In action replay of last year, BBMP has presented a massive budget outlay of Rs.9100 cr for the city on a base of unproven revenues and uncommitted grants.

BBMP Council’s budget session in progress on August 18th 2011. Pic: Navya P K.

Last year BBMP’s actual receipts were Rs 4930 cr lesser than the projected amount of Rs 8447 cr. This year, the gap may be bigger, with a seemingly impossible expectation of receipts of Rs 9112 cr. This, along with opening balance of Rs 85 cr, is expected to cover expenditure of Rs 9196 cr for 2011-12.

Reading out the budget at the Council meeting on August 18, G Manjunath Raju, Chairman of BBMP’s Taxation and Finance Committee, said that additional revenue of Rs 5595 cr will be realised through some new steps.

But many of these steps are the same that BBMP had proposed in last year’s budget, such as collecting higher property tax, auctioning of hoardings and widening the trade license fee net.

Property tax target same as last year

In fact, the target for property tax collection this year is the same as last year – Rs 1500 cr. In the last budget, property tax was projected to go up from Rs 795 cr to Rs 1501 cr. It was based on the premise that 4.6 lakh more properties will be identified through GIS and brought under tax net.

But overall, only Rs 894 cr was collected as property tax, says BBMP’s Action Taken Report (ATR) which was released along with the budget. Only 2.12 lakh new properties – less than half the target – were brought under the tax net, says the ATR.

BBMP’s justification for the same Rs 1500 cr target this year, is that all properties are under tax net now, and that commercial tax rates will be levied from unaided educational institutions, hospitals etc. For instance, BBMP plans to collect Rs 50 cr by levying three times property tax from vacant site owners for site cleaning.

Advertisement tax this year is projected to be Rs 150 cr. But only Rs 9 cr could be collected last year on a projected amount of Rs 100 cr. (This is because advertisement renewal was stopped by Commissioner’s order in July 2010 and the new advertisement policy was not enacted.)

Same is the case with trade license fee – it was supposed to go up from Rs 9 cr to Rs 107 cr last year, but BBMP collected only Rs 16 cr altogether. Yet, this year too BBMP has set its target high, at Rs 85 cr.

When asked how revenue targets will be met this financial year, Manjunath Raju does not have any clear answers. "There is change in policy with respect to property tax, optical fibre cables etc. It will get done; work will be carried on by the committee members who come into power next year. It is a continuing process."

Manjunath Raju, Chairman of BBMP’s Taxation and Finance Committee. Raju is councillor of Kadu Malleshwara Ward. Pic: Navya P K.

The one change this year is that the BBMP has given up hopes of revenues from the Sakrama (regularisation of building violations) settlement. Sakrama has not been included in the receipts this year. Last year, BBMP ambitiously estimated Rs 750 cr from Sakrama even as the Sakrama Bill itself had not been passed.

Amidst all, a new ambitious revenue component added this year is collection of Rs 780 cr from telecom companies which run their optical fibre cables underground or through Storm Water Drains (SWDs).

Projecting receipts from non-existent state govt grants

BBMP has also inflated its sources of money from government grants. This year, it shows the state government granting Rs 2300 cr, even though only Rs 250 cr has been allocated so far. This allocation was done in state government budget earlier this year.

More than Rs 2000 cr is yet to be granted, but this amount is included already in receipts. Of this amount, Rs 602 cr is expected as grants under 13th Finance Commission and State Finance Commission (SFC). In addition to salaries and some administrative expenses of BBMP, these funds are also allocated for works on roads, parking, SWM etc.

"Finance Commission grants are given annually, but state government can decide on the amounts; it does not have to give the amount specified in the budget," says a highly placed official in BBMP’s Accounts department, on condition of anonymity.

Rs 1500 cr has been included as special development grants, which is up to the state government to decide on. Last year Rs 1300 cr was requested under this head, but only Rs 300 cr was granted.

"BBMP has requested a total of Rs 3000 cr from state government, including the Finance Commission funds. The draft budget is only an estimate; it has to be passed by BBMP Council and state government. So the budget will keep getting revised depending on fund receipt, but usually the draft budget gets passed without many changes," says the BBMP official.

Defending his committee’s projection on grants, Raju, however, says, "Unlike last year, we had a series of meetings with the government already and are sure of getting the funds." When asked which projects would get affected in case of lack of state funding, Raju says that the committee has not thought about it yet.

He says that there is no priority in terms of the projects in general either. "We have given funds to all departments. The Commissioner will decide on which projects should be prioritised. Our focus is only on getting the receipts."

JNNURM grant funds of Rs 216 cr will be used for storm water drain (SWD) works, flyover and underpass constructions, etc.

Grants apart, borrowing this year will be Rs 1065 cr, from HUDCO and other agencies.

On monitoring of projects during implementation, Raju says that the concerned Standing Committees (SCs) can audit them, and that Taxation and Finance Committee can only enquire to the SCs about project progress.

Infrastructure takes bulk of the expenditure plan 

Like last year’s budget, infrastructure works are given importance in this year’s budget too. Allocation for capital works has grown to 66% compared to last year’s 58%. Another 3% is for JNNURM projects. Allocation for health and education combined has gone down to 2% from 6% last year. Welfare is allocated 6%. Administration, maintenance, etc., make up the remaining 23%.

In grant for each ward, 10% is reserved for Rain Water Harvesting (RWH), Rs 25 lakh is granted for dry waste segregation centre/ organic waste converter, and Rs 4 lakh is for medical grant for the needy. Funds for wards is the same as last year – Rs 2 cr for old wards and Rs 3 cr for new wards.

TDR bank proposed, size of BBMP zones to be rationalised

Several new policy steps are evident in this budget. There is a proposal for a TDR bank wherein only BBMP can buy and sell TDR certificates. "BBMP will only be a nodal agency to facilitate TDR sale" says Raju.

Raju makes it clear that if sellers are demanding compensation BBMP will pay them. "For this we will tie-up with a bank to provide funds at low interest rates. We are not reserving any funds for TDR bank in budget," says Raju. "It will be done in exceptional cases where owners absolutely reject TDR and if road widening is inevitable", he adds.

Zones will be restructured for better administration. " Old zones have more than 50 wards while some new ones have only 8 wards or so. So all 198 wards should be distributed equally among the eight zones (around 25 wards per zone), so that officials’ work load will be even," says Raju.

A number of other projects planned include tree mapping, sapling plantation and introduction of cycle tracks. BBMP says it will also co-ordinate with IIM-B, IISc etc for starting a technical library. Mobile quality control labs for monitoring BBMP works are also on the cards. .

GIS being the flavour of the past few years, yet another project has been added this time: GIS-operated pothole filling machines. Raju says that he stumbled upon the idea on the Internet. No study has been done on this and procurement process has not been finalised. "Developed countries have this system where potholes are tracked through GIS and are filled evenly using machines. We are planning to install one such machine on pilot basis in each zone. It will be done extensively if the pilot is successful," he says. ⊕