Nagpur civic body facing acute cash crunch, going the Detroit way?

NAGPUR: Nagpur could be headed the Detroit way, in a way. Mayor Anil Sole has warned that the Nagpur Municipal Corporation was heading for an unprecedented financial crisis. He said the civic body was facing a Rs 100 crore revenue deficit after the implementing the Local Body Tax (LBT).


"Since LBT was introduced five months ago, the civic administration has failed to achieve its target of Rs 200 crore recovery," said Sole. "As a result, many ongoing projects have been stalled and no new projects have been started," he added. Sole said he was not against financial reforms like LBT but the state government should have ensured at least a year's 'financial buffer' for the NMC. He also criticized the civic officials for not doing their homework and follow up for making the state government allot funds for NMC in the State budget.

"Today the NMC is just paying salaries of its employees. No one paisa is being spent on development works," he said. However, mayor does not like comparison with Detroit and ruled out bankruptcy. Still, he asserted various taxes and service charges should be revised and collection efficiency increased to help civic body garner funds.

Sources said that octroi was abolished, NMC was struggling to even meet the monthly 'committed' administrative expenditure which is around Rs 40 crore including Rs35 crore on salaries and pensions. They said, the civic body has only Rs 37.38 crore for development works like tarring of roads and constructing storm water drains this financial year.

Sources said the NMC used to generate Rs 42 crore a month from octroi. After implementation of LBT from April 1, NMC could generate a total of around Rs 100 crore from traders in the last five months. Till August 31, 2013, income from property tax is around Rs 15 crore from around 5.48 lakh property owners. The water tax is around Rs 4.66 crore, sewerage benefit tax is Rs 19.76 crore, fire tax Rs 1.51 crore and electric tax is Rs 1.51 crore.

Interestingly, the civic body spent around Rs 23.34 crore annually towards electricity charges for streetlights.

Sources pointed out that the revenue generation from property tax was very less. Even town planning department, which basically sanctions plans for new constructions, generated over Rs 100 crore revenue. "The annual recovery of property tax department has never crossed ever Rs75 crore," said the source, citing an example that the current year's demand stood at Rs 98.31 crore.

Sources blamed this on vote bank politics by corporators. Had the civic body increased property tax gradually every year, NMC would not be in such dire straits. Not only the old properties have not been re-assessed but lakhs of new ones have not been brought under tax purview.

Similar is the situation with water tax. NMC spends of Rs 13 on each unit of water, but recovers only Rs 5 per unit. That too not for all the water supplied. As a result, it ends up paying over Rs 65 crore from its kitty for supplying of water to city. Standing committee chairman Avinash Thakre admitted the revenue of the corporation was very less compared to city's population. He, however, blamed the civic administration for this.

Former standing committee chairman and senior Congress corporator Abha Pande, however, blamed the BJP ruled civic body for the financial crisis and wondered how the cash strapped corporation could spend money to pay bills of private companies like OCW, sweeping machine etc. Municipal commissioner Shyam Wardhane refused to comment on the issue and maintained: "We are doing our best as far as financial management of NMC is concerned."

Contractors stop work

Civic contractors have already suspended all works, including road repairs and drain works, as the NMC failed to clear Rs 43 crore worth old dues. "The corporation had owed around Rs 20 crore to the contractors at the end of last fiscal," said sources from the NMC Contractors Association. Association President Vijay Naidu confirmed that due to financial crisis contractors were not taking up new works.

No ward fund

Corporators from both ruling and opposition parties said the civic body had failed to provide them their ward fund. "Though the civic chief had earmarked Rs 15 lakh for each corporator, he could not keep his word," they said. The financial bankruptcy affect a number of works to be implemented in all zones.