India’s richest civic body’s reserves shrink by Rs 3,544 crore in 8 months

The reserves, held as fixed deposits in multiple banks, now stand at Rs 77,905 crore, according to civic records. (File Photo)

The Brihanmumbai Municipal Corporation’s (BMC) financial reserves have shrunk by Rs 3,544 crore in eight months, the civic body’s latest quarterly financial report shows. The fall comes as the BMC carries a liability of Rs 2.34 lakh crore for the infrastructure projects it has taken up, and a civic official has warned of a liquidity crisis in the next few years.

The reserves, held as fixed deposits in multiple banks, now stand at Rs 77,905 crore, according to civic records. In the budget presented in February, they stood at Rs 81,449 crore. In 2021, they were Rs 91,690 crore, which means the reserves have fallen by nearly Rs 13,800 crore in five years.

Why the fall matters

Not all of the reserves can be spent on projects. BMC rules allow only 50 per cent to be used for infrastructure works. The rest is tied to fixed liabilities, including employee pensions, gratuity and contractors’ security deposits.

“As we can see, out of the Rs 77,000 crore reserve that we have, only 49 per cent could be used for the infrastructure projects, while the overall size of these projects is nearly four times this usable amount. This clearly indicates that in the next few years, there is going to be a liquidity crisis in the BMC,” said a civic official on condition of anonymity.

No crunch this year

The official said the BMC is unlikely to face a financial crunch in the current year, as property tax collection has gone up and so has the premium earned through the building proposal department.

“However, if attention is not paid in full towards controlling expenditure and fixing liabilities, things will go gradually out of control,” the official added.

Where the money is earmarked

The report shows the BMC’s Infrastructure Development Fund has a balance of Rs 2,100 crore. The Special Project Fund stands at Rs [5,5648] crore, with an additional Rs 1,033 crore. A corpus of Rs 768 crore has been set aside for the tree authority to maintain Mumbai’s existing green cover.

Plan to raise more

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Civic officials said the BMC intends to raise at least Rs 10,000 crore through green bonds. Earlier this year, it appointed a private firm to raise money through bonds. Officials said the bonds would fund projects including wastewater treatment facilities at Dharavi, Versova, Bhandup, Ghatkopar, Bandra and Malad, the upcoming desalination plants, two water tunnel projects and the proposed Gargai dam.

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Pratip Acharya is a seasoned journalist based in Mumbai reporting for The Indian Express. With a career spanning over a decade, his work demonstrates strong Expertise and Authority in critical urban issues, civic affairs, and electoral politics across Eastern and Western India. Expertise & Authority Current Role: Journalist, The Indian Express (IE), reporting from Mumbai. Core Authority: Pratip's reporting focuses sharply on local democracy and development, specializing in: Urban Governance and Civic Affairs: Providing in-depth analysis of municipal decision-making, city planning, and local infrastructure, essential for informed urban reporting. City Politics and Environment: Covering the political dynamics of Mumbai and surrounding areas, alongside critical environmental challenges impacting the metro region. Electoral Coverage (High-Stakes Experience): He has extensive experience in high-stakes political reporting, having covered major elections, establishing his Trustworthiness in political analysis: National: Lok Sabha elections in 2014 and 2019. State: West Bengal Assembly elections in 2016 and Maharashtra Assembly elections in 2019. Major Assignments (Ground Reporting): Pratip demonstrated commitment during crises by conducting ground reporting throughout the Covid-19 pandemic since its breakout in 2020, offering first-hand accounts and analysis of the public health crisis. Experience Extensive Experience: Starting his career in 2014, Pratip has built his foundation across multiple prominent English dailies: Started at The Times of India in Kolkata (2014). Relocated to Mumbai (2016) and worked with The Free Press Journal and Hindustan Times before joining The Indian Express. Pratip Acharya's diverse experience across major publications, coupled with his specialized focus on the intricate details of urban governance and a track record of covering major electoral and health crises, establishes him as a trusted and authoritative source for news from India's critical metropolitan centres. ... Read More

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