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22 Apr 2017

MCD polls: Will 2017 help the cash-strapped body?

AAP, BJP and Congress have launched full-fledged campaigns for the Municipal Corporation of Delhi polls scheduled on April 23. All have promised a cleaner capital.

However, no-one has talked about where the funds will come from for the cash-strapped body to actually perform.

A chronic lack of funds has led to delayed salaries, outbreaks of dengue and other diseases, and created a general mess.

In context

Cash-strapped MCD fights for survival ahead of polls
The birth of the crisis - trifurcation


The birth of the crisis - trifurcation

The MCD, established in 1958, was in charge of 272 wards across 12 zones till 2012; then the Congress split it into three - north, south and east.

Experts have attributed the funds' crisis to lack of proper planning before trifurcation. The thickly-populated East has lesser source of revenue than the posh South.

It also led to need for more staff, thereby increasing expenses.


Rs. 758 per person spent in a year for health!

In 2014-15, the three bodies of the MCD - north, south and east - had a budget of Rs. 9,551cr, averaging Rs. 5,340 per person for the whole year.

40% of the budget was spent on administrative purposes, including paying employees and corporators.

Sanitation expenses came to Rs. 1,258 per person, while healthcare cost Rs. 758 per person.

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Mumbai's BMC fares much better than Delhi's MCD

The Brihanmumbai Municipal Corporation has a budget which is over five times higher than that of MCD. It spends three times more than Delhi on health, and twice as much on education per person.

Steps towards a better MCD - more taxes, state funds


Steps towards a better MCD - more taxes, state funds

Property tax can help make the MCD profitable; income is nil from many unauthorized colonies.

Former MCD Commissioner K.S. Mehra suggests "congestion charges". "So many vehicles are parked on roads for the whole day. Why they should they not be charged?"

He adds property tax can also vary depending on location and conveniences provided.

State grants to the MCD need to be increased too.


So what's stopping reforms?

Since Delhi, unlike Mumbai, is a union territory, full devolution of powers to local bodies cannot be done.

Unlike BMC, whose main sources of revenue are Octroi, development charges and property tax, 40% of MCD's funds come from state grants, which are limited.

BMC also draws revenue from water distribution, but in Delhi, it is under a separate government body.

What's going wrong in MCD 2017?

Instead of focusing on revenue generation, parties are promising performance at lower taxes to the public to woo voters ahead of the MCD polls. AAP has even announced scrapping of property tax; with no alternatives, such a waiver could affect financial self-reliance of the body.

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