Low on revenues, high on promises: Janaagraha analyses BBMP budget

BBMP BUDGET 2018-19 ANALYSIS

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Bruhat Bengaluru Mahanagara Palike (BBMP) presented its budget last week. Janaagraha, a non-governmental organisation working in urban affairs, analysed the budget. While the actual receipt of property tax was at Rs 1725 crores, estimated collection for 2018-19 is Rs 2,675 crore. Here is the summary of analysis.

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All amounts in Rs Cr unless otherwise stated; all growth rates on compounded basis unless otherwise stated.

Budget trend

Table 1: Budget Trends

 

Actuals

Actuals

Actuals

Actuals

RBE

BE

Particulars

2013-14

2014-15

2015-16

2016-17

2017-18

2018-19

Receipts

3,093

4,205

5,246

6,572

7,514

9,322

YoY receipts %

 

36%

25%

25%

14%

24%

Source: Budget book 2018-19

Comments

  • We note a decline in the growth rate of receipts in 2017-18 to 14% from 25% in 2016-17.
  • Based on the above, as of now it seems unlikely that BBMP would meet the revenue targets for 2018-19.

Budget variance

Table 2: Budget Variance- Receipts

 

Rs. in crores

Variance %

Particulars

BE

RE

Actuals

BE vs Actuals

2013-14

8,445

3,209

3,093

63%

2014-15

5,978

2,894

4,205

30%

2015-16

5,394

4,542

5,246

3%

2016-17

9,331

6,819

6,572

30%

2017-18

9,997

7,514

NA

25%

2018-19

9,322

NA

NA

NA

Source: Budget book 2018-19

Comments

  • The budget variance of 2016-17 was significantly high at 30% and the same has declined marginally to 25% in 2017-18.
  • However, BBMP continues to propose a Rs 9,322 crore budget this year, despite not being able to hit the Rs 9,000 crore mark in the previous two years.
  • Cities like Ahmedabad and Surat have an average budget variance of < 10% in the past three years.

Revenue analysis

Own Revenues

Actuals

Actuals

Actuals

Actuals

RE

BE

CAGR %

2013-14

2014-15

2015-16

2016-17

2017-18

2018-19

13-14 to 17-18

Property tax

727

1,032

1,403

1,725

1,777

2,675

25%

Fees & Fines

324

522

606

 662

845

1,313

27%

Other Income

146

197

446

 635

645

1,099

45%

Receipts from BBMP Properties

21

12

26

 18

21

 91

0%

Advertisement Taxes

24

13

3

 28

27

 75

3%

Total Own revenues

1,242

1,776

2,484

3,068

3,315

5,254

28%

Total Receipts

3,093

4,205

5,246

6,572

7,514

9,322

 

Own revenue to Total receipts %

40%

42%

47%

47%

44%

56%

 

Source: Budget book 2018-19

Property tax – collection efficiencies

Property tax

2015-16

2016-17

2017-18

2018-19

Actuals/RBE

1,403

1,725

1,777

NA

Budgets

1,900

2,300

2,600

2,675

%

   73.8

   75.0

  68.4

 

Source: Budget book 2018-19

Comments

  • Between 2013-14 and 2017-18, own revenue as a % of total receipts has averaged at 45%. However, BBMP has set itself an aggressive own revenue target of 56% of total receipts in 2018-19.
  • Cities like Pune and Mumbai have recorded more than 60% own revenue as a % of total receipts as per Janaagraha’s ASICS report. Therefore, it is clear that BBMP has to take measures to mobilize own revenues.
  • Additionally, it can be observed that the collection efficiency of property tax has declined to 68% in 2017-18 as compared to 75% in 2016-17 and 74% in 2015-16.

Grants

Particulars

Actuals

Actuals

Actuals

Actuals

RE

BE

2013-14

2014-15

2015-16

2016-17

2017-18

2018-19

Grants

902

1,561

2,235

3,573

3,865

3,665

Total Receipts

3,093

4,205

5,246

6,572

7,514

9,322

Grants as % of Total receipts

29%

37%

43%

54%

51%

39%

Source: Budget book 2018-19

Comments

    • BBMP’s dependency on grants has significantly increased since 2013-14 and continues to increase in 2017-18.   BBMP in 2018-19 has proposed to reduce its dependency on grants to 39%, primarily by mobilizing own revenues.
    • While the state government grants have provided much needed relief to the BBMP and citizens of Bengaluru, such dependence on state grants may not be sustainable.  State Govt would need to devolve revenue powers to BBMP and hold it accountable for delivery instead of providing for grants towards specific infrastructure works.

Salaries

Particulars

Actuals

Actuals

Actuals

Actuals

RE

BE

Particulars

2013-14

2014-15

2015-16

2016-17

2017-18

2018-19

Salaries

483

530

544

402.4997

437.03

491.35

Payments

3,343

3,778

5,198

5,310

7,514

9,326

% salaries to payments

14%

14%

10%

8%

6%

5%

Source: Budget book 2018-19

Comments

    • An interesting trend is that salaries as % of total payments have fallen from 14% in 2013-14 to 6% in 2017-18.
    • This indicates that the BBMP should perhaps invest in good quality human resources and may be under investing in the same presently.

Budgets vs Job Codes vs Bill payments trend

Table : Job codes vs Budgets

Year

No of Job codes created

Job Code Amount

Budgeted Expenditure

Type

% of job codes created

     

2014-15

7,336

2,358

3,778

Actuals

        62.4

2015-16

7,659

2,137

5,198

Actuals

        41.1

2016-17

9,675

5,699

6,820

RBE

        83.6

2017-18*

9,821

3,689

7,514

RBE

        49.1

*2017-18 job codes are up to Feb18.

Source : Job code register for 2017-18

Table : Bill paid in 2017-18 (up to Feb 2018)

Time Period

No of bill paid

Gross Amount

Percentage (%)

Current works

1,358

        743

19%

Pending/Spill over

8,584

    3,187

81%

 Total

9,942

3,929

 

Source : Bill register for 2017-18

Comments

  • 9,821 job codes were created in 2017-18 (up to Feb18) amounting to Rs 3,689 crores. However, revised budget estimate of expenditure for 2017-18 amounts to Rs 7,514 crores, indicating that job codes against only 49% of the estimated expenditure has been created in the current year. This is significantly lower than 2016-17, where job codes against 83.6% of the expenditure was created.
  • Further, out of bills paid up to Feb 2018, 81% pertained to pending or spill over bills, while only 19% pertained to the current year’s works.

This is a press release sent by Janaagraha and published here as is.


About Mahalakshmi Balasubramanian 2 Articles
Mahalakshmi Balasubramanian works with Janagraha, a Bengaluru-based NGO