BMC cramped by poor revenue sources for smart city projects

The State Government has already sanctioned Rs 362.75 crore to the BMC as Smart City grant.

Published: 26th November 2016 05:42 AM  |   Last Updated: 29th November 2016 08:13 PM   |  A+A-

Express News Service

BHUBANESWAR: Burdened  by major financial hurdles, the Bhubaneswar Municipal Corporation (BMC) faces an uphill task to take up ambitious Smart City projects which are in the pipeline to upgrade the State Capital into a world class investment and settlement destination.

Leave apart infrastructure, BMC is struggling to sustain basic services with the existing tax mechanism implemented three decades back. While the major sources of revenue of BMC are Holding Tax and Octroi (now Entry) tax, the State Government’s indifference has hit the collection in both the categories.

The Housing and Urban Development (H&UD) Department is yet to prepare the final draft, rules and by-laws to regulate collection of ‘property tax’ since 2003. While BMC’s collection from Holding Tax in 2015-16 was a paltry Rs 21 crore, the civic body has set a target of Rs 37 crore for next financial year. “A majority of households in the City pays Holding Tax in the range of Rs 200 to Rs 500.

The collection is insufficient to bear the financial liability of basic services like water supply, sanitation and solid waste disposal. Taking up Smart City projects with this income is impossible,’’ said a BMC official. Similarly, as per Orissa Entry Tax Act, the municipal corporations, councils and NACs would get a premium of 10 per cent over the Octroi tax revenue in 1999 (considered as the base year when the Act was implemented).

On that scale, if BMC’s Octroi revenue was Rs 50 crore in 1999-2000, BMC should get Rs 55 crore for 2000-2001 and Rs 60.5 crore in 2001-2002. The Octroi grant by the State Government should have been around Rs 150 crore per year by 2015-16. However, the grant keeps on fluctuating between Rs 50 and Rs 80 crore with Rs 54 crore provided in the current financial year. Sources said the Government has decided to pay Rs 63 crore as Octroi grant for 2016-17 to the BMC.

‘’Considering the significant rise in movement of commercial vehicles into Bhubanesawar over the last 15 years, the actual Entry Tax figure would be much higher,’’ a former BMC official said. While the Government has taken a soft stand on materialising a mechanism for Property Tax, the revenue generated from Entry Tax has been diverted towards a number of populist schemes and State pay commission bounties, sources said. The municipal corporation of Chhattisgarh’s Capital Raipur generates a revenue of more than Rs 150 crore annually. Post-demonetisation, the Greater Hyderabad Municipal Corporation (GHMC) generated Rs 188 crore within two days, while the BMC barely managed to earn over Rs 1 crore during the same period.

As many as 20 cities including Hyderabad have collected a whopping Rs 885 crore towards Property Tax within two days of demonetisation, the sources added. Contacted, BMC authorities said the Corporation is laying stress on supplementary revenue generation sources. “Collection of user charges has been made mandatory from all households and earnings from advertising have also been streamlined.

Besides, we are among the few Corporations which have taken up Planning under its fold to generate revenue out of it,” Additional Commissioner Alok Kar said. The State Government has already sanctioned Rs 362.75 crore to the BMC as Smart City grant. However, the fate of a slew of projects remains uncertain if the civic authority fails to augment its own revenue generation sources.

 

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