VIJAYAWADA: The Vijayawada Municipal Corporation (VMC) is facing a severe funds crunch and is desperately in need of Rs 70 crore, to be sanctioned by the Central and State governments, for executing various development projects in the city. The civic body is under a debt burden of Rs 290.74 crore and appears to be struggling to find ways to increase its revenues.
The main source of income for the VMC is tax collected from property owners in the city, besides minor sources like vacant land tax, water and sewerage charges, advertising revenue, fee from car parking and from mobile phone towers.
The cash-starved VMC has, in fact, mortgaged 32 of its own buildings including the NTR Complex and Vastralatha, to obtain bank loans. “A severe financial crisis may grip the civic administration, if the Centre and State governments delay sanction of funds. The administration claims major ongoing projects will be completed on time. How can they do it? At least Rs 28 crore goes towards debt-servicing (payment of interest on borrowed loans) per annum. It has to pay interest to the Housing and Urban Development Corporation Limited and various banks,” a senior officer told Express on condition of anonymity.
A major chunk of the VMC’s revenues also goes towards payment of salaries to employees. The salary bill itself is about Rs 15 crore per month and the State government doesn’t pay them as it does to other civic bodies like Guntur and Vizag under the so-called 010 scheme. “Ineffective implementation of JNNURM schemes has pushed the VMC into a debt trap,” opined Taxpayers’ Association general secretary MV Anjaneyulu.
The JNNURM was the first Public Private Partnership development programme in VMC. A sum of Rs 790 crore was allocated under JNNURM to the VMC for improvement of urban infrastructure and Rs 634 crore for basic services to the urban poor. However, with the sanctioned funds not being released fully, the VMC was forced to borrow, he said. For some projects under the JNNURM schemes like the Bus Rapid Transport System (BRTS) and housing for the poor, the Central funds did not come. Non-execution of projects like the BRTS on time meant the funds were stopped. The VMC ended up spending from its coffers on incomplete projects.
“The Centre needs to allocate at least Rs 110 crore for the civic body,” Anjaneyulu said.
Mayor Koneru Sreedhar said the need of the hour was to find ways and means of increasing the revenue of the civic body so that it could get rid of debts. “I am aware of the VMC’s poor financial condition. There is nothing to revel about its financial condition. The civic body was almost bankrupt when we came in. We have to take stringent measures to improve its revenue as early as possible,” Sreedhar said.