Post GST, state to devolve funds to BMC monthly

Starting July 1, when the Goods and Services Taxes rolls out and will replace octroi in Mumbai, the state government plans to devolve funds on a monthly basis to the Brihanmumbai Municipal Corporation (BMC) to ensure a steady revenue stream for the civic body. 

The amount will be calculated based on the highest value of octroi collected in the past five years, with a natural annual increase of 8 per cent factored in. Maharashtra finance department sources said FY2013-14, which had octroi revenue of Rs 6,755 crore, will be considered the benchmark. 

“We will adopt this best-of-five formula and factor in an annual increase of 8 per cent for all municipal bodies in the law,” Maharashtra Finance Minister Sudhir Mungantiwar told DNA. 

The Shiv Sena, which controls the BMC, India’s richest civic body, is worried about the impact of GST on its coffers as well as financial autonomy.

“We cannot change the Finance Commission’s norms for devolving funds to the civic bodies... Moreover, depriving Mumbai of funds has obvious political repercussions for our party,” said a BJP minister, when asked about the Shiv Sena’s fears that the advent of the GST may hold the BMC’s financial autonomy hostage to political whims of the state and Centre.