MC must be saved, Rs 238-cr bailout likely: Guv

The UT Administration is considering several options for a bailout package to the fund-starved Municipal Corporation (MC), said Punjab Governor-cum-UT Administrator Gulab Chand Kataria.

In an exclusive chat with The Tribune at the Punjab Raj Bhavan here, Kataria said many plans were being considered by the Administration to pull the civic body out of the economic crisis. These include transferring Rs 238 crore to be saved annually on account of the privatisation of the Electricity Department, increasing the grant-in-aid, renting vacant properties of the MC and augmenting its own sources of income.

“We will not let the civic body die down under the mounting liabilities and put it back on track to carry out the development of the city,” said the Administrator.

The development assumes significance as the gap between the income and expenditure of the MC has mounted to Rs 1,079 crore in the current fiscal. It has income proposals of Rs 1,035 crore against the committed expenses of Rs 2,114 crore for the fiscal 2025-26.

It even struggles to pay the salaries of around 10,000 employees, including nearly 7,000 outsourced workers, on time. The monthly salary bill is about Rs 42 crore, which is its heaviest monthly committed liability. At times, the MC has to take loans for meeting its committed expenditures.

Expressing serious concerns over the poor fiscal health of the MC, which came into being in 1994, Kataria said the UT Administration was exploring various options, including enhancing the annual grant-in-aid and giving share from its (Administration’s) other sources of income, to bridge the widening gap between income and expenditure of the civic body.

“Even as we are seized of the matter and considering several proposals, the MC is also required to put its own house in order by generating more revenue sources and plugging avoidable expenditure,” he asserted. He said the MC must plan and find ways to augment its income from sources such as advertising and sale or rent of properties, which, he said, were inadequate at present. “There are several sources, which can be tapped to earn money, without even burdening the public,” said Kataria.

On the recent hike and partial rollback of the property tax, the Administrator said it was done while keeping in view all aspects, including the public interest at large.

STARK CONTRAST

The Chandigarh MC has generated a demand of Rs 45 crore from property tax in 2024-25, which accounted for Rs 480 per head from the city’s estimated population of 12.5 lakh. The neighbouring Mohali MC was collecting Rs 40 crore property tax per annum with per capita levy accounting for Rs 1,700 from its estimated population of 2.5 lakh.

11% OF TOTAL REVENUE

The share of property tax in revenue from the MC’s own sources was almost 11%, which should ideally be not less than 30%. With the annual income from its own sources pegged at Rs 410 crore, the civic body should get Rs 123 crore in property tax.