BMC proposes property tax hike... again

Civic chief clear that final decision depends on the new corporation; no new concrete sources of income mentioned in Rs 52,619-crore budget; 75pc expenditure on infra projects will come only from FDs

For the fourth budget in a row, BMC has proposed a 16 per cent hike in property tax with a cautionary note that it will be the new elected body that will make the final decision. While the administration has been proposing the hike, the state governments (former MVA and now Eknath Shinde) have been rejecting it every year since 2020-21.

The BMC budget estimates for 2023-24 increased to Rs 52,619 crore with the help of fixed deposits. Rs 27,257-crore projects have been proposed of which 75 per cent will come from FDs as there has been no new source of income in a while. Though the civic body has Rs 88,000 crore in FDs, it needs Rs 1.25 lakh crore for infra projects and Rs 37,156 crore for pension. The corporation estimated Rs 6,000 crore from property tax in 2023-24 on the assumption of a 16 per cent hike. “We have estimated the income considering revision of property tax,” said Iqbal Singh Chahal, municipal commissioner.

FD share in budget hiked

In 2020-21, of the total Rs 33,441-crore budget, the administration proposed use of Rs 4,380 crore from FDs, which is 13 per cent of total amount. Now, four years later, the share of FDs has risen to 36 per cent, underlining dependency on reserve funds as there has not been any new, steady source of income. The BMC proposed Rs 27,247 crore for infrastructure projects out of which 75 per cent will come from FDs.

Also Read: BMC budget: All roads to be concretised, but where’s the money for it?

No concrete source of income

The commissioner said in his budget speech, “It is absolutely necessary for BMC to augment revenue from existing resources, to search for new sources of revenue and to observe strict control on expenditure.” But there is no concrete new income source mentioned in the budget. BMC has planned to appoint agencies for search reports, valuation of property and conducting e-auction of defaulters’ properties. Officials feel that after implementation, compliance by habitual defaulters will improve. 

Ads on BMC properties

BMC plans to identify suitable spots for advertisements on its immovable properties and give them out to advertisers to hike revenue.

Octroi compensation

BMC is receiving grant-in-aid on account of compensation in lieu of octroi. In 2023-24, income on account of compensation is estimated to be Rs 12,344 crore.

Outstanding from state govt

Total outstanding dues from the state government on account of grant-in-aid, property tax etc. amounts to Rs 7,223.42 crore as on December 31, 2022.

Need Rs 1.25 lakh crore for infra, Rs 37,156 crore for pension

The BMC has Rs 88.304 crore fixed deposits. Of this, Rs 37,156 crore is reserved for provident fund, pension of employees and deposits of contractors. This means BMC has Rs 51,147 reserve available for infrastructure works. But as per BMC’s estimation of existing, proposed project cost, it will need at least Rs 1,24,129 crore, which is 250 per cent more than the current funds. A major sum will be required for Sewage Disposal Project (Rs 27,309 crore), Pinjal dam project (Rs 14,390 crore), Goregaon Mulund Link Road (Rs 10,100 crore), Ashray Yojana (Rs 4,038 crore), Waste to Energy project (R3,888 crore) along with 32 other projects.

How the budget reached Rs 52,619 crore
(All figures in Rs crore)

33,290 Revenue income 
18,746 Internal loan/special fund    
312 Sale proceeds/premium of land etc. 
271 Grants and other receipts     
52,619 Total

Sources of income (in crore)

12,344 Grant-in-aid on account of compensation in lieu of Octroi 
6,000 Property Tax 
4,400 Receipts from Development Plan Department
1,966 Water & Sewerage Charges 
1,707 Income from investments 
1,555 Supervision Charges 
1,180 Grant-in-Aid from Government 
465 Receipts from Roads & Bridges
262 Receipts from Licence Department 
303 Receipts from Hospitals & Medical Colleges 
4,269 Other Receipts 
34,451 Total Revenue

Capital Expenditure (in crore)

3,545 Coastal Road Project     
2,825 Traffic and Roads    
2,795 Sewerage Treatment Plant
2,570 Storm Water Drains
2,156 Water Supply
2,100 Bridges     
1,680 Health     
1,434 Sewerage disposal
1,250 Development plan
1,125 Staff quarters 
1,060 GMLR 
550 Repair of civic properties
418 Solid Waste Management
320 Repairs of schools
3,420 Others
27,248 Total

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