An institution in decline is not a pretty sight. Particularly when it is a civic body responsible for the quality of life of vast segments of the population. This is what is happening to Bruhat Bengaluru Mahanagar Palike, which has just presented its budget for the current year. Of course, there’s more to development than figures. Nevertheless, the Annual Financial Statement is a great way of assessing recent performance and future plans. From both points of view, going by the BBMP’s figures, the prospects for Bengaluru are bleak.
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Budget analysis usually starts with three questions. Have promises made in the previous year been met? Has performance been higher than in earlier years? Is something more programmed for the coming year to fulfil the demands of citizens? On all three counts, the BBMP’s overall and sectoral figures are dismal.
For several years, we have been resigned to BBMP raising and spending only about three-quarters of what it plans. Last year, it hit a new low. It did not even reach two-thirds of the projected figures: Rs 7064 crores of receipts (Rs. 7066 crs of expenditure), which is just 60% of the budgeted level of Rs 11649 crs. Figures which are lower than levels attained two years back. And this is at current prices for a city which has not stopped growing.
Taking inflation into account and the expanding population, BBMP should have raised and spent far more even to maintain present standards. All Bengalureans have suffered the consequences of decline in the level of civic services and infrastructure. And here at last, the budget has given us figures to confirm our suspicions, to show that BBMP was indeed falling far short of targets in every area of performance in recent years.
The failure is reflected all down the line in resource-raising and expenditure. Over the years, the BBMP has painted itself into a corner when it came to raising revenue. Today, its revenue streams have shrunk to one dreary trickle: property tax and the cesses piggybacked on it.
In 2015, immediately after the present Council was elected, it raised property tax rates, leading to increased yield in own revenues. A year later, property tax receipts plateaued at around Rs. 1800 crore and stagnated at that level, although the Palike continued to jack up budget figures to justify larger spending plans. As the year closed, BBMP reported that it had collected Rs 2500 crore in 2019-20.
Figures now unveiled show that the actual amount realized is only Rs 2100 crore, up from the Rs 1800 crore of last year but hardly close to the budgeted amount of Rs 3500 crore. How this can happen in a city which is continuously adding to its commercial and residential property is a mystery.
The Revenue Jinx
Reports of experts of the National Institute of Urban Affairs (and even one Economic Survey of the Central government) have noted that the property tax potential of most of our metropolises has not been exploited by municipal bodies. Here, BBMP too is culpable. There are no extenuating factors, since rent control laws do not depress property valuations in Bengaluru, as they do in Delhi or Mumbai.
A report prepared for the State Finance Commission by the Indian Centre for Social Transformation has, in fact, identified various ways of improving property tax assessments in the city to substantially augment revenues. There is, for example, reason to believe that the amount realized through property tax could increase several times if tax registers are cross-checked against water and power connection sanctions and BBMP’s own building permissions.
The city (particularly its outskirts, where construction is always in full swing) has large numbers of “unwilling” defaulters: taxpayers who are prevented from completing tax assessments on new buildings and paying up taxes because of opaque systems and uncooperative and corrupt staff. Since cesses are levied with the property tax as base, improvement in collecting the tax will lead to all-round improvement in BBMP revenues.
This is particularly important, since every other way of raising resources has become defunct in recent years. Advertisement tax is a non-starter because of legal hurdles faced by BBMP, when it refused to develop a coherent policy for regulating hoardings. The issue of trade licences is tangled up with how to permit commercial establishments in residential areas. This has led to an impasse in which illegal establishments flourish but licence fees cannot be collected. As for revenue from own property, BBMP does not revise rentals, even when it spends money on maintaining buildings.
The Palike clearly has no plans to break away from the syndrome of poor revenue in 2020. There is a certain defeatism about the current budget estimates. There are no programmes for facilitating taxpayer interaction or improving compliance. Property tax for the coming year stays at the 2019-20 budgeted level of Rs 3500 crs, but we can hardly expect to net even the current collection of Rs 2100 crore in a year of pandemic and economic slowdown.
Other tax handles are also not up for reform. It is not clear why receipts from fees and fines on building-construction have fallen below levels achieved in 2018-19. Has there been a slump in construction? Nobody knows for sure, since statistics on the city’s growth as reflected in BBMP documents and building permissions are neither collated nor shared. Evidently, civic authorities will continue to limp along with all the earlier handicaps, turning evermore to State government doles to fund improvements: for lake restoration, road repairs, pedestrian crossings and the rest.
The myth of fund scarcity pervades most major expenditure segments, despite brave promises in the budget speech. There is one clear shift in priorities though. The outlay on roads has been boosted by cutting allocations for zonal works and drains. Expenditure on lake development increased last year and there is increase in plans for the current year, but this is only to obey the directions of the NGT about Belandur lake. No fresh lake was developed by the State government and BBMP last year nor is any development proposed for the current year.
Immune to Covid-19
The Covid crisis has highlighted the piteous state of BBMP’s public health and medical facilities. Sanitising and spraying are in full swing today, but the budget reveals no anxiety about the absence of adequate infrastructure and community health staff for primary care.
Only one-fourth of the planned expenditure on medical facilities was actually realized last year: a minuscule Rs 27 crores from a budgeted amount of Rs 111 crores, a shade higher than what was spent a year earlier.
A lower amount (Rs 84 crs) has been set aside for the current year. Given past experience, very little of even this curtailed program is likely to be implemented. Under the National Urban Health Mission, the Central government picks up the costs of community health workers (ASHAs), who are now being diverted from PHCs to carry out Covid related missions. Neither the functioning of this critical program nor the allocation and utilization of funds are mentioned or recorded satisfactorily in the BBMP budget.
We must applaud the decision to open schools in some of the new areas added to BBMP more than a decade back. Schools need buildings, teachers and training. As much as Rs 10 crore is earmarked for capital expenditure on these schools.
What about the teachers: will they be outsourced and paid less than garbage workers as usual? And will Rs.One crore suffice to upgrade and repair the other dilapidated and rundown schools of the Palike? The share of the education budget again stays below one percent.
Solid Waste Management
For most residents of Bengaluru, solid waste mismanagement is perhaps the most visible face of BBMP’s inefficiency. Year after year, it announces plans to streamline this simple task. Year after year, it ends up where it began, with the usual ad hoc solutions. Court direction and supervision have failed to introduce enforceable garbage removal and transport contracts, establish dry waste collection centres in all wards, reduce the use of banned plastic items or promote segregation by households and commercial establishments.
During the current pandemic, the city depends on its most vulnerable group, the garbage workers, to prevent and control infection. Yet, BBMP procedures have hardly changed and sweepers and sorters of garbage remain unpaid for months at a stretch. In recent years, funding for this obligatory function has levelled at around Rs. 1000 crs. But the policy framework remains a mess with little hope for improvement.
Cut in Zonal Outlay
BBMP has diverted Rs 600 cr from the favourite budget item of corporators (zonal works) to fund road infrastructure. The zonal outlay has dropped far below last year’s level of around one-third of the BBMP budget. This amount has come from slashing lump sum allocations for fresh works in wards and decimating funding under the dubious item of new Assembly-wise special development works (which accounted for almost Rs. 500 crore last year). VIP discretionary grants for new projects continue as before. All this is, however, just eyewash.
Ward-wise and Assembly-wise outlays are finalised by adjustments made during the scrutiny and approval process in Vidhana Soudha; these were the only subheads that were extensively revised when the JD (S) led Ministry gave way to the Yediyurappa government in 2019. We can be sure that cuts in these zonal works items will be restored during future iterations of the BBMP budget making process.
Time for Radical Transformation
This budget is by and large an attempt at business-as-usual on a sinking ship. The only way to escape the quagmire of low resources and poor expenditure is to raise revenues. This can break the Palike’s dependence on both government grants and private funds (CSR or PPP). The tax potential of the city should be fully exploited, starting with property tax. Long term projects can then be planned for roads, drains and pavements, lake improvement, schools and hospitals. This will require radical transformation in approaches and attitudes and thorough procedural reform.
Change has been in the air for some time. But, breakup of BBMP into sub-corporations has been shelved and only ward boundaries are proposed to be rationalised. There is a new statute on the anvil, with some provisions of doubtful utility. BBMP should no longer remain an appendage of the government, even though it is now the State’s sole agent for disaster relief and rehabilitation in the city to tackle the Covid pandemic.
A major plank of reform is the relationship with ward committees. These bodies continue to function in the teeth of opposition from politicians and officials. No committee has seen or approved the spending list for the lump sum allocations made last year. Nor have they been allowed to prepare ward plans for the 2020 budget. They play no role in gathering citizen feedback and conducting social audits. As a result, the citizens of Bengaluru distrust authorities and resist BBMP’s suggestions for Covid-appropriate behaviour.
Dramatic change is possible in the city even without alterations in statutes and ward delimitations. We need corporators who welcome citizen participation and take leadership in preparing ward plans. We need a Council that supports and incentivizes good performance. We need competent engineers to formulate projects and firm up tenders. In short, we need a new approach to civic governance. Only then can the budget reflect the aspirations of this growing city.