Empty coffers of the Vijayawada Municipal Corporation (VMC) have apparently hit its financial commitments. Leave alone the salaries of its employees, it could not clear the Union Bank of India (UBI) instalments.
As on Saturday, three instalments were pending as the corporation had to clear them since June. The VMC authorities, however, managed to issue a cheque for the June instalment — April, May and June quarter — on Saturday.
They were clueless as to when they would be able to clear the other two instalments — July quarter (July, August and September) and October quarter (October, November, and December) due on December 1.
The corporation has to mobilise Rs.5 crore to clear the pending dues to the UBI. The VMC has to pay Rs.2.47 crore per quarter to the UBI towards the loan of Rs.70 crore, source say. The VMC failed to pay the instalments just after its higher-ups had asserted in May this year that the UBI loan would be cleared in another one-and-half years. The blessing in disguise is that the HUDCO loan is being repaid automatically as the VMC has escrowed some of its tax collections to it.
The corporation took a loan of Rs.175 crore from the HUDCO to keep up the momentum of the projects taken up under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). The VMC also planned to take Rs.50 crore from the Corporation Bank. Later, it took the loan from the HUDCO, sources said.
The VMC had bitter experiences in the past also. The Corporation Bank served notices on it to clear loans valued at Rs.27 crore taken by the contractors who had executed development works in the city in 2011. The loans were sanctioned at the fag end of 2010. The contractors were supposed to clear the loans in three months from the date of sanction, but they could not do so, putting the VMC in a fix. The VMC mortgaged some of its properties to secure the loans. Opposition parties have been airing the view that the HUDCO loan at an interest of 8.75 per cent per annum would lead to a huge financial burden.