TWO YEARS after applying the brakes on inflated budgetary outlays that were not matched by commensurate real expenditure on capital works, Mumbai Municipal Commissioner Ajoy Mehta on Monday presented budget estimates for the financial year 2019-20 with a modest 12.6 per cent increase in outlays while continuing to promise realistic and achievable goals in improving infrastructure. Mehta presented annual budget estimates for the Brihanmumbai Municipal Corporation totalling Rs 30,692.59 crore, including proposed capital expenditure of 11,480.42 crore, a 21 per cent increase over the previous year’s capital works outlay.
Amid a continuing dip in revenues, Mehta made cautious additions to proposed capital expenditures in comparison with the last two years. But he stayed on the course he set in 2017-18, when allocations were slashed by almost one-third in comparison with the previous year’s outlays with a view to making the budget of the country’s richest municipality more realistic, transparent and understandable for laypersons.
The Brihanmumbai Municipal Corporation has claimed to have narrowed the gap between outlays and actual expenditure over the past two years. Real expenditure on capital works has inched slowly forward over the past several years. For 2019-20, the BMC has proposed capital expenditure of Rs 11,480.42 crore, while revised estimates for 2018-19 show capital expenditure at Rs 7,797.56 crore. The track record of real expenditure on capital works over the earlier years is unimpressive – Rs 6,111.07 crore in 2017-18, Rs 5,399.67 crore in 2016-17, Rs 7,630.60 crore in 2015-16 and Rs 7,448.08 crore in 2014-15. “By continuous project monitoring, with strict implementation, accounting reforms and timely efforts, now we are moving towards increasing capital expenditure rather than revenue expenditure,” Mehta said.
Revenue expenditure or expenditure on establishment is estimated to be Rs 19,205 crore in 2019-20, an increase of 8.48 per cent over the 2018-19 budgetary allocation of Rs 17,703.75 crore. This is largely on account of the implementation of the 7th Pay Commission, which has brought down the revenue side surplus considerably. Mehta said, “We intend to implement some administrative reforms to curtail establishment expenditure by managing the duties of staff, their duty hours and rationalising human resource deployment.” He was quick to add that there would not be layoffs, but an HR “rationalisation” will be implemented for future hiring.
On the income side, the municipality has again failed to achieve targets in collections from development charges that it collects from builders and from property tax. For 2018-19, the BMC had anticipated collections of Rs 3,947.38 crore from development charges but the continuing real estate sector slowdown resulted in collections of Rs 3,453.54 crore. Property tax collection, targeted at Rs 5,206.15 crore, was eventually estimated to be Rs 5,016.19 crore. Once again the major source of revenue for 2019-20 is pegged to be the grant-in-aid on account of compensation in lieu of octroi, a sum of Rs 9,073 crore, plus targeted collections of Rs 5,016.19 crore from property tax and Rs 3,453.64 crore from development charges.
Keeping in mind the major infrastructure projects likely to take off this year including the coastal road, Goregaon-Mulund Link Road and sewage disposal projects, the BMC has opened up a total of Rs 52,635.80 crore from the civic body’s reserves of Rs 70,000 crore.
Citing transparency in budgeting, Mehta also presented the position of the BMC’s committed liabilities and availability of resources, including the Rs 52,635.80 crore available in the BMC’s reserve funds, ranging from its asset replacement fund and infrastructure development fund to its accumulated surplus. This sum has now been linked to various infrastructure projects. In addition, its Fixed Deposits, Provident Fund, pension fund and other special funds total Rs 22,902.20 crore.
In 2018-19, the 145-year-old BMC’s first budget estimates since the implementation of the GST saw the civic body proposing to increase capital expenditure by withdrawing funds from its special reserve funds. Of the Rs 2,743.96 crore proposed to be withdrawn from these, a sum of Rs 574 crore was used, Mehta said on Monday. For 2019-20, a sum of Rs 5,708.77 crore has been linked from the reserves for funding various capital works, a substantial increase from last year.
Addressing the media after presenting the budget to the Standing Committee, Mehta rejected the idea of borrowing from the market or levying toll charges to fund infrastructure projects. “It is not financially suitable to borrow from the market through bonds. BMC gets 6-7 per cent interest from FDs in nationalised banks. If we borrow from the market, the interest charged to us will be minimum 10 per cent. Thus, it makes more sense to tap into our reserves.”
To shore up revenues further, Mehta proposed to levy service charges and increased entry fees to various corporation-run facilities such as the viewing gallery at Malabar Hill, Byculla zoo and Shilpgram. In various sectors, the budget proposes cautious hikes in allocations.
For the implementation of the Development Plan 2034, a sum of Rs 3,323,64 crore has been allocated. An outlay of Rs 1,600 crore has been made for the coastal road project. For repairs to major roads including the Jogeshwari-Vikhroli Link Road, SV Road, Ghatkopar-Mankhurd Link Road, etc, there is an allocation of Rs 1,520.09 crore, up from Rs 1,148 crore last year. For ‘citizen-friendly pavements’, the BMC proposes to implement a footpath policy for which a provision of Rs 100 crore has been made.
In 2018-19, three departments recorded expenditures higher than original budget estimates. While the roads and traffic department had a budget estimate of Rs 1,148 crore, this was revised to Rs 1,375.95 crore; allocations for the Storm Water Drain Department were revised to Rs 829.68 crore from Rs 567.28 crore while for the revamp of the Byculla zoo, estimates were revised to Rs 90.81 crore, from the original provision of Rs 35.25 crore.
Meanwhile, the Shiv Sena’s ambitious promise of a property tax exemption for houses up to 500 square feet in size and rebates for those living in houses up to 700 square feet found no mention in the budget speech. The Sena-run civic body had promised the property tax exemption and rebate in 2018, following which a proposal regarding the same was sent to the state government. However, even after the state government allocated Rs 100 crore form the MMRDA for the Bal Thackeray memorial, the BMC budget made a provision of Rs 5 crore for the project.
In addition, the commissioner appeared to snub the Shiv Sena on its demand for financial assistance to the Brihanmumbai Electric Supply and Transport undertaking, saying the BEST continues to make losses on account of inefficient operations. “Leave alone improvement and enhancement of services, there is no financial strength to even sustain the present operations,” Mehta said while making a modest provision of Rs 34.10 crore for capital investment in BEST including for an intelligent transport management system, IT-enabled depot operations, measures that will directly benefit passengers. He also proposed a Rs 10-crore provision for BEST employees’ housing.
After the collapse of Andheri’s Gokhale bridge, allocation for the Bridges Department has risen to Rs 600.75 crore for comprehensive repairs to and reconstruction of bridges. Focusing on strengthening health facilities, budget allocations for the municipal Health Department have risen from Rs 3,636 crore to Rs 4,151.14 crore in 2019-20.