Friday, October 26, 2007

Your money will fuel city’s growth

Your money will fuel city’s growth
S Kushala and R Jayaprakash | TNN

Bangalore: A bigger, better Bangalore needs to be flush with funds. For infrastructure upgradation of 741 sqkm of Greater Bangalore, civic agencies will have to pump in a whopping Rs 36,308 crore as initial investment. And that is only is a short-term measure till 2012.
How will BBMP, BWSSB and BDA generate this amount? You, dear citizen, will bear the brunt. Brace yourself for a variety of cesses — capital impact fee, real estate fee, additional sewerage charges, regularisation fee and recurring impact fee. Generous funding from state and Union governments may be your only solace.
These are some findings of CRISIL Infrastructure Advisory, a credit rating agency which conducted a financial assessment of Bruhat Bangalore. In the report submitted on October 5, director of CRISIL, S R Ramanujam, highlighted the long-term investment needed for Greater Bangalore till 2031 is Rs 1 lakh crore to service the expected additional population of 1.28 crore.
Sector-wise, the city’s major requirement will be roads, water supply, sewerage, infrastructure, solid waste management, slum development, installing streetlights and stormwater drains. According to projections, the BBMP will have to invest Rs 20,019 crore till 2012, of which, Rs 4,004 crore should flow in annually. In stark contrast, the surplus budget as on 2005-06 is a paltry Rs 77 crore. This, along with the debt liability of Rs 751 crore.
The BWSSB will have to plough in Rs 11,029 crore with over Rs 2,206 crore annually. Its surplus as on 2005-06 is Rs 70 crore, with a debt liability of Rs 1,388 crore.
How much can civic bodies mop up? Of the huge chunk, the findings’ forecast, based on trends and normal revenue revisions, says the combined sustainability of the BBMP and BWSSB is just 35% of the proposed investment, with a gap of 65%. To fill the gap, the study has suggested avenues for revenue augmentation — regularisation, introduction of new fees such as capital impact fee, real estate fee and recurring impact fee for BBMP; additional sewerage charges, capital impact fee and new connection fee for BWSSB. This will place the agencies at a higher level predicted at 59% as against 35%.
How can the government strengthen civic agencies? Surcharge on stamp duty and VAT, write-off BWSSB loans and exempt contribution to JN-NURM revolving fund, which will benefit the organisations to the tune of Rs 2,753 crore.
The credit rating exercise started in April and was conducted by Industrial Credit Rating Agency (ICRA) for cities that come under JN-NURM funding. The agencies involved are CRISIL, ICRA, CARE and Fitch. The rating will assess the financial health primarily to ascertain whether the agency will be able to chip in matching contribution for JN-NURM projects.
Bangalore revenue lowest
Revenue generated by the BBMP as compared to other cities is abysmal even though BBMP is bigger in area than that of Pune and Surat. Pune’s annual revenue is Rs 2,348 crore, Surat collects Rs 2,089 crore, Mumbai generates Rs 2,008 crore (Thane and six other municipalities excluded), Hyderabad nets Rs 1,980 crore. The BBMP? Only Rs 1,085 crore.


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