It’s a five-year itch for the civic body

The Brihanmumbai Municipal Corporation (BMC) has gone from boom to bust. Cash-rich in 2003, it has now become cash-strapped. The next five years are going to be grim, says the latest report on the financial health of the corporation.

Previously too, the corporation had entered a lean phase in 1995. It took eight years to come out of it and become cash-rich again in 2003. And six years later, it has hit the trough again.

The city’s development graph will take a nosedive if the projections made in the report turn out to be true. Wild overspending, recessionary trend, and increase in salaries of civic employees have taken a huge toll on the coffers of the BMC, the richest municipal corporation in the country. To cope with the deficit staring it in the face, the BMC has imposed cuts in expenditure. Some big-budget infrastructure projects have been postponed.

Tabling a report on the present financial position, and what it is likely to be in future, the finance department of the BMC has predicted that the civic body’s income would fail to match its expenditure at least till 2014. This is especially grim as the department has not forecast any increase in capital expenditure in the intervening period. The deficit will grow with every passing year during this period.

“The BMC has revised the grades of its employees to pay them on a par with the sixth pay commission recommendations. For this, the revenue expenditure will keep rising for the next three years. Conversely, the recession has left a big hole in the BMC’s income from sources, such as octroi and development plan receipts,” the report said. It will be another two years before the civic body’s income from these sources will improve. If there is no augmentation in sources of the BMC revenue, and the expenditure pattern do not change, the deficit will even out only after 2015, it added.

The finance department has projected the revenue income to grow by 5% every year, and the corresponding revenue expenditure to go up by 10%. To overcome the deficit, the BMC has plans to raise soft loans against deposits for special funds.