Special: A matter of life and debt: pay up, BBMP!

Rs 1,600 crore. That’s how much the BBMP?owes its contractors, most of whom are steeped in debt, thanks to pending payments from the civic body.

While the Palike justifies this sloppy management of its finances by saying tax collection hasn’t been upto par, a contractor taking his own life because he couldn’t repay his loans proves once more, that only thing the BBMP does is ignore our pleas to make this city a better place. Shrinivasa M. reports.

Scams involving BBMP contractors have often made news, but they tell only one side of the story.

While on the one hand some contractors are accused of billing the civic agency for work not done with the help of conniving officials, on the other, those who do the work they are engaged for are not paid for months. 

Sadly, the BBMP’s sloppy management of its finances  has now cost the life of a contractor, S R Girish who committed suicide because he was not paid dues of Rs 30 lakh for years. 

According to sources, the BBMP has virtually stopped paying its contractors for the last 15 months, plunging many of them into the depths of misery.

Ironically, while the BBMP had not paid contractor Girish for the last two years, it promptly announced a compensation of Rs.20 lakh for his family after he killed himself.

The rest are still waiting to be paid. Of the 3,000 contractors listed with the BBMP, 2,500 are part of a contractors’ union, and the rest work independently.

Some have unpaid bills running into crores. In all, the  BBMP reportedly owes its contractors around Rs.1,600 crores, leaving many of them in dire straits.

According to an officer, like most of the other contractors, Girish  too had taken loans from moneylenders at high interest rates to execute the projects he was entrusted with.

"Although there are a lot of complaints about a officer-corporator-contractor nexus in tender works, most small- time contractors execute projects more or less efficiently, borrowing from moneylenders and repaying the loans once their bills are cleared by the BBMP. Any delay in  payment gets them deeper into the debt trap," he says.

The contractors, for their part, point out that under the terms of their agreement, the BBMP is expected to settle their bills within 90 days of submission of the project completion certificate.

However, when they don’t receive the  payment not many are willing to take the legal route.

For these small- time contractors,the BBMP provides the most business as it has a  huge budget for civil works in the city.

So whatever may be the agreement, none of the contractors are ready to get on its wrong side by dragging it to court,” explains one contractor who has huge bills pending with the BBMP himself.

The only recourse for many of these contractors is to avoid doing more work for the civic agency till they are paid their dues.

Consequently, most of  them are virtually boycotting the ongoing tender process  for the 2,787 projects for 2013-14 estimated to cost Rs. 494 crore.

"There is lukewarm response  to the current tenders as the contractors have no faith in the BBMP," admits an officer of the engineering division.

Next: ‘Govt must share responsibility for public works’

‘Govt must share responsibility for public works’

M.S. Shivaprasad

We have corrected the problems with the PID data bank. Now  on clicking any PID number you can get tagged property details along with the GIS info.

Of  the estimated 16 lakh properties, more than 13 lakh have already been given PID numbers and in many zones we have achieved 90 per cent coverage.

There is no truth in the allegation that property tax is not collected  properly. We have made tremendous progress on this front.

While in  2001, the BMP’s property tax collection was just Rs 150 crore, we  collected Rs 1,358 crore in 2012-13 and are confident of collecting around Rs.700 crore more this year.

The problem is that every month, the BBMP needs around Rs 250 crore for various services offered like garbage disposal and salaries and pensions.

If the state government does not release money or share taxes with the BBMP it is bound to find it hard to manage the show.

We can't meet all the expectations of the people on good roads, infrastructure, health and  education only through property tax collection.

I strongly urge the state to introduce a revenue sharing module. For example although it collects road tax through RTOs, it doesn't share even a paisa with the BBMP which builds and maintains the roads. 

Either the government share’s revenue collected as road tax with the  BBMP or it takes over the responsibility of the roads.

The writer is chairman, standing committee for taxation and fixation.

Next: ‘Palike misleads the people with its annual budget’

‘Palike misleads the people with its annual budget’

C. N Deepak, The writer is an activist

There are several reasons for the present crisis. There are some honest contractors, but there are also others who indulge in double job code and bogus bill rackets.

So when BBMP withholds payment for such double job code works and bogus bills many cry foul. The honest contractors pay dearly for no fault of theirs in the process.

BBMP’s poor budgeting  is also to blame. While its annual income is between Rs.3,000 crore and Rs.3,500 crore, it presents an annual budget of over Rs.8,000 crore and to mislead the people promises to carry out all the work they demand in a locality.

Sometimes it kickstarts the work and then is not able to pay for it. The biggest problem is that 60 per cent  of the BBMP's budgetary allocation is for non-plan expenditure. Its time it cut its non-plan expenditure to ensure more funds for developmental works.

The agency is again to be blamed for poor property tax collection. In 2001-02 when the erstwhile Bengaluru Mahanagara Palike (BMP)  introduced GIS based Property Identification (PID) numbers, it was found that around three lakh properties were out of the tax ambit.

But even after the formation of the BBMP, our administrators have failed to  give PID numbers to all properties.

Consequently in many areas if a house has five floors, the owner  pays tax only for two floors and buildings in residential areas  are used for commercial purposes without any change in the tax structure.

Also, new  houses were not included under PID  for a long time due to a local nexus between officials and engineers, reflecting the maladministration in the BBMP. Its time all properties were brought under the tax net so the BBMP doesnt lose more revenue.

Next: Lakhs of properties still not taxed:?Experts

Lakhs of properties still not taxed:?Experts

Civic experts suggest the BBMP needs to improve its tax collection to get its finances back on track and clear all its dues. Its officials too feel its time property tax collection was made foolproof so that the BBMP is not cheated of funds from property owners.

"Several lakhs of  properties in the city are still out of the tax next. The collection is not  upto mark due to the wrong information provided by the property owners. In most residential areas house owners are paying tax only for a part of their buildings by excluding several floors, or misleading us on the building area and type. This is where we need to improve things," says an official of the agency’s revenue department.

B. Somashekhar, chairman, standing committee for major  works, agrees that the onus is on the BBMP to  improve its tax collection.

"In the south zone the BBMP hoped to make a  Rs.400 crore tax collection, but till now it has collected only Rs.20 crore. So recently district in-charge minister. Ramalinga Reddy, mayor Katte Sathyanaraya and senior  officials of the BBMP held a review meeting with the local officials to see how  things could be improved.  This sort of review will be extended across the city,” he says, revealing that the BBMP has also approached the state government for more funds for  developmental projects.

"Recently we met the chief minister and senior officials of the urban development department seeking more funds for the city.  We will also continue our efforts to improve tax collection," he assures.

Next: Populist schemes eating into aid for civic bodies

Populist schemes eating into aid for civic bodies

Cash strapped urban civic bodies may not get more financialsupport from the state government this year owing to its many populist schemes, according to sources.

The cheap rice scheme, loan waivers and recent  package announced for the sugarcane factories are expected to drain the state exchequer, says an official.

"Around Rs.4,000 crore could be diverted to fund these welfare schemes. The urban local bodies could suffer in the process," he  adds.