Government vs municipalities

FUND CRUNCH: BJP-RUN MCDs SAY KEJRI REGIME IS CHOKING FLOW OF CASH TO THEM

It has taken mere months before the wisdom of splitting the Municipal Corporation of Delhi into three is being questioned. The move is also being blamed for the severe funds crunch faced by two of the three new civic bodies: after the split, the richer south Delhi no longer ‘subsidises’ services elsewhere in the capital. And the now bloated bureaucracy is actually adding to the expenses, critics say.

One manifestation of the crisis was seen on Friday. In East Corporation areas, sweepers littered main roads with garbage to warn that things will get worse if their long-pending wages were not paid. Like East, North Corporation too doesn't have the money to pay many of its employees.

The trifurcation in 2012 might have been an astute political move by the then Congress government  make inroads into the Bharatiya Janata Party-run MCD, but councillors now say it was not in the public interest.

At that time the MCD was being split, the Delhi government promised to provide adequate financial aid to the three new civic agencies. But it has released only Rs 326 crore so far — that too in the form of loans when the municipal corporations want it as  grants.

“But the government refused to accept the demand and it gives funds as loan at a steep 18 per cent interest,” says a senior official with East Delhi Municipal Corporation.
“We end up paying Rs 80 crore to Rs 90 crore as interest.”  And, in any case, the Delhi government has not given funds to corporations for a long time.

The city government gives non-plan funds to civic agencies under three heads. “Last year, the Delhi government promised to pay Rs 620 crore under the education sector to North Corporation, but later reduced it to over Rs 450 crore. So we were at  a loss of over Rs 150 crore,” he adds.

“We were supposed to get Rs 302 crore in the form of tax from the city government, but we haven’t seen this amount so far,” says a senior North North Delhi Municipal Corporation official.

While the North and East Corporations are pressed for cash, the South Delhi Municipal Corporation is self-sufficient. The North civic agency has sought a loan of Rs 100 crore from the South Corporation.

Both the councillors as well as officials of the civic agencies are now clamouring for reunification of the three corporations to extricate them from their financial troubles.
Obviously, underperformance in revenue generation by the municipalities is one of the main causes for their present predicament. But there is no denying the fact that lack of funds from the city government has made the situation worse.

“The trifurcation was an illogical move because the number of zones under the three civic agencies remained the same as they were under the unified MCD — 12 zones. Instead of the trifurcation of the unified MCD, the city government should have increased the number of zones for greater division of labour,” says a senior North Corporation official.
Experts say that the trifurcation has led to increase in the expenditure for carrying out development work, but the delivery of services has not improved.

Budget allocation of Rs 6,624 crore was made in 2011-12 for the unified MCD,  and now the combined budget of the three corporations is over Rs 10,000, adds the official.
“The expenditure has risen by nearly Rs 4,000 crore but the revenue has not increased,” he says.

Untapped revenue
The main sources of generating revenue by civic agencies are property tax, and revenue  from  parking, advertisement rights and licensing.

But the corporations have not been able to bring more properties under their tax net. There are over 10 lakh properties under the limits of the North Corporation, of which only 3.5 lakh pay property tax. The East Corporation manages to recover the tax from 2.8 lakh properties out of a total 4.5 lakh in its area. While the east civic agency’s annual budget amounts to over Rs 3,000 crore, its revenue stands at just about Rs 900 crore.

In their defence, the civic agencies say that they provide many services like sanitation, education, and health, which don’t generate revenue. “The corporations are left with limited sources of income as the Delhi government has taken over roads (over 60-feet wide), slum department, rural development, development of unauthorised colonies, Delhi Jal Board and fire department in the past 15 years,” says the official.

The municipal corporations say the Delhi government should give them back some of these responsibilities – and give grants-in-aid to carry out these functions.

South Delhi Municipal Corporation chairman Subhash Arya says, “These functions belong to the civic agencies according to the 74th Amendment that strengthens local governance in the country.”

The Delhi government should release funds for better delivery of services, he says. “It will lead to financial stability in the corporations and speedy execution of development projects.”

Arya says after the trifurcation, the financial condition of the corporations has weakened due to the transfer of services. “The Delhi government assured that the three corporations will be made loan-free at the time of trifurcation. But the then government welched on its promise,” he adds.

“After trifurcation the government stopped timely release of funds for development projects and didn’t give corporations their share in taxes as well as loans.” It has led to financial crises in East and North Corporations, he says.

“Now there is a new government in city. It should work to strengthen the corporations by giving them back the responsibilities which form their core functions,” adds Arya.
He says that reunification of the civic agencies is the only way out. “If the corporations are unified the delivery of services can be improved. Multiple civic agencies are creating problems in development works in the city.”

But Chief Minister Arvind Kejriwal has asked the three Bharatiya Janata Party-run civic agencies to seek funds from the Centre as the city governent itself is short on funds.
This has irked councillors of the three corporations alike. “When we had gone to meet the CM, he told us that we should ask our party for funds. We told him that you are the CM and we have come to you as the leaders of civic agencies for financial aid. You should act like a CM and not like a member of a party,” says Leader of House in East Delhi Corporation Ram Narayan Dubey. “How are we supposed to carry out our obligatory functions without being able to pay the employees,” he adds.

Shortage of officials
Shortage of officials is another  problem for the MCDs. “Most of the officials are on deputation and they are busy preparing reports for the city government. They don’t have time for monitoring municipal functions,” says a official.

The South Corporation has also written to city Urban Development Minister Manish Sisodia for “immediate release” of the Municipal Reform Fund by the Delhi government.
“After implementation of the Unit Area Method in 2004, the then city government had assured us to compensate for the losses, but it is still pending since 2005-06,” Arya says.
He adds that the government was giving 5.5 per cent to municipal corporations under the ‘global share of taxes’ till 2007-08. “The share was reduced to four per cent and the remaining 1.5 per cent is kept under Municipal Reform Fund (MRF),” he says.

“Under the MRF Rs 60 crore was released against the demand of Rs 135 crore in 2012-13 and since 2013 no MRF has been released to the municipal corporation,” he adds.
The corporations have been carrying out cleanliness and sanitation in authorised colonies, unauthorised colonies and rural villages but “no fund” has been released under these schemes, he says.

“The Delhi government must move forward from political gimmicks and release funds for the benefit of Delhiites,” Arya says.

If this standoff between the BJP-run corporations and Aam Aadmi Party's Delhi governement over funds is not resolved soon, basic services like sanitation and garbage disposal are bound to be hit across the city. Friday's token littering of streets by sanitation workers was a taste of things to come.

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