Bangalore civic body on mortagaging spree, contractors pushed to the brink

“We are indebted to the tune of Rs 3400 crore to financial banks and there is no quick easy solutions. We can only work to put in place the mechanisms to recover taxes from properties and to settle the backlogs of dues to contractors and in the future execute only need-based projects,” said the BBMP commissioner M Lakshminarayana.

In November last year, S R Girish, a contractor allegedly committed suicide over non-repayment of Rs 80 lakh in dues by the BBMP. His wife Bhagya was initially assured a compensation of Rs 20 lakh but so far the commitments remain unfulfilled, the family said. “Repaying our loan-related interest has already cost us our profit-margins from the contracts. It is ridiculous that the BBMP is expressing inability to settle our claims after so many years,”  said J Srinivas,  president of the BBMP contractors association.

Since December 2013, contractors have refused to take-up nearly 1359 work related to the civil and horticulture department under the BBMP, instead preferring taking up private construction projects which are on the boom.

Further, for the past two months, the salary of health workers with the BBMP’s waste segregation unit has been withheld owing to lack of funds. “I had to pledge my goldchain with my aunt so that I could buy books and school uniforms for my children. I want to change my job but the contractor says if I miss my work even for a day, he wont hire me again nor will he give my dues,” said a BBMP health worker Devaki.

According to senior BBMP officials, one of the problems with the finances of Bangalore is that though the city contributes over Rs 1,00,000 crore to the state and national coffers in taxes and other forms, it receives less than a pittance in return for funding its own development. The BBMP is infact awaiting state approval of its operational budget of Rs 7773.08 crore to start implementing plans and programs for 2014-15.

A few BBMP corporators have raised objections to city corporation going to commercial institutions for high interest loans when these are available at lower lending rates for development banks. “The city corporation had an offer from the Asian Development Bank and the World Bank of funds at an 11 percent interest rate for a feasible period of 60 to 100 years. But corporation officials fearing the detailed accountability demanded by these international agencies overlooked the offer and went instead to commercial banks,” a former BBMP mayor said.

The former mayor also attributed the inflationary spending of the corporation to Hundi-system- that existed during the administrators rule of the corporation in 2010.

“It literally gave unchecked access to the contractors to claim bills directly from the banks irrespective of the fact if the work was undertaken or not. Ultimately BBMP was billed Rs. 2613 crore in principal and Rs. 21 crore as the interest amount for non-existent development in areas like Rajarajeshwari Nagar, Gandhinagar and Malleswaram,” the BBMP official said. The projects funded under the Hundi-scheme between 2008-10 are right now come under the scanner of investigating agencies. Despite repeated assurance and even after the CAG audit in 2012 the city corporation has not yet come clean with a white paper on its financial status. “As soon as the budget is sanctioned by the government the BBMP will come out with a whitepaper on its finances this year,” BBMP commissioner Lakshminarayana said.