The Bruhat Bengaluru Mahanagara Palike (BBMP), bogged down by a backlog of pending bills of over ₹800 crore, has sought a special grant from the State government to start on a clean slate or permission to raise a loan from nationalised banks.
BBMP Commissioner N. Manjunath Prasad recently wrote to the Urban Development Department explaining that the backlog of pending bills, as it stands today, is ₹1,160 crore for 6,334 works taken up since April 2016. “Of the ₹1,160 crore, BBMP will clear ₹360 crore from its own resources. But it is tough to fund the remaining ₹800 crore,” the letter states.
To fill the hole, the letter suggests three options – State government makes a special grant to clear the pending bills, or State government gives a soft loan to the civic body to be repaid in eight instalments at 4% interest, or stand guarantee to raise a loan from nationalised banks at market rates.
The letter has come under much criticism, as it was written without the approval of the council. Mahadev, chairman of BBMP’s Standing Committee on Taxation and Finance, was in the dark regarding the letter.
However, Mr. Prasad maintained that since it is only a proposal, council approval is not necessary. He added that Mayor Sampath Raj was in the know of the proposal.
Sources said Chief Minister Siddaramaiah will present the State budget early next year. The letter was written as part of the pre-budget consultations with various departments.
However, sources said that in a pre-poll budget, the government is unlikely to allot ₹800 crore for clearing pending bills and is likely to permit the BBMP to raise a loan.
The BBMP has outstanding loans totalling ₹1,200 crore, sources said.
BBMP had a backlog of pending bills of ₹1,600 crore of two years in 2013-14. Since then, it has been paying nearly ₹800 crore every year. However, in 2017-18, pending bills totalled ₹1,160 crore.
“The civic body has been doing fairly well in recent years in revenue generation, especially in property tax targets that have improved its financial health. However, the State government clearing all pending bills is not advisable, since reckless loans is a phenomenon that may then repeat. The government must give BBMP a soft loan with reform conditions like audit of accounts,” said Srikanth Vishwanathan, CEO, Janaagraha Centre for Citizenship and Democracy.
