Mumbai: BMC's fixed deposits facing negative growth for first time in a decade

BMC`s FDs witnessed stable growth during the first seven years of the decade. File pic

The country's richest municipal corporation is losing its money. For the first time in a decade, the Brihanmumbai Municipal Corporation's (BMC) fixed deposits (FDs) faced negative growth. In the first seven years of this decade, the annual growth rate of the FDs was 17 per cent, which came down to six and three per cent in the past two years.

Not just COVID-19, but mega-projects like the Coastal Road, Mumbai Sewage Disposal Project (MSDP) and funding for the BEST have added to the BMC's burden.

Apart from spending on projects, the BMC had also provided Rs 1,700 crore to support the BEST

While citizens are facing various economic issues due to the lockdown, the BMC has been facing a crunch for the past two years. The reserve fund, which touched R80,000 crore at one point, has started a downward journey. Although breaking FDs for immediate payments is not new for BMC, the real worry is that the amount withdrawn is more than the new deposits and interest on FDs.

Between March and November 2020, the difference between withdrawal and deposits is Rs 2,300 crore. In other words, the BMC's expenditure is more than its revenue. The BMC recorded a three per cent negative growth in the first eight months of the financial year and looking at the current scenario, the withdrawn amount will only increase till March 2021.

At the end of March 2011, the BMC had FDs worth Rs 23,330 crore, which increased at an average of 17 per cent annually and reached Rs 72,000 crore in March 2018. In the subsequent financial years, the BMC somehow managed to increase the fund by six per cent. In 2019-20, the fund increased by Rs 2,500 crore, but this was mostly due to the interest received.

'Don't blame pandemic alone'

Though BMC officials pointed out that the COVID pandemic has reduced its income sources and increased expenditure, it may not be the sole reason for the reduction. In 2019-20, BMC broke FDs to support its debt-ridden transport wing, BEST with funds worth Rs 1,700 crores. The BMC spent Rs 1,281 crore on the Coastal Road and has appointed consultants for seven plants under MSDP, completed one of them under the Rs 14,000-crore project.

Leader of Opposition Ravi Raja told mid-day, "In the past eight months, they spent an enormous amount on COVID management. Spending on COVID centres with no one using them is a waste. Same goes for funding the BEST. Now, who will give financial support to the BMC?"

He added, "The Shiv Sena is ruling in the state. They should start the procedure to extend the deadline for GST compensation by another five years. Otherwise, it will be difficult for the corporation to manage civic works."

"Neither the BMC administration nor the ruling party is doing any financial management. The compensation for GST ends in 2022. Is there a plan for new income sources or any changes in current sources like property tax, to increase the income?" asked Prabhakar Shinde, group leader of the BJP.

He added, "The officers don't think about making up for the losses incurred by the many concessions BMC gives. The BMC gave R1,700 crore to the BEST, what happened? Neither the BEST is working nor the BMC come out of the financial loss."