Civic body plans internal loan as subsidies begin to ‘hurt’

The estimated budget outlay for the department for the 2014-15 fiscal has been pegged at Rs 6,126 crore, lower than the previous budget at Rs 6,443 crore. The total budget outlay for water supply and sewerage includes water supply, sewerage operations, sewage projects and water operations in BMC.

Civic officials said the BMC has been giving subsidies worth Rs 1,200 crore for slums and non-slum domestic users.

Official data shows that while the BMC provides about 200 litres per person per day, the production and supply cost is actually Rs 11.37 per 1,000 litres, which is incurred on transportation and filtering before it is supplied to residents. Meanwhile, it charges only Rs 3.24 per 1,000 litres to the domestic users and Rs 40-60 per 1,000 litres is charged to bulk consumers.

While the Shiv Sena recently promised free water to the city, both the party and the civic administration are aware of the widening gap between the cost of production and user charges.

An analysis of data provided by the BMC reveals that this gap has widened since 2001. While the civic body provided a subsidy of Rs 2.25 per 1,000 litres in 2001-02, the current figure is Rs 7.05.

With ongoing and proposed water supply projects — worth an estimated Rs 42,000 crore — in the pipeline, senior civic officials admit it would be difficult to fund these without a significant tariff hike.

Senior civic officials hinted that although the pre-election budget has not touched on increasing water charges or sewerage charges, the civic administration could increase the water and sewerage taxes after the Assembly elections.