Mumbai: BMC mulls borrowing money for civic work

The civic administration said that with polls approaching, corporators would ask it to complete projects or start new ones. File pic

The COVID-19 pandemic has affected the municipal corporation to such an extent that it is considering borrowing money to generate revenue. With its income shrinking and the election year approaching, the Brihanmumbai Municipal Corporation (BMC) is mulling issuing Municipal Bonds to raise money from the open market.

There is a possibility that the BMC sees a deficit in the upcoming budget. In a first, it is looking to fill the huge gap of R6,500 crore between its revenue and spending through the bonds. It claims that its the only solution that would prevent it from disturbing the R80,000 crore worth of fixed deposits.

Municipal Bonds are issued with a guarantee on the interest and the repayment of the principal. They are generally raised to fund infrastructure or day-to-day projects. Interestingly, while one of the costliest projects, the Coastal Road, has its funds ready, the BMC is finding it difficult to manage its day-to-day operations.

Concession of 50 per cent given to developers on premiums to be paid to the BMC, low rate of interest on FDs and a low collection of Property Tax, have hit the corporation hard. mid-day had reported how its income is shrinking owing to various reasons on January 9.

With the election year approaching, the BMC administration claims that there would be demands by corporators to complete or to take up new capital works, which include project works on roads and Solid Waste Management. Officials said completing capital works projects via money raised in the market would be easier.

P Velrasu, additional municipal commissioner, BMC, who is in charge of the Finance department, said, "We are facing trouble with regards to the collection of income as there are concessions on development charges. This slashed our income. In addition, property tax bills are yet to be recovered and the interest on FDs has gone down."

"We managed the COVID expenditure by using our contingency funds and deferred some projects. Yet, the gap is huge and if this situation continues for another year, by the end of Financial Year 2021-2022, we may have to consider issuing Municipal Bonds, Velrasu added.