With no octroi to lean on, the BMC might find it a taxing affair to fund its budget for the coming year
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With no octroi to lean on, the BMC might find it a taxing affair to fund its budget for the coming year. The octroi was the civic body's largest source of revenue - accounting for 40% - but now that it has been abolished and replaced by the Goods and Service Tax (GST), the Corporation is walking a thin line in terms of financial stability.
To make matters worse, ever since the Deonar dumping ground in February 2016, the Bombay High Court stayed all new constructions in the city until the civic body resolves its waste management crisis. This has stalled earnings from construction projects too. Property tax revenue has fallen flat too.
Demolished earnings
For 2017-18, the BMC had estimated revenue of Rs 4,997 crore from construction charges, and R5,205 crore from property tax. However, figures available with the authorities show that as of January 31, 2018, the BMC earned less than 49% (Rs 2,432 crore) of the estimated construction charges. In the same period, the civic body received 64% of the estimated property tax (Rs 3,364 crore). A senior civic official from the BMC said, "It is very difficult to achieve the target now, since only two months are left till the end of the financial year. The development revenue is unlikely to see much surge, since the HC's stay is still on."
GST not enough
Although the BMC now receives a portion of the GST, this is not nearly enough to make up for the absence of octroi. In 2016-17, the octroi earnings were Rs 7,300 crore as against the target of Rs 6,850 crore.
The central government has promised to pay GST compensation of Rs 647 crore every month with 8% hike per annum, but a civic official said, "By this calculation, even if GST compensation amounts to Rs 7,700 crore, it cannot match the rise in revenue that would have come with octroi. The 8% annual hike in compensation is nowhere close to octroi's revenue." For 2017-18, the civic body earned about Rs 1,300 crore from octroi, in addition to Rs 5,823 crore as compensation from the Centre.
Rising expenses
An official from the BMC's finance department said, "We have planned big projects like the coastal road (Rs 15,000 crore), Goregaon-Mulund Link Road (Rs 2,200 crore), sewage disposal project (Rs 5,000 crore), water projects (over Rs 5,000 crore). Without financial support, they will not finish on time. We also need Rs 2,000 crore to close the over-capacity dumping grounds and to set up waste-to-energy plants."
40%
Octroi's share in BMC's revenue
49%
Construction charges recovered in 2017-18
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