FOR THE first time in its history, the Brihanmumbai Municipal Corporation’s annual budget estimates were reduced by nearly a third, as Municipal Commissioner Ajoy Mehta presented a budget of Rs 25,141.51 crore for 2017-18, down from last year’s estimates of Rs 37,025.15 crore, without curtailing expenditure on key capital works. Despite reducing the total size of the budget by nearly Rs 11,910.64 crore, the civic body’s outlays remain the largest by any municipality in the country.
Clarifying that the significantly smaller overall estimates did not indicate the corporation was reducing actual spends, Mehta said the focus this year had been on making a realistic budget and a “transparent, citizen-friendly budget document” that laypersons could easily understand. Of the total outlay, Rs 8,127.08 crore has been allocated for capital works — in 2016-17, total actual expenditure on capital works was only Rs 5,399.67 crore.
The logic for doing away with the machismo of annually larger and larger budget outlays is not only on account of the BJP and the ruling Shiv Sena’s letters to the commissioner asking for a ‘realistic’ budget. Data shows the actual expenditure is only a fraction of outlays presented in the budget speech, with Mehta saying he was trying to close the gap between announcements and actual performance.
In 2015-16, the estimated capital expenditure as announced on the budget day was Rs 11,684 crore, but the actual sum spent was Rs 7,630 crore. In 2014-15 and 2013-15, estimated capital expenditure was Rs 11,003.69 crore and Rs 9369.41 crore, respectively. However, the actual amount spent was Rs 7,348.08 crore and Rs 6,430.33 crore, respectively.
“It has been observed in the past that departments tend to grossly overestimate capital expenditures. This results in large withdrawals from the Capital Accounts in the Capital Income Side. However, the capacity of the departments to spend these amounts is limited and as a consequence the capital expenditure is far less than expected. This results in inflating the budget and poor budgetary discipline and also paints an incorrect picture of the projected capital works,” said Mehta.
He further said the allocation for the capital works had been made based on set principles in this year’s budget. “It is based on the principles of conservatism which means demand only the actual amount to be spent. Then, the principle of avoidance of duplication in accounting practices. It resulted in paper entries, and has now been minimised to what is absolutely essential,” Mehta added.
In another first, the commissioner listed out a chart of available “reserves”, statutory funds maintained by the civic body, totalling nearly Rs 42,000 crore that can be used for development work. “This makes clear that though BMC is having adequate resources to fulfill its plans, there is no room for any financial profligacy,” said Mehta, adding that there was no hike in any existing taxes and no new taxes were proposed.
For the first time, Mehta has also proposed to integrate the two principal tools that the BMC uses — the Development Plan (DP) which is the city’s roadmap of development for 20 years, and the annual budget estimates. “However, usually, the two are divorced in practice. While the DP is finalised, no attention is paid to the financials of the corporation. Hence, the total funds required for the implementation of the DP is humongous and beyond the reach of the urban local body. Since these goals are unattainable, the budgetary exercise pays lip service to its implementation,” he said.
In all, a total of Rs 2,096 crore has been kept aside for implementation of the proposed DP. Only those projects that can be implemented in the current fiscal have been allocated funds.
Also, for the first time in the civic body’s functioning, the cost of running the day-to-day activities has been reduced by Rs 2,525.56 crore. Confirming that this had never been done in the past with salaries and establishment costs always ballooning in revenue expenditure, Mehta said, “The restrictions have been imposed on granting overtime allowances to employees. Feasibility of outsourcing the services wherever possible, shall be explored. Instructions have been also been given to curtail unnecessary day-to-day expenditure.”
In order to cut flab from revenue account expenditure, the civic body is proposing human resources rationalisation and modernisation. “There are separate cadres in the current system which can be carried out by a single post of executive assistant. We intend to implement it and other reforms in the a big way in the coming year,” said Mehta.
The other significant cutting of flab is in the expenditure on road works, following the extensive road repairs scam last year. While the total cost for the proposed coastal road is Rs 15,000 crore, a provision of Rs 1,000 crore has been made in the current fiscal. For other road works, the roads department has been allocated Rs 1,095 crore, down from the current financial year’s allocation of Rs 2,886 crore for proposed repairs and reconstruction of the roads. The budget also proposes to give a push to the information technology department, cashless services and other projects to push transparency, for which a budgetary provision of Rs 175 crore has been made .
In fact, “transparency” was a keyword that found repeated mention in Mehta’s budget speech, besides “cashless” and “digital” services. “I assure you that a citizen-centric, realistic budget will incorporate stricter monitoring and ensure expenditure is made in the most prudent manner,” he said.