Despite the worldwide recession, which found considerable mention when Mumbai’s Municipal Commissioner presented the budget for the country’s richest municipal corporation, the Brihanmumbai Municipal Corporation’s proposed budget estimates for the year 2009-10 hit a new high of Rs 19,931 crore. However, while that is Rs 3139 crore in proposed expenditures more than last year, it is a budget minus any ambitious, new projects. The inflated sum of Rs 19,931 crore is itself a result of some nimble number-crunching, an internal loan and a largest-ever contribution from the accumulated surplus.

The good news: no new taxes, with a rider that if the recessionary trends do not reverse, citizens will have to brace for tax hikes in the following fiscal.

The warning is clearest in the lower revenue collection projections for the traditional money spinner departments — Octroi, Property Tax and Development Charges.

“Worldwide recession has started showing its effects on municipal finance. This will certainly affect our projects in hand and those to be undertaken in the future,” said Municipal Commissioner Dr Jairaj Phatak, while presenting the budget to the civic Standing Committee.

Chief Accountant Ram Dhas admitted the budget estimates reached the Rs 19,000 crore mark only due to the internal loan and special funds.

In the current financial year, though the civic budget had provisioned an internal loan (on deposits and Employees’ Provident Fund), it remained unused. “However, this year, for balancing of the budget, we had to internally borrow Rs 3,338 crore, which in all probability will be used,” said Dhas.

“This year, the internal loan is the highest, and so is the tapping of special funds. The accumulated deposits and surplus over the years have been used to their full potential this year,” he added.

The budget estimates for 2009-10 also saw some damp news on the civic body’s highest revenue-earner, the Octroi department, which has been the worst hit by recession. Growth rate of octroi collections is down to 12 per cent as against last year’s 21 per cent. The budget estimates for octroi collections in 2009-10 are pegged at Rs 4300 crore. The revised estimates for octroi collections in 2008-09 are also Rs 4,400 crore

On the same note, Phatak added that although the BMC’s finances have not seen a slump, there will be slowdown in the pace of growth. “It is like a brake in a speeding car,” he said, referring to the impact of the economic slowdown on the civic body’s works and finances.

The Development Plan department that earns revenue from development charges levied on construction activities will also be affected due to the slump in the realty market. However, officials said there are already a number of proposals in the pipeline, due to which the BMC will recover its income. Also, new properties will be assessed for property tax, contributing to earnings in another department.

Although officials scout for lavish new projects and decorative policies to spruce up the civic budget each year, the year 2009-10 will be devoid of any such plans. Almost all proposed allocations are for continuing schemes, some even recurring due to the administration’s failure to implement them until now.

Phatak admitted that the BMC may “not have any ambitious project” but said officials would concentrate on large-scale projects that are already underway: Water Supply, Sewerage and the Brihanmumbai Stormwater Drainage Project, since these have “maximum effect on citizens”.

Many firsts in this BMC budget
* Bringing in the first outcome based budget, the BMC has developed a set of performance indicators for all major departments. A Monitoring and Evaluation cell in all departments along with an Outcome Advisory Board will oversee the planning, budgeting and expenditure monitoring of the different departments. For example, indicators and key targets for Storm Water Drainage department would be achieving zero flooding during the monsoon, zero vector-borne diseases and international standards in cleaning. For the roads department, the main task is to provide aesthetic road infrastructure, road transportation speed, reduced accident rates, etc. The water supply department must ensure potable water 24 X 7 to 100 per cent city population with zero contamination levels
* In a first, the largest revenue earner, the octroi department, estimates NO rise in revenue for the year 2009-10. Last year’s revised estimates for octroi collections was Rs 4,300 cr. The projection for collections in 2009-10 is also Rs 4,300 crore. Last year’s growth rate of 21 per cent in Octroi collections has now reduced to 12 per cent
* Highest internal loan from deposits and provident fund, accounting for Rs 3,348 crore. Last year’s internal loan of Rs 2,243 crore remained unused. Maximum tapping of funds from accumulated surplus this year, accounting for Rs 1,194 crore
* Establishment costs including salaries of over 1 lakh employees now up from 47 per cent to 53 per cent of operating expenditures. The rise is owing to the implementation of the 6th Pay Commission’s recommendations. Establishment expenses are now Rs 5,964 crore, up from Rs 3,762 crore in 2008-09. Reforms mandated by JNNURM require a civic body to curtail establishment costs to 40 per cent
* First gender budget presented, Rs 42 lakh proposed in various projects for women