In the midst of Anna Hazare anti-corruption movement, an event of significant importance went unnoticed by citizens of Bangalore. The Bruhat Bengaluru Mahanagara Palike (BBMP) presented the much delayed annual budget for the fiscal year 2011-12. A cursory look at the budget suggests that BBMP is in as much a mess as Satyam Computers was at the time of confession of fraud by its founder. Little wonder even after three weeks of release of the budget, it cannot be found on Palike website.
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Ramalinga Raju the founder CEO of Satyam Computers booked fictitious revenue to inflate profits of his company. BBMP in its current budget has inflated revenue numbers by manufacturing fictitious receipts and grants. Raju lied to and cheated the shareholders, auditors and board of directors of the company. BBMP by presenting a bizarre budget is lying and cheating the citizens of Bangalore.
Raju and his cohorts created a Super User ID in the financial system to create false invoices and book fake revenues. BBMP’s fake budget has the blessings of its Super User – state government and the state cabinet ministers who are responsible for governance of Bangalore. Satyam Computers won many awards for excellence in corporate governance during its fifteen year existence. BBMP recently won the Nagar Ratna award for the best financially managed corporation in the country.
Similar to Satyam Computers producing phony financials year after year, BBMP budget has been a fiction for the last several years. The new Chief Minister who is also responsible for the affairs of Bangalore could have forced the finance and tax committee of BBMP to come clean and shore up City finances. He should have essentially asked the councilors to prepare a budget with a realistic revenue figure and scrap all projects that have not even begun but have been budgeted for in the previous years.
Fictional budget with no inputs from citizens
An example of such a project would be to build a parking lot over a playground in Malleswaram. After hearing protests from citizens, BBMP commissioner assured protesters that the project will be scrapped. But in the just released Action Taken Report, an addendum to the budget, this specific project is shown as though it will be executed during this financial year. There are many such glaring contradictions in the budget that higher authorities and state cabinet ministers could have easily prevented.
The budget itself has nothing new and has no concrete plan to tackle any of the day to day problems afflicting the citizens. Despite having imposed a garbage cess along with the property tax, there is no blueprint to make the city garbage free. The budget is silent on dog menace, the other problem that needs urgent attention of the authorities before more lives are lost.
While people are protesting road widening, the budget allocates a whopping Rs 55 crores for this, based on project assessment done by Palike engineers. Many of the projects listed have been spillovers from previous years that never saw the daylight for want of funds. 65% of the budget expenditure is geared towards building City’s physical infrastructure while a meager 6% has been allocated to social development, a travesty to poor people of the City.
The budget continues to burden citizens with debt. Bank loans have already crossed Rs 3,500 crores, debt servicing costs are a whopping 7% of the budget while contractors are yet to be paid more than Rs 2,000 crores. Palike wants to borrow Rs 1,200 crores this financial year and it remains to be seen which financial institution will be willing to lend money given its precarious financial status.
Revenue fantasies of the budget
But the real fantasies are on the revenue side of the budget. Only 18% of revenues are its own tax receipts while Palike expects to collect 82% from grants, loans and non tax receipts. Like the inclusion of revenues from Akarama / Sakrama from previous years, the finance and tax committee has invented a new optic fiber cable policy this year that officials think will generate more than Rs 800 crores in revenues. The only positive measure in the budget is to bring unaided schools, colleges, service apartments and hospitals under the commercial property tax domain.
BBMP financials are in disarray and is in dire need of an outside audit. It does not know what it owns and what it owes. Last year’s revenue deficit of Rs 5,000 crores is likely to be matched this year. For Palike to come clean on its finances, an outside audit needs to be done for the next budget to be credible amongst voters and taxpayers.
BBMP as an institution is failing its people. The elected representatives of Palike seem undeterred by the hue and cry of the anti-corruption movement also oblivious to the clarion call from residents of the city for improving administration and reducing corruption. Like the prosecution of Ramalinga Raju has proven difficult and tricky for investigating agencies, it will not be easy for citizens of Bangalore to rid itself of the administrative malaise in BBMP.
Disclaimer – B Ramalinga Raju, Satyam Computer founder and others have been accused in a multi-crores accounting fraud; CBI investigations are on and the no verdict has been passed yet on Raju’s culpability.