The budget presented by Brihanmumbai Municipal Corporation (BMC), the cash-rich body that runs Mumbai is important and big. Its decisions have an impact on the cost and ease of living for every resident in India’s financial capital. The rates it charges builders for permissions impacts the home buyer and consequently the tenant. Its control on the bus network through BEST determines the cost of last-mile road connectivity.

Corporation-run schools and hospitals play a role in helping the under-privileged. The roads and bridges it builds and repairs using the money allotted are the lifelines of private transport in the city.

Yet, the BMC budget doesn’t deserve the attention it should. Part of the reason is that budgets are high on hype and very low on delivery. The corruption and incompetence that pervades BMC is another.

As it happens every year, this edition of the BMC budget too reeks of big money but has little substance on delivery. The BMC has budgeted Rs 33,441 crore for 2020-2021, a rise of 9 percent.

Borrowing a page from last year’s budget, this year as too BMC will have to dip into their reserves and plough out Rs 4,380 crore. Excluding the capital from reserves, grants etc, the forecast on revenues is Rs 28,448 crore.

Promises on Paper

This forecast is not optimism. It is a delusion.

BMC’s performance hardly inspires confidence. Remember, after an initial revenue estimate of almost Rs 25,000 crore for the full year, so far it received even less than Rs 15,000 crore. You will be forgiven for comparisons with Yes Bank’s promises to attract a credible foreign investor.

Let me explain why. The first part of its forecast pertains to property taxes. These taxes are paid by every property owner. BMC has forecast it at Rs 6,768 crore, accounting for 24 percent of the revenue forecast.

This is a really steep estimate, to put it mildly. In the current year until December 2019, property taxes totalled Rs 1,810 crore. While there may be a crackdown on previous dues that aggregate almost Rs 15,000 crore, the odds of the BMC recovering more than Rs 1,500 crore are slim. Even if it did – it is almost impossible to garner more than Rs 4,500 crore from these taxes.

Given the dependence the corporation has always had on real estate for its finances, I expected them to do something radical with regards to its FSI policy. Nothing has been done when the industry is in such a dire state.

Even the BMC possibly thinks the Mumbai real estate is dying. (Some media reports say that governemnt may cut ready reckoner rates). The forecast of Rs 3,879 crore is a 30 percent rise from last year’s estimates, which itself will not be met.

BMC is partially counting on recovering Rs 600 crore from participants who had abused the Development Control Regulations (DCR) 1991 norms that excluded flower beds and balconies as part of FSI. Many had taken the balcony area inside their apartment. Now for a fee, these can be regularised.

While these two segments are important for the revenues of the municipal corporation, the biggest component is the compensation it gets in lieu of octroi that was done away with after the introduction of GST. The estimate for next year is Rs 9,799 crore, accounting for 34 percent of revenues.

Money on its Last Legs

It should use it wisely since this compensation is on its last legs and will continue only until 2022. When this tap of funds stops, the revenue base of BMC will return to the levels seen in 2010-11 when it hovered in the range of Rs 13,000 cr.

Expenses, however, will only keep rising. Salaries are estimated to be Rs 12,606 crore due to an additional Rs 1,300 crore burden resulting from the 7th Pay Commission recommendations. I won’t waste time talking about employee costs since I highlighted that in some detail in my last column.

The Municipal Commissioner has noted that the “duties and duty hours of staff will be adjusted in such a way that expenditure on overtime allowance will be minimised.” Loosely translated: I know the ease by which everyone has been milking the corporation through the overtime nexus but please stop it.

But given his limited tenure left at the job, I am not sure if he will be able to see through this malpractice being contained.

Now to the bit that really impacts the residents of the city — infrastructure. The capital expenditure for 2020-21 is estimated at Rs 14,637 crore – a jump of 28 percent over the last year.

Since 2018, capital expenditure, in fact, has risen almost 3x. The budget for traffic operations, roads and bridges has been expanded to Rs 2,700 crore.

Sadly, if the speech is an indication, the bureaucracy has convinced the BMC Chief that this budget is well spent. The commissioner noted that the prominent roads where work had started and completed include Andheri-Kurla and Jarimari.

I could only smile when I heard that. The contractor running the show in Andheri-Kurla is a legend due to the perennial road-digging. Visit a realty project around that area and salesmen often remark saying, “This project is close to ABC but not very close to Andheri-Kurla Road."

Pedestrians have little to look forward to because footpaths have been allotted a meagre Rs 50 crore. In a city crying for footpaths, this is an embarrassing admission by the corporation about its inability to control the rampant encroachment menace.

Coastal Road has been set aside Rs 2,000 crore, an increase of 20 percent. Part of the hike is on account of the lesser allocation to the project this year as litigation stalled the project temporarily.

Thanks to the high quality of contractors such as L&T and HCC involved, I am optimistic about the execution of this project and its ability to enhance connectivity. Given its depleting resources, this will possibly be the last major project funded by the BMC.

BEST Hope for City

No public undertaking in Mumbai has seen as a meaningful change in its operation as the BEST bus service. From wet-leasing of buses, slashing fares, introducing mini-buses to navigate congested routes, this has reduced dependency on taxis for most of the residents that need last-mile connectivity.

For public transport, the BMC has given a grant of around Rs 1,500 crore to BEST, with strict conditions. This can be money well utilised to expand the network further and be financially sustainable.

It is no secret that every monsoon, Mumbai comes to a standstill. Keeping that in mind, the budget for stormwater drains has been raised by around 10 percent to Rs 912 crore. With this hike, the budget for it next year is almost double the amount from two years ago. Will this stop the flooding every monsoon? It won’t.

And that is where this budget will fail like every other budget of BMC. This is due to the complete absence of any governance reform that would make an attempt to break free from the politician-contractor-BMC nexus.

Steps like deferred payment to contractors to validate the sustainability of works are good ideas but will fail in an environment wherein almost every file is up for a price. The solution is to involve bigger and credible players by offering large contracts across multiple wards up for tender.

The current model of holding individual tenders offering a small road in a narrow by-lane for repair will only attract contractors that do not even have a website.

The silver lining is that owing to the relentless mismanagement of BMC funds, the city is now at a stage wherein there isn’t much left to plunder. As it fades into an era of becoming a sick unit without any discretionary resources, even the plunderers will stop tracking the annual budget.