NMC seeks special grants of Rs 325 cr from State

Source: The Hitavada      Date: 01 Jun 2018 10:20:56


Special Correspondent,

In a bid to strike a balance between its not-so-sound financial health and city’s growing developmental needs, Nagpur Municipal Corporation (NMC) has sought special development assistance grants worth Rs 325 crore every year from State Government for development of Nagpur. Standing Committee will take a decision on this proposal of Finance Department in its meeting slated on June 5.

As per the proposal, State Government had assured in the year 1995 to provide special grants of Rs 15 crore for development of Nagpur city for next five years, recognising its status as Second Capital of Maharashtra. The Government had released funds for the Orange City for the said period. However, from 2006-07 to 2010-11, the State released only Rs 15.59 crore and after 2011-12, the special grants were stopped for reasons best known to the erstwhile Congress-NCP Government.

Against this backdrop, Finance Department of NMC has proposed that in view of development spree in the city, special assistance is required to maintain the pace of development works.

Presently, financial condition of the local body is in shambles. The committed expenditure of the local body over salary, pension grants, electricity, raw water bill, payment to Orange City Water, petrol, diesel, telephone bills, security, repayment of loan, garbage lifting, Government’s cess, etc is around Rs 92 crore. Devendra Fadnavis, Chief Minister, has already rejected NMC’s demand for increasing its share in GST and has advised the local body to increase its revenue sources instead of demanding more funds from the State. Still, NMC is mulling over a new option of seeking funds from the State Government instead of increasing its own revenue.

The expenditure of the civic body is increasing while sources of revenue generation are shrinking. Already, two revenue sources Octroi and Local Body Tax have been abolished. Besides, State Government is releasing only Rs 51 crore in lieu of subsuming of some taxes in Goods and Services Tax (GST). The GST grant is meager as compared to income from Octroi. As a result, it is becoming difficult for the civic body to make its contribution towards development works as well as to maintain public transport system more efficiently.

Presently, public transport service also is running in huge losses. In future, the local body will be required to generate Rs 3,000 crore for various developmental works. Given the present scenario, it looks like a Herculean task.

In its proposal, Finance Department of NMC has suggested that in view of today’s wholesale price index (WPI) and consumer price index (CPI), Rs 15 crore grant of 1995 is equivalent to Rs 75 crore now. Considering CPI, the grants should be Rs 417 crore and in view of WPI in 2017, the special grants should be Rs 234 crore. Therefore, the department has suggested that the local body should request to the State Government to release special grants of Rs 325 crore every year for next five years. Standing Committee will take final decision over the proposal and forward it to the State Finance Department for approval.