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Monday, April 12, 2021

BMC faces flak over plan to issue credit notes to developers

The BMC had planned to issue the credit notes as an attempt to tide over a massive revenue crunch that the country's richest municipal corporation is facing due to the pandemic-induced lockdown.

By: Express News Service | Mumbai |
Updated: March 20, 2021 1:59:02 am
BMC newsSo far, the BMC has received about 150 purchase notices from private land owners whose plots have been reserved for public amenities in DP. (File Photo)

The Brihanmumbai Municipal Corporation (BMC) is facing criticism from corporators of Opposition parties over its decision to issue credit notes of worth about Rs 9,000 crore to developers for taking up construction of houses of project-affected persons (PAPs). The civic body has planned to construct 12,000 PAP units in five administrative wards.

The BMC had planned to issue the credit notes as an attempt to tide over a massive revenue crunch that the country’s richest municipal corporation is facing due to the pandemic-induced lockdown.

According to officials, under the new plan, the civic body will pay credit notes of worth Rs 8,800 crore to developers or land owners who will come forward for development of land for project affected persons.

Samajwadi Party leader Rais Shaikh called the move a scam and wrote a letter to Chief Minister Uddhav Thackeray and Municipal Commissioner I S Chahal demanding an inquiry in the matter.

“For the first time in its history, the BMC will issue credit notes instead of paying cash to contractors. Those holding these credit notes will be allowed to use them to pay property tax, settle, penalties, or even sell them in the open market. There are several anomalies in the above mentioned tenders. The BMC has awarded a contract for construction of homes of a similar size and nature units as part of its Ashray Yojna. Here the cost is only Rs 2,000 crore for construction of 12,000 units. So there is massive disparity in cost as far as the above mentioned tenders for PAP units are concerned,” said Shaikh.

“Handing out credit notes can lead to the corporation losing sight of the need to curtail expenditure. The entire scheme is a Rs 9,000 crore scam and will turn out to be a white elephant for the BMC,” he added.

The BMC has set a target of construction of 12,000 housing units for families that will be affected due to various infrastructure projects. The civic body has invited bids asking developers or land owners who can give up their lands for construction of houses for PAPs. “Earlier, the civic body had decided to give transfer of development rights (TDR) or money if developers construct PAPs. However, now taking note of financial crunch the BMC decided to give credit notes to these developers,” said a BMC official.

Officials added, “The developers or land owners can use these credit notes to pay property tax or other municipal taxes. They can also sell their credit notes to other developers.”

BMC will give credit note worth Rs 6,000 crore and TDR of Rs 2,800 crore. With TDR, developers are given rights to develop in any other parts of the city in lieu of the land they surrendered for development.

BMC is facing a financial strain as the lockdown has hit revenue sources. BMC had to revise its major sources of revenue due to losses. Property tax is one of BMC’s biggest sources of revenue. For 2020-21, the property tax collection target is Rs 5,200 crore but with only few days left in the fiscal year, it has collected Rs 3,700 crore.

The BMC is also facing losses in development plan department. Earlier, in a bid to save money the BMC had slashed Rs 2500 crore from its capital expenditure and 20% of the cut was imposed on establishment expenditures in 2020.

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