BMC bites octroi bullet, to exempt textiles, garments

MUMBAI: The Brihanmumbai Municipal Corporation (BMC) wants to exempt textile and garments from paying octroi in 2008-09. The BMC move is significant as the state government continues to drag its feet on the proposal to abolish octroi.
Presenting BMC’s budgetary estimates for the next fiscal on Monday, municipal commissioner Jairaj Phatak described the proposal as an “incentive” to Mumbai’s best-known business sector.

Mr Phatak said the city was witnessing the migration of several businesses in the textile and garment sector due to the heavy octroi. “The proposal to abolish octroi on textile and garments is to retain these businesses,” Mr Phatak said.

The BMC stands to lose around Rs 26 crore in the next fiscal on account of this abolition. But Mr Phatak said the amount was negligible if seen in the larger context of the BMC’s proposed octroi collection target of Rs 4,525 crore for the 2008-09 fiscal. The proposed octroi target is a significant increase over the 2007-08 target of Rs 2,500 crore and the civic body has justified it to the 8.5-9% rate of growth and Mumbai’s growing importance as the country’s business capital.

Mr Phatak said if the state government abolished octroi in its budgetary announcements in March, it was also expected to propose an alternative to the civic bodies to make up for the loss.

Meanwhile, the BMC has proposed an outlay of Rs 16,792.77 crore for the next fiscal, which is an almost 25% increase over the budget size of the current financial year. Mr Phatak attributed the increase in outlay to the buoyancy in tax collection and a project to utilise accumulation in various special funds like asset replacement fund for taking up major capital works.

A 25% increase in the budgetary estimates has also been attributed to hefty allocations for the Mumbai makeover plan. The civic body proposes to use the entire outlay of Rs 16,793 crore for upgradation, maintenance and beautification of civic infrastructure in keeping with the state government’s grand Mumbai makeover plan.

The budget proposes revenue receipts of Rs 10,391 crore and a revenue expenditure of Rs 10,399 crore for the next fiscal. The civic body has pegged a capital income of Rs 8,564 crore and a capital expenditure of Rs 8,585 crore.
The civic body has not proposed a hike in any of the major taxes. Octroi levy continues to be the largest component in the civic receipt.

On the basis of a boom in the realty sector, the BMC has proposed a target of Rs 2,059 crore through property tax. The civic body expects to mop up Rs 730 crore through the water and sewage disposal tax.