Unrealistic, the word that describes NMC’s budget

* In the past 10 years, there has not been a single occasion when the budget estimates of either civic administration or the political leadership have come true

By Kartik Lokhande

One should dream big, it is said. But, it is also said that one should work pretty hard to turn the dream into reality. As far as Nagpur Municipal Corporation (NMC) is concerned, it believes in dreaming big but not in taking steps to realise the big dream. A look at the budget estimates of both – the civic administration and Standing Committee (political leadership) – prove this point.

Often, one hears that the budget of NMC is ‘inflated’ or ‘unrealistic’. The budget estimates of civic administration are revised by Standing Committee (political leadership), and there have been intermittent rounds of blame-game between civic administration and political leadership. However, irrespective of claims made by both the sides, the truth remains that not once in past 10 years has NMC been successful in achieving the same mark in budgetary estimates and actual results the next year.

Since 2004-05, Municipal Commissioner’s budget estimates have been revised always by the Standing Committee. However, neither the civic administration nor the Standing Committee has been successfull in turning the ‘dream budget’ into a reality. “This has become a regular feature as the administration and political leadership both fail to gauge the hard realities of liabilities and revenue sources. As a result, there is less-than-projected realisation of revenue under one head or the other, at the end of every financial year. This affects NMC’s capacity to meet the liabilities,” said a source familiar with the issue. He added that non-realisation of the projected budget estimates at the end of financial year, year after year, reflected poorly on the financial management of NMC.

If one takes a look at the budget estimates of Municipal Commissioner’s budgets over the years since 2004-05, and the actual targets achieved, it becomes clear that actual results at the end of financial year have been lesser than the projected budget figure. The closest that civic administration’s budget could get to reality was in 2004-05. Then, Municipal Commissioner’s budget was of Rs 339.56 crore and the actual result at the end of the financial year was Rs 338.04 crore. Thus, there was difference of only Rs 1.52 crore between the administrative projection of budget and reality. The same year, Standing Committee had revised the administrative budget of Rs 339.56 crore to Rs 524.36 crore. The administration’s estimates were thus revised upwardly by Rs 184.80 crore. The result was obvious – at the end of financial year 2004-05, the difference between budgetary projection of Standing Committee and actual result was a whopping Rs 186.32 crore.

This has been the case over the years, without an exception. In 2011-12, for the first time, NMC’s budget went beyond the mark of Rs 1,000 crore. Municipal Commissioner had proposed a budget of over Rs 1,087 crore, Standing Committee revised it to Rs 1,187.12 crore. However, as neither the administration nor the political leadership had paid heed to ground realities, both failed in their projections. As a result, the financial result for the financial year was Rs 815.49 crore only. This was Rs 272.25 crore less than the projection of Municipal Commissioner and Rs 379.54 crore less than the estimates of Standing Committee.

Unfortunately, despite repeated failures, neither the civic administration nor the political leadership has given the financial management of the civic body a serious thought. In 2013-14, civic administration had proposed a budget of Rs 1,232.47 crore, which was revised upwardly to Rs 1,401.37 crore by Standing Committee. But, the provisional figures that have been compiled recently are around Rs 850 crore only. Of course, civic administration and political leadership both have been blaming the imposition of Local Body Tax (LBT) for the fall of revenue. Still, one wonders how Standing Committee can propose even higher budget for the financial year 2014-15. The administration has proposed a budget of Rs 1,061.40 crore, but Standing Committee has raised it to Rs 1,645.02 crore, making various new announcements and ‘expressing confidence’ that NMC’s revenue would increase.

Isn’t NMC still engaged only in dreaming big, without much emphasis on getting realistic?

NMC’s budget in past
10 years and this year
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Financial Year     Mpl Commr’s                  Standing Committee’s     Actual
                             budget estimates            budget estimates            (revised) 

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2004-05              Rs 339.56 cr                     Rs 524.36 cr                 Rs 338.04 cr
2005-06              Rs 507.25 cr                     Rs 554.84 cr                 Rs 396.39 cr
2006-07              Rs 476.16 cr                     Rs 534.89 cr                 Rs 460.96 cr
2007-08              Rs 498.54 cr                     Rs 602.29 cr                 Rs 449.74 cr
2008-09              Rs 628.76 cr                     Rs 784.68 cr                 Rs 508.96 cr
2009-10              Rs 747.36 cr                     Rs 869.23 cr                 Rs 654.71 cr
2010-11              Rs 824.54 cr                     Rs 1187.33 cr               Rs 807.79 cr
2011-12              Rs 1087.74 cr                   Rs 1187.12 cr               Rs 815.49 cr
2012-13              Rs 1109.96 cr                   Rs 1286.28 cr               Rs 940.12 cr
2013-14              Rs 1232.47 cr                   Rs 1401.37 cr               Rs 850 cr (provisional)
2014-15              Rs 1061.40 cr                   Rs 1645.02 cr                -- 

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Need to get more realistic: Mpl Commr

When ‘The Hitavada’ talked to Municipal Commissioner Shyam Wardhane said that NMC needed to get more realistic and hence the administration has been submitting a budget that was closer to reality. Asked about Standing Committee increasing the administration’s budget, Wardhane said, “We propose realistic budget, they propose optimistic budget.” On why NMC failed in achieving the budget figures at the end of financial year, the Municipal Commissioner said that several schemes or works are announced in a year and this created liabilities for the next year. As a result, the revenue in next year’s budget is consumed in clearing the liabilities and only attempts could be made to meet the demand for developmental works in current financial year.

Supportive State Govt, tough decisions needed: Mayor

Mayor Prof Anil Sole, who knows NMC very well and has served in various capacities, felt that difference in actual result of a financial year and projections of administration as well as political leadership was on account of one simple reason – projections were only ‘estimates’ and not actually ‘budget’.

The administration has to propose its estimates considering its constraints and Standing Committee has to consider the developmental needs and aspirations of the people, Sole said. Still, financial management could have been better if the State Government had been supportive, he added. According to him, State Government did not have proper analysis and understanding of the issues confronting the civic bodies. “On various occasions, State Government has taken decisions that would hamper revenue collection of NMC. The latest one being replacement of octroi with Local Body Tax. Since imposition of LBT, NMC’s finances have taken a hit,” he said.

Sole, who is also MLC, said that expenditure component could be controlled and revenue could be increased if the administration did its bit. “At present, NMC’s administrative expenditure is 67 per cent. This needs to be curtailed, as this leaves very little for carrying out developmental works and meeting the aspirations of Nagpurians. Besides, rationalisation of taxes and concerted efforts of administration to realise the revenue are other steps that are needed to improve the situation,” he said. Also, he added, civic body will have to take some ‘tough and unpalatable’ decisions to restore financial discipline and put Nagpur on fast track of development in future. 

(Published in The Hitavada CityLine on July 27, 2014)