Kochi Corporation in a debt trap

Owes nearly ₹80 crore to contractors, has just ₹13.5 crore in coffers

Faced with mounting overdues to contractors, routine expenses and funding community kitchens and food kits, the Kochi Corporation is heading towards a financial crisis.

From August 2017 onwards, the corporation owes nearly ₹80 crore from its own fund to contractors taking up construction, road and other work like drain and canal cleaning. Earlier this month, the civic body had promised to pay ₹4.3 crore to the contractors, but the amount has not been cleared yet. The Cochin Corporation Contractors’ Association had withdrawn a strike in December last year after they had been promised ₹10 crore worth of dues. The corporation had availed of a loan to pay off the amount. “That amount, due in January this year, was also not given,” said K.A. David, secretary of the association.

“Since the lockdown was imposed, we cannot take up work but have had to provide for workers. Out of the ₹45 crore owed to us from the State treasury, only ₹1.8 crore has been paid. The government has recently been clearing only bills of less than ₹5 lakh. This puts us in deep financial trouble,” Mr. David said. Road repairs and canal desilting that would have to be taken up on priority before the monsoon, could begin with five workers on each site once permission was given, he said. “But if the issue of the dues is not resolved, this work will also come to a standstill.”

Corporation Secretary Anu R.S. said that the files had not been signed yet but the amount promised earlier this month would be released to the contractors soon.

COVID-19 and the lockdown had dealt a severe blow to the civic body that was heavily dependent on income from taxes, said Deputy Mayor K.R. Premakumar.

Revised tax rates that were implemented this year were expected to bring in additional income of ₹45 crore. “Instead, nothing was collected after March 15 and even regular income from tax has not been met,” he said. If the e-governance system had been functioning and tax payments could be made online, there might have been some respite, he added.

The civic body’s coffers are running dry with ₹13.56 crore remaining. Once salaries and routine bills worth ₹11 crore are paid at the beginning of May, nearly nothing would be left. “Paying salaries and bills after that would become impossible without a loan. Going forward, the situation will worsen,” Mr. Premakumar said.

So far, nearly ₹50 lakh was spent on running community kitchens. Additionally, ₹95 lakh was spent on providing food kits.

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Printable version | Jun 6, 2020 4:40:52 AM | https://www.thehindu.com/news/cities/Kochi/kochi-corporation-in-a-debt-trap/article31455477.ece

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