A moderate risk of default in timely repayment of loans has resulted in Kozhikode city getting a credit rating of BB+ for the implementation of Atal Mission for Rejuvenation and Urban Transformation (Amrut) projects for the period 2015-2020.
However, the credit rating done by the Bengaluru- based Brickwork Ratings India for 2016-17 has said that the prospect for the city in the long-term looked stable due to the efficiency in tax collection and satisfactory financial position. Kozhikode also has a low debt liability for the past six years.
The civic body, it said, has undertaken various reforms to strengthen local self-governance. But the progress in the implementation of reforms under Amrut has been slow mainly due to the Assembly elections in 2016 and Corporation election in 2015.
A major concern, the rating agency pointed out, was that the corporation heavily depended on government grants. The implementation of the 10th Pay Commission recommendations and payment of arrears for employees from 2018 would result in higher revenue expenditure.
The civic body has a shortage of trained and professional manpower, especially in the accounts and financial departments. It lacks autonomy in staffing, leading to weak administration and inadequate decision making.
Building rules
The report of the Comptroller and Auditor General of India on Local Self-Government Institutions in Kerala has highlighted major lapses and shortfalls in the implementation of building rules in Kozhikode Corporation.
An analysis of the financial performance of the civic body showed that there was a lack of clarity on the nature of receipts and expenditure in terms of revenue and capital. Inconsistency in data furnishing and weak information, and non-availability of auditor’s report for the accounts and appending statements for the audited financial statements were other factors.
Revenue source
It was found that the major revenue stream for the corporation was property tax followed by professional tax. Both the incomes were continuously increasing over the years and account for more than 90% of the revenue for the past five years. However, the user charges collected by the corporation were relatively low when compared to property and professional taxes.
Services such as sewerage, green spaces, parks and play grounds are inadequately managed. “The corporation does not have an existing revenue sharing mechanism, resulting in low user charges being collected,” the agency said.
