Amidst much anticipation, the Bruhat Bengaluru Mahanagara Palike (BBMP) presented its budget for the fiscal year 2023-24 on March 2nd. The total projected budget for this fiscal year stands at Rs 11, 163 crores. The budget’s main focus is on construction and maintenance of road infrastructure, as has been the trend in the past years as well. This is mainly because of the sub-par quality of construction requires repeated expenditure on operation and maintenance.
It was announced that the total receipts of BBMP during 2023-24 will be Rs 7,070.11 crore, while the total Centre-State grants will be Rs 4,093.86 crore. While the total receipts will be Rs 11,163.97 crore, the total expenditure will be Rs 11,157.83 crore, thereby resulting in a surplus of Rs 6.14 crore. Thus, 63% of total income for BBMP for the year 2023-24 is estimated to be from its ‘own sources’ while 57% is from grants and transfers.
Income from property taxes
As per the analysis of the previous year’s budget document, the BBMP’s main source of revenue is from property taxes, about 52% per cent of revenue. BBMP’s per capita income from property taxes is to be Rs 1,567. In comparison with other metro cities, BBMP’s income from property taxes is much lesser, as Mumbai stands at Rs 5,458 per capita and Delhi at Rs 3,843.
The main reason for the low income from property tax for BBMP can be attributed to the use of the Self Assessment Scheme (SAS), based on the unit area value (UAV), which limits the property tax demand from BBMP. Along with that, the high number of exempted properties as well as inefficient collection efficiency leads to poor property tax collection for BBMP.
BBMP’s main functional domain includes: roads and public infrastructure, SWM, registration of births and deaths, allotting building permissions, development of social infrastructure: health and education, and planning and development of the city. While there is a budget assigned for each of these functions, it is very important to understand the sufficiency of the allocated budget.
Analysis of the budgets of the previous few years indicates that the per capita budgeted expenditure on roads (operations and maintenance) stands at Rs 5, 935, which is much below Rs 11,825 the normative standards prescribed by the High Powered expert Committee (HPEC) for a metropolitan city. The per capita budgeted expenditure on Solid Waste Management stands at Rs 1,469, still below the normal the prescribed Rs 2, 200.
Allocation for social infrastructure
Urban local bodies (ULBs) provide for social infrastructure, like schools and health facilities, which is one of the 18 required functions of ULBs. BBMP runs about 164 schools and 42 health centers (including maternity homes and referral hospitals).
Based on the previous year’s budget the per capita budgeted expenditure on such social infrastructure stands at Rs 648.
Integrated financial management system
During the announcement of the BBMP budget this time, several administrative reforms were introduced to promote transparency that included implementation of the Integrated Financial Management System (IFMS). In this regard, from the financial year 2023-24, all incomes, receipts, inter office transfers and expenses will be covered under the Integrated Financial Management System (IFMS). The IFMS will, hence, enable the BBMP to prepare accounts on a day to day basis. This will bring complete transparency to the BBMP’s accounting system and the BBMP’s financials is expected to be released quarterly.
Improving quality of governance
In fact, in a first, several institutional changes were also proposed to enhance the quality of governance of the BBMP. It is proposed that officials will club two to three wards into a subdivision to ensure easier administration. In order to keep up the motivation of BBMP officers a ‘Nada Prabhu Kempegowda Innovation’ award of Rs 2 lakh is planned, which will be given to deserving officers and staff to encourage innovative solutions to problems.
In another landmark move, the budget has allocated Rs 10 crore to be reserved to fund the health insurance and health benefit scheme for retired employees of the BBMP, including pourakarmikas. In order reach its revenue capacity, the BBMP has allocated Rs 40 crore to determine and identify the agency’s properties, including geo-tag-GPS marking of its lakes, digitisation of records, chain-link fencing, and installation of nameplates. This will give impetus to the scheme of preserving BBMP’s assets and turning them into sources of income.
Also, all self assessment declarations by all major commercial buildings will be taken up for detailed verification during 2023-24, and a target of Rs 4,790 crore is expected to be collected in the year under property taxes, including cesses.
Budget heavily biased towards public works
As per Kathyayini Chamaraj, executive trustee, CIVIC, the BBMP budget should have focused more on fulfilling social infrastructure needs such as: creches, anganwadis, schools, Public Health Centres (PHCs), rental housing, and slum redevelopment. Overall, the budget is still very heavily biased towards public works, it could have emphasised more on redeveloping slums, rejuvenating lakes, removing encroachments, processing solid waste locally, etc.
In association with BBMP, NGO Janaagraha had organised the ‘My City My Budget’ campaign in 2021-22. A total of 16,261 inputs were received from all 243 wards, spread across the eight zones, in a span of 31 days, of which 67 % are related to footpaths, roads, and drainage maintenance. Demand for investments to improve pedestrian and vehicular mobility in Bengaluru emerged as one of the most critical areas flagged by the citizens. As per Jayaram Raipura, Special Commissioner Finance, several of these inputs have been incorporated in the BBMP budget for the year 2023- 24.
While it is true that the BBMP is one of the very few cities in the country to move towards a participatory approach in budgeting, the overall approach towards budget allocation is rather unscientific and somewhat haphazard. There is excessive reliance on the incremental approach. Almost all budget estimates are prepared on the basis of past year’s figures and by following an incremental approach. This approach builds a bias towards continuing the same activity year after year, well after their relevance and utility may have been lost because of various reasons.
More inclusive and transparent
In the Budget of 2023-24, like all previous years, all financial estimates and figures were budgeted without having any overall targets beforehand. This causes heavy demand on sources of funds. Also, no proper detailed base work or calculations or analysis were made while estimating funds requirements or forecasting receipts of the BBMP.
Overall, the BBMP has made significant changes towards making its budgeting process more inclusive and transparent. Its plan to release quarterly budget tracking, if followed through, will be path breaking for municipal finances in Indian cities. However, there is an urgent need to undertake a more scientific approach in computing budget estimates as well as strengthen tracking of budget expenditures.
Addendum: This article has been updated, with a wrongly attributed quote removed.