4,732 crore. This means a sizeable decrease of Rs 1,091 crore in revenue income from development charges. Octroi, Development Charges and Property Taxes are the BMC’s major sources of revenue, contributing 70 per cent of its total revenue.

With the political standoff on GST continuing, Mehta also stressed on other taxation sources to ensure a good pace of infrastructure development in Mumbai once octroi is abolished. “While the Centre intends to put in place a system to suitably address the loss of octroi, it is also now necessary that the BMC begins a process of restructuring its fiscal sources. We would need to consider alternate taxation sources to broad-base tax collection and to maintain the buoyancy that octroi offers. Towards this end, we are in dialogue with the government and also actively considering various options,” he stated.

Meanwhile, based on a notification by state government in November last year, one third of all premium that the BMC collects from granting fungible FSI to builders will now have to be given to the state government, one more hit on the BMC’s revenue collection. This will have to be shared with the state government with effect from November 20, 2015, onwards.

Despite the significant hit on its anticipated revenues for the current year and for 2016-2017, the commissioner offered a marginal increase in estimated capital expenditure — Rs 12,874 crore, 8.52 per cent more than last year’s budget estimates.

Owing to noticeable decrease in revenue income especially from its main sources of revenue, estimates for 2016-17 show only Rs 173 crore to be transferred to the capital account for meeting capital expenditure. In comparison, according to Revised Estimates for 2015-16, Rs 1924 crore is to be transferred to the capital account.

A sizeable part of capital expenses for the following year, therefore, will be met through withdrawing Rs 5,509.72 crore from various special funds, he said.

“Our first priority will be to ensure financial stability so that shortage of resources does not mar development works in future. As part of long term policy, it is necessary to increase the contributions to the various funds as well as to create new funds. We need to ensure pace of infrastructure development and delivery of civic services,” Mehta said.

Civic officials said that establishment expenses has been reduced alongside, keeping in mind the financial constraints. “This has been reduced because there are vacant posts in the civic body. But we have still made a provision for the Seventh Pay Commission if needed,” said a senior official.

Health: Thalassemia patients get a boost 

With its focus this year on specialised services, the civic body has set aside Rs 900 crore for capital works in the health department, 13.3 per cent more than the previous year, to start a state-of-the-art center for treating thalassemia patients and for providing a yearly estimate of 60 bone marrow transplants in an acquired two-storey building at Magothane. While funds for the hospital will be provided by Tata Trusts (a sum of Rs 6.8 crore), the civic body will pump in an additional Rs 4.87 crore to run the center, expected to start by June.

The BMC will also float specialised services such as more geriatric clinics, stroke clinic and birth defect control clinics to handle lifestyle-related and newly emerging diseases. Another concept, ‘polyclinics day care’, will be started to tackle hypertension, diabetes, cancer and non-communicable diseases. ENS

Education: Outlay for education drops by Rs 107 crore

The education budget estimates for civic schools for 2016-17 is Rs 2,394 crore, about Rs 107 crores less than last year’s allocation.

While most schemes and projects proposed in the BMC’s Education Budget were repeated from last year’s proposals, the civic body has additionally proposed a scheme under which teachers from reputed private schools may dedicate two hours a week to guide students of BMC-run schools. Presenting the estimates for BMC’s schools, Education Committee chairperson Ritu Tawde of the BJP said the allocations included capital expenditure of Rs 324.57 crore.

Apart from 22,799 tablet computers for municipal school students, the BMC issued work orders for 14791 eco-friendly desks and benches last year, whose supply will be received in March, said Tawde.

New initiatives for the coming year include establishing 175 mini-science centres in primary and secondary schools to develop an interest in science. This initiative has a budgetary provision of Rs 4.45 crore. An allocation of 227.42 crore has been made for repairing, reconstructing and upgrading school buildings and Rs 10 crore has been set aside for construction of hygienic toilets in schools.

Additionally, taking cognisance of students dropping out, the BMC will create toy libraries to attract students, a project with an allocation of Rs 1.76 crore. ENS


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