Ahead of 1st merged MCD budget, prep to unify disparate financial books starts
NEW DELHI: The unified Municipal Corporation of Delhi has begun preparations for its first budget with senior officials saying that they were looking at account books, expenditure and income statements of three erstwhile civic bodies to collate the required data.
The three corporations, which have now been merged, passed their budgets in February. After the Parliament passed the Delhi Municipal Corporation (Amendment) Act, 2022, the three civic bodies were unified on May 22.
“The financial books, liabilities, salary allocations, income sources of all three corporations are being merged and the executive wing will send the final budget report to the special officer for approval. The changes are expected to be finalised in the next week,” a senior official associated with the process said.
Until fresh civic elections are held, a special officer will head the deliberative wing (elected representatives). The bureaucrats will report to the commissioner.
The official said that preparatory meetings for formulation of the common budget have started. He explained that unlike the normal practice of the commissioner presenting the budget proposals to the House elected councillors, and the House passing it after deliberations, this time it will be much shorter exercise.
Since the special officer is incharge of the deliberative wing during the transition, the budger will soon be passed after incorporating his inputs, the official said.
The exercise is important since alleged financial mismanagement and massive fiscal deficits and liabilities was among the prime reasons cited for the unification of the three civic bodies.
In February, the North MCD presented a budget of ₹7,504.91 crore; East MCD prepared a budget of ₹4,735.77 crore, and the South MCD made a budget of ₹4,830.57 crore. As elections were scheduled to be held in another couple of months, all proposals for revision of taxes and imposition of new taxes were rejected by the councillors despite a yawning gap between the income and expenditure.
The extent of financial stress in the East body could be gauged from the fact that over 80% of EDMC’s expenditure was spent on paying salaries of the employees while in North MCD the liabilities including repayment of loans, interest on loans, pending payments to waste collection concessionaires and contractors was more than ₹8,800 crore.
A second official who is involved with the unification process said the budget will also look into how to streamline the disparate taxes and licence fee levied by the three civic bodies. “SDMC used to impose 1% education cess on the property tax collections but North and East MCD had no such levy. There are also several disparities in health, trade and factory license fee. All of these need to be uniform across the city with the unification of MCDs. In case of expanding the tax net, we will first focus on bringing large commercial properties located in 1,799 unauthorised colonies,” the official added.
Civic officials say that pending policy decisions are also expected to be taken up from this week. “No meetings of standing committee and house of councillors have taken place since March 31, 2022 and more than 50 big and small policy decisions are pending. These include provisions such as single tender for biomining of 5 million tonnes of legacy waste at the Ghazipur landfill,” he said.
The two officers, however, added that the issue of funding from central and state government is still unclear. “Article 243Y of the Constitution forms the basis of the distribution of the net proceeds of the taxes, duties, tolls and fees between the state and the municipalities. We are exploring all the possible resources to increase MCD’s revenue but the constitutional arrangement in terms of devolution of funds to the urban local body cannot be side lined” a third civic functionary said.
On multiple occasions, the unified MCD has claimed that ₹11,00 crore should have been released as the first quarter allocation of taxes to the local bodies but only ₹631 crore have been released so far. The Delhi government, however, has maintained that all dues of corporations have been released over the last five years.