To finance its administration and municipal services, the Brihanmumbai Municipal Corporation (BMC) is interested in finding out how cities throughout the world are making money. Before the budget presentation next year, the civic body has hired a consultant to look into international revenue models and recommend comparable options to help increase its declining revenue.
The BMC, which is still regarded as the nation's richest municipal corporation, is having difficulty closing the gap between its revenue and expenses. The civic body approved a budget of INR 60,000 crore for the current fiscal year, but in order to pay for the project, INR 22,500 crore must be taken out of fixed deposits. In barely two years, the fixed deposits have been exhausted by INR 10,000 crore, and projects totaling INR 2 lakh crore have already been approved. In order to fund its increasing spending, the BMC has hired a consultant.
M/s Ernst and Young LLP was chosen by the BMC to make recommendations for improvements to the operations of the accounts department as well as new revenue streams. Since no other company in the nation has the same scale as the BMC, they will research revenue models from international cities and recommend workable options here, a BMC official stated. Although the contract is for nine months, he noted, they anticipate certain suggestions to be submitted by February so that they can be included in the budget for the following year.
For the consultation, the BMC is spending INR 71 lakh. The BMC has already attempted to expand its sources of income. Since property tax, the company's second-largest source of funding, has decreased, it is largely dependent on compensation from the state government in lieu of OCTROI.
The BMC suggested new revenue streams in the 2023–24 budget, including hiring organisations to increase property tax collection and advertising on BMC properties. In addition, they recommended raising property tax rates and employing a company to collect past-due amounts. None of these suggestions, though, came to pass.
Political parties resisted a proposal to impose a property tax of INR 100 on all slum settlements almost a decade ago. They also exempted apartments up to 500 square feet from property taxes a few years later. The BMC has not enforced the annual 8% hike in water taxation rates or the planned 16% property tax increases for the last five years.
Another civic official stated that increasing revenue presents a number of difficulties. The BMC needs a long-term, realistic solution and must concentrate on incremental changes rather than laying an enormous tax bill on citizens.
The budget for the BMC for the current year (2024–25) is INR 59,954 crore. INR 22,505 crore will be taken out of fixed deposits to make up the expected INR 36,644 crore in revenue income. Regarding the anticipated property tax increase and other possible revenue streams, BMC has maintained ambiguity.
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