Published On : Sat, Jan 30th, 2016

Civic body protest: Why trifurcation of MCD is the source of all troubles

New Delhi/Nagpur: As the AAP-led government and the BJP continue the game of finger-pointing over the protest of nearly 1.5 lakh civic body workers, who have decided to go on indefinite strike from Saturday, the question who is telling the truth remains unanswered. While the government has been claiming that it has cleared the funds for the BJP-headed corporations, the latter have been contesting it. They maintain that there’s no scope for salaries for employees in the funds allotted.

Now, where does the truth lie?

Delhi Civic Body protest PTIi

File Pic

“It is extremely shocking that despite the Delhi government having provided the three MCDs all the funds meant for payment of salaries before time, salaries have not been paid to the employees,” said AAP spokesperson Raghav Chadha.

He added: “The three corporations of North Delhi, East Delhi and South Delhi have themselves admitted to having received Rs 892.92 crore, Rs 465.53 crore and Rs 668 crore respectively under the head of non-planned expenditure in the current financial year, which will come to an end on 31 March. It is clear that 90 percent of the non-planned allocation is for payment of salaries. The basic question is why haven’t the MCD employees been paid their salaries? Why are the MCD mayors scared of getting the accounts audited? Why are they not revealing how much income they have generated from the sources of income under their control?”

Speaking on the same issue earlier, senior AAP leader Dilip Pandey had said, “We give around Rs 1.25 lakh crore to the Centre as taxes in every three months but in return we get Rs 2,000 crore. Except this and a few other small grants, we do not have any Central fund to support the MCDs. As set by the Delhi Finance Commission, we have to give the civic body 10.5 percent – 4.5 percent under the head of planned expenditure, 4.5 percent under unplanned expenditure and 1.5 percent based on performance – from our share of the tax collection. We give 9 percent as planned and unplanned budget to the corporations but do not give their 1.5 percent performance-based share because the three corporations have miserably failed to perform their duties.”

According to the Delhi Municipal Corporation Act (Amendment), 2011, 10.5 percent of the state’s share in Central taxes is delivered to the civic bodies in three quarters (25 percent of the total amount in the first quarter of April-June, 50 percent of the total in July-December and the rest 25 percent in the final quarter of January-March).

But the BJP-ruled corporations say that the money released by the Delhi government is not sufficient to clear salaries of all the employees.

EDMC Mayor Harshdeep Malhotra said his corporation has to shell out Rs 1,100 crore as salary of staff, from commissioner to sanitation workers but his corporation was allocated only Rs 465.53 crore in the January-March quarter of the ongoing financial year. “They stipulated Rs 576 crore for EDMC in their financial budget out of which we were given Rs 465 crore. They owe us Rs 111 crore. In addition, they have an additional outstanding of Rs 275 crore of Municipal Reform for the past three years. We are asking for it because our income from house tax, toll tax, conversion, parking charges and advertisement stands at Rs 750 crore but the total expenditure stands at around Rs 1,800 crore, including salary of our employees,” Malhotra told Firstpost.

When asked why EDMC does not put efforts to generate more revenue, he said “House tax is the main source of EDMC’s income but only 30 percent of the houses in East Delhi are liable to pay the tax. The rest 70 percent are either unauthorised colonies or slum clusters, which are not required to pay the tax. We earn small amounts of Rs 7.8 crore from parking and Rs 10-15 crore from advertisements.”

SDMC Mayor Subhash Arya urged the state government to depute its charter accountants to sit together with the three corporations and get the accounts audited to resolve the crisis for ever. “We have an agreement with the city government that it will give us 10.5 percent, which increases every year, of the total tax collection we do. But we were not given our share. We received what we were getting three years ago in the Congress regime. As a result, the government owes us around Rs 3,000 crore. According to their own figures, we gave them a tax collection of around Rs 23,000 crore in 2012-13, Rs 25,000 in 2013-14, Rs 27,000 in 2014-15 and Rs 34,000 in 2015-16. Now, they should give us our share at the rate of 10.5 percent as agreed for the past four financial years. But on an average, we get only Rs 800-900 crore only which is insufficient to pay salaries. While we have to spend about Rs 1,800 on salary, NDMC has to give around Rs 2,400 crore,” he said.

The NDMC also says the amount released by the Delhi government is not enough. “We still need an additional amount of Rs 100 crore to pay salaries and pensions. In addition, our global share, which stands at Rs 300 crore in every financial quarter, must be released without delay so that we can continue our services,” NDMC Mayor Ravinder Gupta told Firstpost.

Leader of Opposition in the Delhi Assembly Vijender Gupta thinks the trifurcation of the MCD into South, East and North corporations in May 2012 is the prime reason of the fund crunch. He advised Chief Minister Arvind Kejriwal to see the financial issues in “proper perspective”.

While trifurcating the MCD, the then Delhi government had promised to financially sustain the local bodies till the time they were able to generate sufficient revenue to sustain themselves. “But it is an act of treachery that the Delhi government has backed out of its promise. The present crisis is due to its political ambitions and breach of promises made while carrying out trifurcation,” Gupta told Firstpost.

The trifurcation of MCD has brought in its fair share of problems. The resources in unified MCD were equally divided among the entire local bodies without reference to geographical areas. The erstwhile MCD had a loan liability of Rs 1,800 crore and contractors’ liability of Rs 650 crore, which was to be waived or cleared as one time grant. Instead of it, the liability was passed on to the newly-formed corporations. In fact, the East, North and South Municipal Corporations should have not been burdened with the liabilities of the erstwhile MCD, experts say. This amount is being recovered with 13.5 percent interest. It is being deducted from grants and revenue-sharing.

While the NDMC has a loan of around Rs 2,000 crore, SDMC has dues of about Rs 1,700 crore. On the other hand, the EDMC owes about Rs 1,300 crore. The Delhi government owes Rs 1,800 crore to the three corporations for implementing the ‘Unit Area Method’ of property tax. The government in 2004 had assured to compensate the loss caused by the new method.

“The ‘global share’ of the MCD in the state government’s income was reduced from 5.5 percent to 4 percent. A cut of 1.5 percent was made as an incentive for implementing the ‘municipal reforms’. Despite repeated pleas, the 1.5 percent cut has not been released. Also the remaining 4 percent has been adjusted against the loan given to the three corporations,” said Gupta.

The EDMC is the worst when comes to financial condition.

“On 1 April, 2012 (a month before the trifurcation of the MCD), we were in the deficit Rs 451 crore. Therefore, the corporation sought a subsidy grant of Rs 421 crore. But instead of the grant, the Sheila Dikshit-led Congress government in the state gave only Rs 335 crore at a hefty rate of interest of 10.5 percent. We have paid back about Rs 300 crore in the past three years,” said Malhotra, the EDMC mayor, adding that the Delhi government was supposed to give a grant of Rs 140 crore to the EDMC in the current financial quarter, but has given only Rs 76 crore.”

Although post the trifurcation the Delhi government got partial control over the functioning of the MCD, the three bodies are still administered by the Centre through the Delhi Municipal Corporation Act, 1957. Director of local bodies, who reports to the state government, now keeps an eye on the working of the corporations. Earlier, the civic body used to get funds from the Union Ministry of Home Affairs.