Economics. February 4, BrihanMumbai Municipal Corporation: Budget

Transcription

1 February 4, 2016 Economics BrihanMumbai Municipal Corporation: Budget The budget of BrihanMumbai Municipal Corporation (BMC) was announced on 3 Feb 16. The Corporation, which is the richest in the country, has seen a 40% increase in the size of its budget for to Rs. 37,502 crs. With the Corporation to go to the polls in early 2017, BMC has been undertaking increasing developmental expenditure as well as undertaking various administrative reforms to improve efficiency and performance. At the same time, BMC has been seeing a decline in revenues from its traditional chief sources of revenue viz. octroi from crude oil. The Corporation is thus required to begin a process of restructuring of its fiscal resources. Highlights The total size of Budget Estimates for is 37,052crore, which is 39.93% more than Revised Estimates (Rs. 26,479 crore). Capital Expenditure is estimated at Rs.12,874 crore, which is 69% increase from the revised estimates for The budget estimates for Revenue receipts indicate 17.7% increase from that in (as per the revised estimates) There has been a decline in revenue income from chief sources of revenue viz. octroi. Based on the collections till end December and the expected collections for the remainder of the fiscal Rs. 6,650/- crores would be the likely revenues from octroi on crude oil, 16% lower than the budget estimates for the fiscal. There is also a decline in the revenue income (19% decline from budget estimates of ) from Development Plan department i.e. revenue income from fungible FSI, staircase and lift premium etc. The Corporation continues to record a revenue surplus, which it has been transferring to the capital account Alternative taxation sources to broad based tax collection are being considered. Measures to be undertaken to restrict establishment expenditure, improve efficiency and cut wasteful expenditure 1

2 Revenue Receipts Over half of BMC s income is from Octroi (27%) and development plan (25%). Octroi collections have seen a decline in recent times viz. octroi on crude oil on account of the fall in prices of crude oil. An increase in rate of Octroi on crude oil from 3% to 4.5% is estimated to bring in additional revenues of Rs. 500 crores in This will help the corporation to maintain its income flows. Sources of Revenue Income (BE) - Rs. Crs % share Octroi 6, Property Tax 4, Water & Sewerage Charges 1, Receipts from Development Plan 6, Interest/Income from Investments 2, Grant-in-Aid from Government Receipts from Roads & Bridges Supervision Charges Solid Waste Management Receipts from Hospitals & Medical Colleges Receipts from License Deptt Receipts from Markets &Deonar Abattoir Other Receipts 1, Revenue Receipts (Total) 25, Revenue Expenditure Items of Revenue Expenditure (BE) - Rs. Crs % share Establishment Expenses 11, Administrative Expenses 1,269 5 Operation and Maintenance 3, Interest and Finance Charges 78 0 Programme Expenses Revenue Grants, Contributions and Subsidies 6, Provisions and write-off Transfer to Reserve Fund Other Refund of taxes Revenue Expenditure 24, BMC Budget

3 Establishment expenditure accounts for nearly half the non-developmental expenditure of BMC. This is followed by revenue grants and contributions and operations and maintenance. Capital Receipts Withdrawals from Special funds account for over half the contributions towards capital receipts. Special fund include asset replacement fund, land acquisition & development fund, school building maintenance fund, urban transport fund and infrastructure development fund on account of fungible compensatory FSI. Loans are another major source of capital receipts, estimated to account for a 21% share in Sources of Capital Receipts (BE) - Rs. Crs % share Loans 2, Grants Contribution from Development Fund Sale proceeds/ premium of land and building Accumulated Surplus Withdrawal from Special Fund 5, Other Receipts 1, Capital Receipts (Total) 11, Capital Expenditure Capital expenditure is to be chiefly incurred towards projects related to traffic operations, roads and bridges. These segments will likely see expenditure to the tune of Rs.4,479 crores or 35% of the total capital expenditure of the corporation. Projects covering water supply, storm water drainage and sewage disposal are the other focus areas of BMC. BMC Budget

4 Items of Capital Expenditure (BE) - Rs. Crs % share Traffic Operations, Roads & Bridges 4, Water Supply 1, Storm Water Drains Health Budget Sewage Disposal 1,037 8 Solid Waste Management & Transport Fire Brigade & Disaster Management Information Technology Market & Deonar Abattoir Repairs to Mun.Properties & Slum Improvement Repairs to Primary School Buildings Others Excess of Income over Expenditure 2 0 Capital Expenditure (Total) 12, Project specific allocations Rs.10 crore towards Smart City Project. Rs.1,340 crore for Cement Concrete Roads in the year to begin before monsoon. Rs.1,466 crore is proposed for Asphalt /Mastic Roads in the year Rs 1,000 crore towards the 33.2-km coastal road project connecting south and north Mumbai. Rs 130 crore for the east-west connector Goregaon-Mulund Link Road and Rs 2,806 crore for city roads Rs.233 crore for the Brihanmumbai Storm Water Disposal System Rs.765 crore for improvement of Storm Water Drains network Rs. 3,693 cr towards various health and medical initiatives, 45% increase from that in (revised estimates). Rs.2,394 crore to the Education Department. Rs. 2512cr towards solid waste management - target to construct 1,070 new toilet seats under Pay & Use Toilets and 3,340 new toilet seats under Community Toilets. BMC Budget

5 Reforms The Budget has announced various administrative and octroi related reforms for the corporation. They have been summarised here Administrative reforms Performance Management - upgrading the skill set of employees to bring about efficiency and simplification in operations. SAP HR module and Bio Metric Systems for keeping employee records, making payments and marking attendance. Right to Services Act, 2015 as per which 14 services (such as health, development planning, sewerage operations etc.) are to be provided online. Expeditious Tender Invitation- a system of tracking/monitoring any delay in publishing a tender notice on MCGM portal. Collection of Property Taxes/ Water Bills through various branches of Banks. E-tendering to improve confidentiality and an environment for fair competition in the tendering process. Policy for governing Variations of Contracts - policy for governing extra/excesses has been framed with cap on the value of extra/excess work. Ease of doing business by simplifying forms, improving processes, resolving issues and speeding up grants of permissions /permits. Extending various civic services to the urban poor and improving the standard of these services. Slum Assessment to cover slums under property tax. Early Bird Incentive to encourage the tax payers to make early payments. Octroi To check evasion, numerous steps being undertaken like CCTV Cameras, digital weigh bridges and stepped up vigilance at the Octroi check posts. Octroi refund - refund procedure for Octroi has been streamlined and IT enabled. Octroi on Ethanol at 7% ad valorem to be abolished Increase the rate of Octroi on crude oil from 3% to 4.5% ad valorem. This could fetch additional revenue of Rs. 500 crore at current prices. BMC Budget

6 Contact: Kavita Chacko Nitika Agarwal Economist Associate Economist Disclaimer This report is prepared by Credit Analysis &Research Limited (CARE Ratings). CARE Ratings has taken utmost care to ensure accuracy and objectivity while developing this report based on information available in public domain. However, neither the accuracy nor completeness of information contained in this report is guaranteed. CARE Ratings is not responsible for any errors or omissions in analysis/inferences/views or for results obtained from the use of information contained in this report and especially states that CARE Ratings has no financial liability whatsoever to the user of this report. BMC Budget