A first: MC to adopt fiscal reforms to augment revenue generation

In a first, the Ludhiana Municipal Corporation (MC) will soon adopt fiscal reforms to augment revenue generation.

The biggest, largest, and the richest civic body in the state, in terms of area, population and budget, has been facing fiscal ill-health despite having an annual Budget of almost Rs 1,000 crore.

The process to bring the much-needed fiscal reforms began with the Adviser (Fiscal Affairs) to the Punjab Government, Sebastian James, meeting senior officials of the MC here recently.

Professor of practice in the Sanford School of Public Policy and faculty affiliate of the Duke Centre of International Development, James took stock of the current financial situation of the civic body to prepare a blueprint for the augmentation of revenue and resources.

MC Commissioner Aaditya Dachalwal briefed the Fiscal Affairs Adviser that the MC limits of Ludhiana were spread over 159.39 sq km with an estimated population of 20 lakh. Being the largest industrial hub of the state, the city has a large number of migrant population.

With roads and lanes network spreading over 4,000 km, the MC limits cover areas falling under seven Assembly constituencies — Atam Nagar, Ludhiana Central, East, North, South, West and Sahnewal.

Divided into four municipal zones and 95 wards, the MC has a Commissioner, Additional Commissioner and three Joint Commissioners and three Assistant Commissioners.

Of the total 4,34,751 properties registered with the MC, a maximum of 2,90,996 were residential, 47,556 commercial, 11,205 industrial, 41,468 mixed land use, 41,068 vacant plots, and 1,361 agricultural properties, besides 1,097 parks.

Dachalwal apprised James that the state government had classified the city into three separate areas/ categories in 2014-15 on the basis of socio-economic profiles, infrastructure availability and developmental parameters. While the Area 1 encompassed high-income zones, Area 2 comprised middle-income zones and Area 3 represented low-income zones. Tax rates were accordingly determined for these areas separately.

“Over the past decade, Ludhiana has undergone significant urban development, with notable changes in infrastructure, socio-economic demographics and property values,” the MC Commissioner said while suggesting increase/ revision in tax rates determined in 2014-15.

He said several areas categorised under Area 2 and 3 have witnessed substantial growth and now, align more closely with characteristics of Area 1. He said the Punjab Municipal Corporation Act empowers the committee, headed by the Local Government Secretary, and comprising Local Government Director, MC Mayor and Commissioner, and the Deputy Commissioner, to review the area limit from time to time to update and revise the categorisation, if required.

The Fiscal Affairs Adviser was also informed that in 2013, a new property tax regime was introduced, which led to decline in tax collection from industries as compared to the pre-2013 levels, indicating that the revised rates had an adverse impact on revenue generation from industrial properties.

From 2021-22 onwards, a 5-per cent increase in property tax rates had been implemented for all property categories except rented ones. The MC advocated the application of the same increase rule for the rented properties as well to augment tax collection.

James, who on an honorary basis and in his personal capacity, will advise the government regarding financial resource mobilisation, reviewing capital and revenue expenditure and its rationalisation, augmenting the state’s finances, and restructuring fiscal debt, deliberated with the MC officials on the current fiscal health of the civic body and assured them to present his report with suggestions on bringing possible fiscal reforms for tax augmentation to the state government for formal nod before their implementation.

Revenue augmentation main concern: MC chief

“The main concern and agenda of the meeting were how to augment revenue generation. It was a preliminary discussion during which we presented detailed facts and figures of our fiscal health for consideration and further action at the government level,” said Aaditya Dachalwal, MC Commissioner.