Cities struggle to stay afloat

India’s biggest cities are simply unable to raise the amount of money they need to sustain themselves, city budgets presented over the last month show, with major sources of revenue including parking and rents going untapped.

Janaagraha, an urban governance-focussed non-profit based in Bengaluru, and The Hindu compiled and analysed data from municipal corporation budgets presented in February and March this year. Of the cities whose 2015-16 budgets were immediately available, Mumbai was by far the richest, with a total expenditure of Rs 33,500 crore proposed for the upcoming year. Mumbai’s budget was more than that of all four municipal corporations in Delhi, as well as Bengaluru, Hyderabad and Chennai put together.

The city’s corporation will spend over Rs. 26,000 per resident over the next year, as compared to the rest of the country’s civic bodies, while Delhi, Chennai, Hyderabad and Bengaluru will all spend less than Rs 10,000 per resident over the next year.

Mumbai’s high revenues are driven in part by octroi, a goods entry tax that exists only in the western state; a quarter of Mumbai’s receipts came from the tax alone, and at over Rs 7,700 crore, accounted for more than Chennai, Bengaluru or Hyderabad’s receipts from all sources.

For most cities, and more so for Bengaluru, property tax is a major source of income; it accounted for just under a third of Bengaluru’s total revenue, and nearly all of its own revenue. Grants and loans helped keep all major cities afloat, accounting for over a quarter of both Chennai and Bengaluru’s revenues. Most cities had large outstanding debts on their account books, with Bengaluru’s debt up to nearly Rs 3,500 crore, or over half the size of its total revenue.

More than what sources of revenue they do tap, the numbers tell a sorry tale of untapped potential. Chennai expects to raise just Rs. 1 crore in parking fees, despite 40 lakh vehicles on its streets. Despite owning prime property in the city, Mumbai expects to raise less than Rs 40 crore in rents. Bengaluru will raise less than Rs 50 lakh in advertisement charges, as compared to Mumbai which says it will raise over Rs 100 crore. But corporation officials say that their hands are tied; “We have very little opportunity to raise new taxes, and there is intense pressure to keep rents and taxes low,” a senior official of the Municipal Corporation of Greater Mumbai told The Hindu.

“We studied 21 cities including 18 state capitals last year, and found that either own revenues as a percentage of total receipts are very low, or total revenues themselves are very low… compared to the capital expenditure requirements for the city,” Srikanth Viswanathan, Coordinator for Advocacy, Research and Capacity Building at Janaagraha said. “So both in terms of total revenues and in terms of own revenues, urban local bodies in India are significantly under-resourced,” Mr. Viswanathan said.

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Printable version | May 22, 2022 8:26:02 pm |