The Brihanmumbai Municipal Corporation’s (BMC) financial reserves have declined by Rs 3,544 crore over eight months, raising concerns about its ability to fund major infrastructure projects in the coming years. The civic body faces commitments of approximately Rs 2.34 lakh crore, prompting an official to warn of a possible liquidity crisis.
According to the latest quarterly financial report, the BMC’s fixed deposits across various banks stood at Rs 77,905 crore, down from Rs 81,449 crore in the budget presented in February. The reserves have also fallen from Rs 91,690 crore in 2021, marking a reduction of nearly Rs 13,800 crore over five years.
Only a Portion Available for Development
The entire reserve cannot be deployed for infrastructure spending. Under BMC rules, only 50% can be used for development projects, while the remaining funds are required to meet obligations such as employee pensions, gratuity payments 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.
The official, however, indicated that the corporation is unlikely to encounter a financial crunch during the current year. Higher property tax collections and increased premiums generated through the building proposal department have strengthened its near-term revenue position.
“However, if attention is not paid in full towards controlling expenditure and fixing liabilities, things will go gradually out of control,” the official added.
Infrastructure Funds and Fresh Borrowing
The financial report lists Rs 2,100 crore in the Infrastructure Development Fund and Rs 768 crore earmarked for the tree authority to preserve Mumbai’s green cover. It also records allocations under the Special Project Fund, although the reported figure appears inconsistent.
To finance upcoming works, the BMC plans to raise at least Rs 10,000 crore through green bonds. The proceeds are expected to support wastewater treatment plants, desalination facilities, two water tunnel projects and the proposed Gargai dam.
The declining reserves underline the need for expenditure controls and careful financial planning as Mumbai’s infrastructure spending expands.
Source: The Indian Express
