Recently, BBMP passed a resolution to include Electronic City (Ecity) under its jurisdiction. But on the other hand, state cabinet is already contemplating giving industrial township status to the area.
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On July 31st, BBMP passed the resolution to include Electronic City phase 1, 2 and 3 under its jurisdiction. State government has to approve the resolution now, for it to be effective. If approved,industries and commercial areas that are notified as part of Electronic City, will go to BBMP.
Dr Amita Prasad, Principal Secretary at state government’s Urban Development Department (UDD), says that BBMP has not yet sent the resolution to the department. “I have only got some mails from Electronic City Industries Association (ELCIA) and other representatives from E-City, who are opposed to the idea of BBMP taking over. I have forwarded these mails to the BBMP Commissioner,” she says. BBMP Special Commissioner K R Niranjan says that it may be 1-2 months before BBMP gets the final decision on the proposal from UDD.
As soon as BBMP Council passed the resolution, ELCIA had objected to it. N S Rama, CEO, ELCIA, says that talks about giving industrial township status to Ecity had been going on for the last five years. “Government had mentioned many times that ELCIA was a right candidate for industrial township,” says Rama. On getting industrial township, ELCIA will have powers similar to that of a local government body. The industrial township authority will include industry members and government representatives, and can take independent decisions.
ELCIA was formed in the early 90s, as soon as companies started to be set up in Electronic City. It has been maintaining the complex since 1997. Companies have been paying taxes to their local panchayats.
M N Vidyashankar, Principal Secretary at state government’s Commerce and Industries department, says that the proposal to give industrial township status to Ecity is already before the cabinet, and that cabinet may make a decision in its next meeting.
Unrealistic revenue expectation?
Bankrupt BBMP had long been discussing inclusion of Ecity under its jurisdiction, to get more revenue. BBMP currently estimates that Rs 300 cr can be raised as property tax from E-City establishments. Electronic City includes over 150 companies – small, medium and large.
BBMP’s expectation is almost 100 times that of the tax that companies are paying now. Collectively, they pay only Rs 3-4 cr to local panchayats. Much of Eity comes under two villages – Konappana Agrahara and Doddathogur. While Konappana Agrahara collects about Rs 1 cr as property tax from Electronic City annually, Doddathogur panchayat collects around Rs 1.5 cr. Other panchayats collect small amounts.
Doddathogur Panchayat Development Officer B C Nagaraj says, “There are 40 companies coming under our panchayat, mostly small and medium companies. We collect Rs 1.20 per sq ft as annual tax from them. Wipro is the only big company – it pays us Rs 42 lakh as tax. Others pay in the range of Rs 10,000 to Rs 40,000 mostly.”
While they pay taxes to panchayats, companies have also been paying maintenance charges to ELCIA. ELCIA collects Rs 2 per sq ft from companies as part of its Annual Maintenance Contract (AMC); overall, this amount comes to Rs 4 cr per year. This amount is used for road maintenance, waste and sewage disposal, street lighting, holding social activities etc.
BBMP says that Rs 300 cr can be collected, as its tax rates are higher than that of panchayat. For industrial buildings, BBMP has a higher and varying tax rate per sq ft – as opposed to panchayat’s flat rate of Rs 1.20 per sq ft per year – depending on size of the company and also whether the building is owned or rented.
According to rough calculations of Citizen Matters, with BBMP’s current slab, tax from Electronic City would come to around Rs 55 cr. I Ramakanth, Deputy Commissioner (Revenue) at BBMP, says that the tax slab for Electronic City is likely to remain the same as existing rates. BBMP is also eyeing tax from Neo Town, an upcoming luxury residential-cum-commercial township spread over 100 acres.
However, the extent of property is not clear and BBMP has not yet done a survey to get full details of properties. “I cannot confirm the exact industrial area, but we know about the boundaries of Electronic City, and our calculations are based on that,” says Ramakanth.,
Special Commissioner Niranjan says that the survey could not be done, as the property is still not under BBMP. Plans on extending BBMP boundary has not been made either. “We have not thought about these, since the idea has only been proposed. Once government approves it, we will take 2-3 months to notify the area, change boundaries, mark lanes etc.”
Niranjan says that BBMP’s expectation is realistic, and that panchayat may be getting less revenue because it leaves out many properties or negotiates tax rates with companies. “For panchayats, the taxes they get now are huge amounts. They are not spending much either. They may not have included common areas, or charged higher for A/C buildings, which BBMP does. We will start maintaining roads, street lights and public health facilities in the area, once it is handed over,” he says.
We don’t want BBMP
This precisely is the worry of ELCIA. Rama says that, with BBMP control, ELCIA may end up being like a residents’ welfare association. “Currently, in case of any issue, we deal with it immediately. We make decisions and have a decent relationship with the village panchayats. If BBMP takes over, we may have to get everything done through them. BBMP has not done much in the city anyway,” she says.
Rama says that traditionally Electronic City has been ignored by local elected representatives, as company employees are not voters of the local area. “The issues in industrial area are different, and elected representatives are not interested in these.”⊕