Stagnating revenues and excessive reliance on State government grants have been plaguing the civic budget for at least five years now — a trend that continues in 2019-20 budget as well. The average gap between budgets and actuals continuing at around 30% is also a cause for concern, says a budget analysis released by Janaagraha Centre for Citizenship and Democracy on Monday.
The variance between the budget estimates and revised estimates for 2018-19 is pegged at 27%. “Since 2016-17, the budget variance between budget estimates (BE) and revised budget estimates (RE) averaged at 26%, while cities like Mumbai (9%), Chennai (15%), Ahmedabad (8%), and Surat (5%) recorded an average budget variance under 15%,” said Janaagraha.
Its prescription: implementation of the Karnataka Municipal Accounting and Budgeting Rules (KMABR), 2006 and the Karnataka Local Fund Authorities Fiscal Responsibilities Act, 2003 that can provide the policy framework to achieve long-term financial sustainability and accountability. The BBMP in its budget on Monday announced that it will implement KMABR, 2006.
Srikanth Vishwanathan, CEO, Janaagraha Centre for Citizenship and Democracy, observed a stagnation in BBMP’s own revenues, and its continued dependence on State grants. “There is a risk that the total budget size of BBMP may stagnate at current levels without either a significant push to further raise own revenues or receive guaranteed, predictable State grants,” he said.
The analysis highlights how BBMP’s own revenues have almost stagnated. “It is worrying that there has only been negligible growth in own revenues between 2016-17 and 2017-18 of around ₹100 crore. There is a risk that the BBMP may miss the revised estimate for 2018-19 and own revenues again settle just marginally higher than the previous year,” the analysis pointed out. As against revised estimates for 2018-19 being pegged at ₹3,590 crore, the 2019-20 budget estimates to generate a staggering ₹6,746 crore from its own revenues.
BBMP has ambitiously proposed to reduce its dependency on State grants to 34%, primarily by mobilising own revenues. Last fiscal, its dependence stood at 49%. However, given the average gap between budget estimates and actuals pegged at 26% over the past five years, the eventual dependency on State grants is only expected to go up.
Janaagraha noted that most of the State grants were for specific projects or purposes and not available to the BBMP for discretionary use. This significantly restricts BBMP from investing in capital projects other than those identified particularly by the State government. “There is a need for systematic, but significant fiscal decentralisation to the BBMP either through predictable transfers over a 4-5 year term, or devolution of profession tax and fair share of motor vehicle registration charges, stamp duties and registration charges and GST,” argued Mr. Vishwanathan.
