Urban public finances in developing countries : a case study of metropolitan Bombay

DRAFT THE WORLD BANK DEVELOPMENT ECONOMICS DEPARTMENT URBAN AND REGIONAL ECONOMICS DIVISION URBAN AND REGIONAL REPORT No. 76-13 URBAN PUBLIC FINANCES IN DEVELOPING COUNTRIES: A CASE STUDY OF METROPOLITAN BOMBAY FRANCINE BOUGEON-MAASSEN (Consultant) August 1976 These materials are for internal use only and are circulated to stimulate discussion and critical comment. Views are those of the author and should not be interpreted as reflecting the views of the World Bank. References in publications to Reports should be cleared with the author to protect the tentative character of these papers. FOREWORD This is one of a series of case studies of the public finances of urban governments in less developed countries. These studies, designed to be as comparable as the local conditions and availability of information permit, are meant to provide (a) an understanding of the operation of finance systems in cities of developing countries; (b) a formiat for describing and analyzing these sytems; (c) a menu of major problems facing these governments; and (d) a set of data which may be used to establish comparative norms against which aspects of performance or problem severity of urban governments generally may be evaluated. It should be emphasized that, although each case study contains a section on conclusions and policy implications, the primary goal is not to offer a program of detailed fiscal reform for individual cities. Rather, it is to provide the beginnings of an analytic and informational base which will permit such judgements to be made on a consistent basis and with increasing confidence over time. All but a very small portion of this work was carried out as a World Bank Research Project (670-70) under the direction of Professor Roy Bahl, of the Metropolitan Studies Program, The Maxwell School, Syrcause Univrsity, and Mr. Johannes Linn, of the Urban and Regional Econamics Division of the World Bank. The overall project includes case studies of ten cities, eight of which were conducted under Research Project 670-70: Ahmedabad and Bombay, India; Cartagena and Bogota> Colombia; Jakarta, Indonesia; Kingston, Jamaica; Seoul, Korea; and Tunis, Tunisia. In addition, case studies on Lusaka, Zambia, and on Manila, the Philippines, were prepared as separate, but related efforts. In the final phase of - 11 - this research a set of papers will be prepared on major urban public finance issues, comparing practices and experiences in these ten case cities, as well as others for which comparable information exists. This case study of the Public Finances of Metropolitan Bombay is an outgrowth of field work carried out in 1973 by Professor Babl and Francine,Bougeon-Maassen. Douglas H. Keare Urban and Regional Economics Division Development Economics Department - iii~ - Research Staff Roy Bah1 and Johannes Linn have been responsible for the final editing of all papers issued under--or in association with-this project, ensuring accuracy and consistency, etc.; however, a large number of other persons have been involved in their production: Detailed Case Studies Principal Research Arising out of RP0270 - Researcher (s) Assistant (s) Ahmedabad Ray Bahl., Douglas Keare Michael Wasylenko, Tamar Katz Bombay Francine Bougeon-Maassen, Michael Wasylenko, Roy Bahl Tamar Katz, Carlos Noble, Mark Gellerson Bogota Johannes Linn, Roy Bahl Michael asylenko, Carlos Noble, Tran Than Dang Cartagena Johannes Linn, Roy Bahl Tran Than Dang, Carlos Noble Seoul Roy Bahl, Douglas Keare Ewang Mtong Chan, Michael Wasylenko, Tamar Katz Jakarta Johannes Linn, Roger S. Smith, Hartojo Wignjowijoto, 'Roy Bahl Kingston Francine Bougeon-M:aassen, Johannes Linn, Roy Bahl Tunis Remy Prud'homme Limited Case Studies of Other Origins Lusaka Robert Saunders Manila Roy Bahll, Pamela Brigg,Roger S. Smith 1/ Roy Bahl, who is principal consultant on this project is the Director, Metro- politan Studies Program, The Maxwell School. Douglas Keare, Johannes Linn, and Pamela Brigg are World Bank staff members; as is Robert Saunders, though his input to this project occurred on a consultihg assignment. Remy Prud'homme, Francine Bougeon-Maassen, Roger S. Smith. and Hartodo Wignjowijoto have served for more limited periods as consultants to the Worla Banh. -iv- Urban-Regional Economics Division Urban Public Finance Project Case Studies Paper No. Title Author 1 Urban Public Finances in Developing Countries: Roy Bahl A Case Study of Metropolitan Ahmedabad 2 Urban Public Finances in Developing Countries: Johannes Linn A Case Study of Metropolitan Cartagena 3 Urban Public Finances in Developing Countries:. - Roy Bahl and A Case Study of Metropolitan Seoul Michael Wasylenko 4 Urban Public Finances in Developing Countries: Remy Prud'homme A Case Study of Metropolitan Tunis 5 Urban Public Finances in Developing Countries: Roy Bah,d A Case Study of Metropolitan Manila Pamela BrigG and Roger S. Smith 6 Urban Public Finances in Developing Countries: Francine Bougeon- --- A Case Study of Metropolitan Kingston Maasen and Johannes Linn 7 Urban Public Finances in Developing Countries: Johannes Linn, Roger A Case Study of Metropolitan Jakarta S.Smith and Hartojo Wignjowijoto 8 Urban Public Finances in Developing Countries: Francine Bougeon- A Case Study of Metropolitan Bombay Maassen Table of Contents (Continued) Page No. V. REVENUE STRUCTURE AND TRENDS ............................... .110 A. Revenue Authority ............. .... .... 110 1. Property Tax Powers ................................... 110 2. Tax on Vehicles and Animals ......................... 110 3. Theater Tax .......................... 112 14. Octroi .............................. . . . . . . . 112 B. Trends in Revenue Growth ..................... .. . 113 VI. PROPERTY TAXES ............................................ 12)4 A. Introduction ......................... 124 B. Property Tax Base ........... ........ ................ 124 C. Exemptions ........ 129 1. Exemptions from the General Rate .......... ... 129 2. Exemptions from Municipal Sertice'Taes ...... 136 3. Exemptions from the Municipal Education Cess ....... 137 4. Exemptions from the Government Service Taxes ....... 137 D. Percentage Rate Structure ........... 138 E. Growth in Assessed Value ................................ 141 F. Assessment Method ................................. 15 1. Residential Properties ,..................... 1 2. Non-Residential Properties ......................... 160 G. Administration of the Property Taxes .................... 165 VII. INTERGVER10NTAL GRANTS ..............6..0...... ........... 180 A-. Historical Importance ................................... 180 B. Forms of Intergovernmental Assistance tane.180 C. Intrastate Aid Distribution ............................ 18 APPENDIX I: Government Financial Assistance to Municipal Councils in the State of Maharashtra 189 APPENDIX II: Government Financial Asistance -to the Zilla Parishads and the Village Panchayats ........... 193 TABLE OF CONTENTS Page No. I. INTROUCTION ..........................******.... 1 II. ADMINISTRATTON AND ORGANIZATION OF THE CITY OF BCNBAY ........ 3 A. General Overview ........................******** 3 B. The Legislative Branch ............... ............ 5 1. The House .. ...... .. . ... . . .... * .. ..* 9 a . 600 2. The Camnittee System ...... .. . . ...... .. . . . . 8 C. The Executive Branch'......... ...................* 9 2. The Administrative Organization of BD ....... 9 2. BEST Organization ....... o ......................... 19 3. Civil Secretariat and Municipal Audit -.......... .. . 21 III. FISCAL STRUCTURE AND BUDGETINM ............................. 22 A. The Assignment of Functions.................... 22 B. Expenditure Responsi'bility of the BM ................... . 27 C. Borrowing Powers ..... . . . .............. 32 D. Budgetary System .............................. 34 1. - Budgetary and Accounts Documents 34 2. Budget Documents . .......... 3 3. Annual Accounts .... ........ 36 4. Administrative Reports ............................. 37 5. Structure of the Budget Documents .................. 37 6. Budget A ........ .............................. 43 7. Budget B .......................*. .. . ..* 6 . 5 8.- B udget E . . ... .. .. . ... .. . . . . . . . .. . .. . ... . .. .. .. 56 9. Budget C ..................................* * * .5 10. Special Funds ... . ... ............... 56 11. BEST Special Funds ................................ 65 12. Budgetary Process ............................ 66 IV. EXPENDITURE STRUCTURE AND GROWTH AND CAPITAL FINANCING ....... 72 A. Expenditure Data ........... ...... . ......... . 72 B. Dpenditure Level and Trend ...... 73 C. Means of Financing Expenditures .................... 83 D. Financing of Capital Expenditures - BMC. 90 Table of Contents (Continued) Page No. VIII. EDUCATION FINANCE ............................. 196 A. Introduction ....................... 196 B. Primary Education .......... ...........................- 196 1. Services Provided .................................... 196 2. Expenditures .......... . ..*........................ 203 3. Financing Methods .........*................. . 211 4. Municipal Fund Contributions ............ ..... 218 C. Secondary Education ..... . ......... ... . . .. . . ... . . . 218 1. Grants-In-Aid .................... ....... 221 2. Budgetary Position of Secondary Education . ..... 225 D. Medical Education ........ . .............. . ... ........ 229 IX. HEALTH AND LF EXPENDIT S ..... o ... o ......... ...... 232 A. Health ..... . 0,.......S...'..... ... . . . . . . ... 232 1.: Scope of Services ........ ........ 232 2-. Budgetary Position of Public Health Services ....... 242 B. Welfare . .o. . . 0 ......................... .. ...... 245 1. Welfare Centers and Nursery Schools ............... 246 2. Scholarships ............................ 24 3. Health and Housing ............................... 27 4. Budgetary Operations ............................... 27 5. Welfare BEST ST. .......................... 250 I. HOUSING ....... ......... .............. ...................... 2 3 A. Present Housing Conditions .............................. 253 B. BMC Programs ... ..... o ..................... ... . ... 257 1. Employee Housing ...... ....... ................. 27 2. Slum Housing ..................................... 262 3. Slum Clearance Program ................. 266 4. Slum Improvement Program ..................o....... 275 5. Amenities Provided Under the Slu-m Improvement Program 276 6. Budgetary Account of the Slum Improvement Program... 278 7. Summary: BMC Slum Programs ...........os.......... 280 Table. of Contents (Continued) Page No. C. Bombay Building Repairs and Reconstruction Board . 283 1. Functions of the Board .............................. 284 2. Means of Financing ................. ......... 287 XI. ROAD TRANSPORT ....................... ...........* 292 A. Road Network in Greater Bombay ............ 292 B. Responsibilities of the Corporation ..................... 294 C. Budgetary Account ...................................... 296 XII. WATER SUPPLY, SEWERAGE AND REFUSE CCTION ........ 297 A;.- Water Supply .. .... ............ 297 1. Nature of the System ............................... 297 2. Expenditure Structure and Growth ................... 309 3. Planning and Administrative Organization ........... 311 4. Financial Position ................................. 316 B. Sewerage and Refuse Collection ........e.ti....o........ 324 1. Level of Services ......... .............. . . .... 32 2. Financial Situation ............................... 328 1111. BCNBAY ELECTRIC SUPPLY AND TRANSPORTATION UN TAKING ........ 336 A. Electric Suppl7 ....... ............................. 336 1. Services Provided. ....... 336 2. Budgetary Positzion ................................. 31 B. Transportation .................. .......... ....... 357 1 . S e r v i c e s P r ov i d e d . . . .. . . . . . . . .. . . .. 35 7 LIST OF TABLES Page No. Table 1: Expenditure Responsibility in Greater Boay ............. 23 Table 2: Level of Bombay Municipal Corporation's Responsibilities in Expenditure Functions ............................. 26 'Table 3: Duties and Powers of the Municipal Authorities ........... 28 Table 4: Relative Importance of the Various Budgetary Accounts Based on 1971-72 Actuals .......................... 39 Table 5: Format of Budget A ........... ................... 44 Table 6: A Loan Works Budget A for the Purchase of Plant and Machinery (Division I) ... 0 .......... ........ *1 Table 7: Format of Budget B . ..g........................ ... 52 Table 8: Format of Budget E .................. ........... ....... 57 Table 9: Format. of Budget C ...... 59. .................. .... Table 10: Comparison of Adopted and Approved Budget Estimates 67 Table 'l1: Expenditures by Function - Bombay Municipal Corporation . 7 Table '12: Per Capital Expenditures by Function - BVC' .............. 79 Table 13: Population - Greater Bombay ....................- 80 Table 14: Consumer Price Index: Greater Bombay ... 81 Table .1 : Percent Distribution of Expenditures by Function-BMC- 1962, 1969, and 1971 .. ............................. 82 Table 16: Functions with Decreased or Increased Share Based on Total Expenditures - BMC - 1962-1971 ................. 84 Table 17: Functions with Uecreased and Increased Functicas Based - on Current Expenditures - BMC - 1962-1971 .......... 85 Table 18: Functional Sources of Total Expenditure Increase-BM- 86 Table 19: Functional Sources of Current Expenditure Increase-BD-... 87 Table 20: The Financing of Expenditures - BM - 1962-1971 .. 88 Table 21: The Financing of Expenditure Increase-BMC-1962-1971 ...... 89 LIST CF TABLES (Continued) Page No. Table .22: Book Value of the Sinking Funds by Budget-MC .......... .93 Table z-23: Balances of Special Funds - BMC as of Mar,ch 31, 1972 ... 94 Table 24: Advances Made by Special Funds and Securities Held in the Provident Fund - 1971-1972 ................ 95 Table 25: Borrowing Activities, BMC .............................. 96 Table .26: Total Borrowing. Percentage Distribution of the Source of Funds ........ ...... ............. 97 Table 27: Outstanding Debt - BMC ........ 98 Table 28: Outstanding Debt by Budget - BMC ....................... 99 Table 29: Borrowing Activities - Budget A - BM . ...... 100 Table 30: Borrowing Activities - Budget B - BMC ..............-.... 101 Table 31: Borrowing Activities - Budget E - BMC ............. 102 Table 32: Internal Funds Advances ... 108 Table 32a: Tax on Vehicles and Animals ........ 1 Table 33: Theater Tax .......... ............... . . . .112 Table 34: Revenue Structure and Trends in Revenues - BMC - 1960-1972 ............. . . . . ... ... . . . . . 114 Table 35: Local Revenue Structure and Trends in Local Revenues - Percentage Distribution - BM 1960-1971 ...... 11 Table 36: Revenue Structure-and Trends in Revenues when BEST Accounts are Excluded - 1961-172 .......... 116 Table 37: Local Revenue Structure and Trends in Local Revenues When BEST Accounts are Excluded ................... 117 Table 38: Municipal Revenues Per Capital - BM - 1960-1972 ....... 119 Table 39: Municipal Revenues Per Capita when BEST Accounts are Excluded - 1960-1972 ............................... 120 Table 4O: Tax Revenues - BMC - 1960-1972 ......................... 121 Table 41: Tax Revenues and Trends in Tax Revenues - Percentage Distribution - BMC - 1960-72.1..... . ..22 LIST OF TABLES (Continued) Table 42: Tax Revenues Per Capita - BMC - 1960-1972 ............. 123 Table 43: Property Taxes Liabilities by Major Types of Ownership .............. g ... g ..a........ .... . 130 Table 44: Number of Properties Exempted from General Tax, Amount of General Tax Exempted and Estimates of Rateable Value Exempted 1962,1971 .................. . 135 Table 45: Property Tax Rates as a Percentage on Rateable Value 139 Table 46: General Property Tax :Rates .... 140 Table 47: Effective Rates of the Property Taxes .............. 142 Table 48: Property Rates by Valuation Value ......... 143 Table 49: Rateable Value for Greater Bombay 1960-1972 . ..... 1 Table 5o: Rateable Value Per Property Assessed - BMC -.. ......... 146 Table 51: Number of Properties and Rateable Value ... 147 Table 52: Variation Among Wards in Selected Property Tax Statistics ........................................ 1-88 Table 53: Percentage Distribution of Number of Properties by Valuation Range .... ... .... 1. 149 Table 54: Summary Table - Percentage Distribution of Properties Assessed ........ ...... .. ............ ............ 151 Table 55: Total Number of Properties, Properties Newly Assessed and Property Enlarged .................... 13 Table 56: Number of Properties Under Rent Control and Other Properties by Ward - Greater Bombay ............... 17 Table 57: Rates Adopted to Property Used as Factories and Workshops in Suburbs and Extended Suburbs .......... 161 Table 58: Rateable Value of Government Properties for the Quinquennium 1964-1969 ............................. 166 Table 59: Number of Properties and Sections in Bombay ........... 170 Table 60: Tax Assessed and Collected in Respect with the Property Taxes for the City 172 LIST OF TABLES (Continued) Page No. Table 61: Net Demand of Property Taxes and Tax Outstanding Related to Unauthorized Holdings 175 Table 62: Taxes Assessed and Taxes Collected in Respect of Government, Railways, and Bombay Port Trust Properties ..................................... 177 Table 63: Outstanding of Municipal Property Taxes in 1971-72... 178 Table 64: Break-Up of Arrears of all Taxes as of April 1, 1972. 179 Table 65: Total Grants Allocated to the Bombay Municipal Corporation and Grants on a Per Capita.Basis .... 181 Table 66: Government Grants to B ..... .............. 182 Table 67: Revenue Structure of the Municipal Corporations of State of Maharashtra ... ................... 186 Table 68: Government Grants Per Capita by Category of Local Authorities and Percentage Distribution of Government Grants ............................... 188 Table 69: Primary Education - BMC ............................. 198 Table 70: Selected Statistics on Primary Education - BMC ...... 200 Table 71: Primary Education .................................. 201 Table 72: Education-BMC-Primary Education-Current Expenditures. 2o Table 73:. Grant Per Student ................................... 206 Table 74: Primary Education - BMC - Current Expenditures Percentage Distribution ................... 208 Table 75: Cost Per Student Enrolled in the Municipal Primary Schools - BMC ................................... 209 Table 76: Average Pay:and Salaries for Primary School Teachers. 210 Table 77: Education Budget - Revenues .............*........... 212 Table 78: Education Revenues - Percent Distribution-BMC ........ 213 Table 79: State Education Grants to the Local Authorities ..... 215 Table 80: Education Cess Rates ............................... 216 LIST OF TABLES (Continued) Page No. Table 81: Comparison of-State Education Proceeds within Greater Bombay Grant Receipts .................... 217 Table 82: Selected Statistics on the Municipal Secondary School System ......................... 220 Table 83: Secondary Education - Revenues and Expenditures-BMC .. 226 Table J4:. Revenue and Current Cost Per Student Enrolled in - -- - - Secondary Schools .............................. 228 Table 85: Medical Education - Number of Students and Cost Per Student in the Medical Colleges - BMC ........ 230 Table 86: Medical Colleges - Statement of Income and Expenditures by Institution .................................... 231 Table 87: Number of Patients at the Acworth Leprosy Clinics in 1971-72 .................... ...................... 234 Table 88: Selected Statistics on the Municipal Group of Tuberculosis Hospitals ............................ 23 Table 89: Public Health Expenditures-BPE-Percentage Distribution. 237 Table 90: Selected Indicators of the Level of Public Health - Services in BMC ..................... *0 ......... 238 Table 91: Public Health repartment-Selected Statistics-BMC ...... 239 Table 92: Current Expenditures in Cemeteries ....... 243 Table 93: Current Expenditure on Public Health Services ....... 244 Table 94: Current Expenditures on Welfare Budgets and by Major Allocations - MBC .......................... 248 Table 95: Welfare Activities - Financing of Current Expenditures- BMC ...o...........* *** **.. ..... ... ..........-... 251 Table 96: Conditions of Overcrowding in Tenements (City)......... 256 Table 97: Requirements of Additional Tenements to Eliminate Ov e r c r o w d i n g . . . . . . . . . . . . . . . . . . . . . . . . . . 2 6 Table 98: The Pre-War and Slum Areas of the City in 1956-57 ..... 258 Table 99: House Collapses in Bombay for the Period 1960-1971 .... 259 LIST OF TABLES (Continued) Page No. Table 100: Requirements of Tenements to Meet the Housing Shortage ...............age************.. 260 Table 101: Slum Clearance Program Capital Works ............... 269 Table 102: Slum Clearance Program - Means of Financing lapital Expenditures - BMC .............................. 271 Table 103: Slum Clearance Program - Means of Financing Capital Expenditures - Percent Distribution-BMC ........ 272 Table 104: Slum Clearance Program - Means of Financing Total Expenditures - BD ............................. 273 Table 105: Slum Clearance Program - Means of Financing Total Expenditures - Percent Distribution - BMC ...... 27 Table 106: Accounts of the Slum Improvement Department ....... 279 Table 107: Slm Program - Means of Financing Total Expenditures- BIC ...........................** ***........... 282 Table 108: Slum Program - Means of Financing Total Expenditures- Percent Distribution - BBC ...............- 282 Table 109: Repairs and Reconstruction Board Property Tax Rates.. 288 Table 110: Bombay Building Repairs and Recostruction Board .... 289 Table 111: Number of Properties Exempted Category Wise from the Building Repair Cess ....... 290 Table 112: Types of Roads in Greater Bombay as of March 31, 1972 .................. 295 Table 113: Relation Between Population and Road Length ......... 295 Table 11h: Water Sources at Present Used by or Under Developed for BMC ...................q...******* *******.. 300 Table 115: Statistics on Water Supply-BMC ...................... 303 Table 116: Summary of Water Supply Statistics .................. 304 Table 117: Metered and Unmetered Supplies ..305 Table 118: Details of Standpipes in City, Suburbs and Extended Suburbs as of March 31, 1972 ..................... 307 Table 119: Statement Showing Details of Meters in City, Suburbs and Extended Suburbs, as of March 31, 1972 ...... 307 LIST OF TABLES (Continued) Page No. Table 120: Distribution of Water Supply by Major Territorial Division and Major Uses - BM .................... 308 Table 121: Breakdown of Supply Hours .................... 309 Table 122: Expenditures on Water Works - B ............... . 310 Table 123: Water Supply: Current Incomes and Expenditures 315 Table 124: Water Works - Revenues ................... 318 Table 125: Water Works - Revenues Percent Distribution 319 Table 126: Revenue from Water Charges ... 320 Table 127: Water Tax Assessed and Collected for the City ........ 321 Table 128: Statement Showing Water Charges Assessed on Water Consumption Prevailed for Major Categories of Consumers ..................................... 323 Table 129: Budgetary Account of Sewerage Works - B. 330 Table 130: Current and Capital Expenditures on Sewerage Works ... 332 Table 131: Revenues from Halalkhore Tax ......... 333 Table 132: Statement of Halakhore Tax Collected and Expenditures Incurred on Sewerage Services............ 334 Table 133: Summary of Statistics in the Electricity Distribution System - BxC as of March 31, 1972..... . . 337 Table 134: Coincident Madmum Demand, Power Transformer Capacity, Distribution Transformer Capacity and Number of Transforming Substations in the Systems 338 Table 135: Statistics on Receiving Stations .................. 339 Table 136: Units Sold Under Different Categories for Last Ten Years ..............0...... ......... 341 Table 137: Number of Consumers, Service Lines, Connected Load and Meters in the System ................... ,... 343 Table 138: Units Sold Under Different Categories for Last Ten Years - Percent Distribution ................. 34 LIST OF TABLES (Continued) Page No. Table 139: Units Sold and Revenues by Category of Consumers for Selected Years .. ............. . 35 Table 140: Units Sold and Revenues by Category of Consumers - Percent Distribution 36 Table 141: Electric Tariff .. ....... ................ 347 Table 142: Revenues Per Unit - By Major Category of Consumers 3o Table 143: Budgetary Position of Electric Supply ......... . 32 Table 144: Breakdown 6f Current Expenditure per Unit,7 Electric Supply .......................................... 355 Table..1-4: BEST Electric Supply Revenues ...................0.. 36 Table 146: Passenger Carrying Capacity as of April 1973 ......... 39 Table 147: Transportation Branch - BEST ................. 36 LIST OF FIGURES Page No. Figure 1: Organization of the Municipal Corporation of Greater Bombay ........................... 4... Figure 2: Political Organization of the Municipal Corporation o f G r e a t e r B o m b a y . . . . .. . . . ... . . .. .. . . . . . . .. . . . . . . .. 6 Figure 3: Administrative Organization of the Bombay Municipal Corporation ......................................... 10 Figure 4: Responsibilities of the Deputy Municipal Commissioners *.. 13 Figure 5: Organization of the Bombay Electric Supply and - Transport Undertaking ................................. 20 Figure 6: Budget Structure of the Municipal Corporation ............ 3 Figure 7: Transfers Between Budgetary Accounts ..................... 0 Figure 8: Budget Process ................... 68 Figure 9: Organization of Property Tax Administration ............ 168 I. INTRODUCTION The major policy issues regarding the urban fiscal system of Greater Bombay were analyzed a few years ago in the context of a World Bank study of urban development in Bombay. For this reason the present report serves the objective of providing (a) an overview over the administrative and fiscal structure of the Bcibay Municipal Corporation (BE) as of Summer 1973; (b) a historical analysis of the revenue and expenditure trends of BMC; and (c) a detailed account of local revenue sources (in particular the property taxes), and of the most important local expenditure functions. Rather than replicating the earlier fiscal study of-Greater Bombay, this report aims at filling in, mostly in descriptive terms, some of the gaps left in the earlier analysis in the expectation that this will advance our understanding of how the fiscal structure of Bombay operates and what are some of the prJoblems it has encountered. Accordingly, Chapter II surveys the adinistrative and organizational structure of BMC, while Chapter III considers the distribution of responsibility for the provision of urban services in Bombay between various government levels, and analyzes in detail the budgeting format and procedures. Chapter IV provides a ten-year history of revenue and expenditure flows of the Bombay municipal authorities. The revenue structure is further discussed in Chapters V through VII, focusing on the trends and composition of revenues, on the property tax, and on intergovernmental financial flows. Chapters 1/ IBBD, Report on Bombay, Annex IV, "Public Finance and the Efficiency of Urban Development,'t Special Projects Department, April 30, 1971. 2 VIII through- XIII review the individual service functions of the BMC as to their organizatinnal framework, the level of services provided, and their financing. These chapters cover in particular education; health and welfare; housing and slum improvement; road transport; water supply; sewerage, and refuse collection; and finally electricity and bus transportation. -3- II. ADMINISTRATION AND ORGANIZATION OF THE CITY OF BOMBAY'? A. General Overview Bombay is a Municipal Corporation governed under the Bombay Municipal Corporation Act (Bombay Act No. III of 1888). The provisions of this Act are carried out by seven statutory authorities charged with - distinct responsibilities in the Municipal Government: (a) a Corporation (i.e. the elected representatives), (b) a Standing Committee, (c) an Improvements Committee, (d) a Bombay Electric Supply and Transport (BEST) Committee, (e) an Education Committee, (f) a Municipal Commissioner, and (g) a General Manager of the BEST UndertakLng. Broadly speaking, the Corporation and its statutory committees constitute the legislative branch. Consultative and special committees may also be appointed with their respective functions being determined by the Corporation. The Commissioner and the General Manager form the executive branch of the Municipal Government. The executive and legislative branches of government are aided by separate administrative bodies (Figure 1). Though executive authority is vested in the latter, the elected representatives do exercise general control over civic affairs through various measures provided in the Municipal Act or established by convention. They exercise budgetary and financial control by determining taxes and allocations for expenditure, sanctioning contracts and approving other financial proposals. Finally, they form policies or express opinions on various measures of civic welfare, and approve bylaws, procedure rules, and other regulations. The political structure of the Bombay Metropolitan Council (BMC) is described here while the executive authorities are treated in the following chapter. Figure 1: ORGANIZATION OF THE MUNICIPAL CORPORATION OF GREATER BOMBAY CORPORATION i STATUTORY COMMITTEES -SPEeIAL CONSULTATIVE MUJNICIPAL BCOMMITTEES COMMITTEES UHE ADITORI MUNICIPAL i SECRETARY MUNICIPAL CMMISSIONERý GENERAL MANAGER OF BEST 2/ DEPUTY MUNICIPAL ADMINISTRATIVE C~MMISSIONERS DEPARTMENT S ASSISTANT THER AMINISTRATIVE DIRECTLY SUPERVISED GENERAL DEPARTMENTS MANAGER IRECTLY SUPERVISED AMINISTRATIVE DEPARTMENTS WARD OTHER ADMINISTRATIVE ADMINISTRATION DEPARTMENTS 1/ Under the administrative control of the Standing Committee 2/ Bombay Electric Supply and Transportation Undertakdng SOurce: BMC Staff B. The Legislative Branch The political system comprises the Corporation, which is commonly called "House", and the committees (statutory, special and consultative) (Figure 2). While in terms of statutory authority the "House" is the most powerful decision-making agent in the municipal organization, most decisions are made at the Committee level and are usually ratified by the House. Decisions as to the tax rates and budgetary allocations are made by the financial and the statutory committees, i.e., (1) the Standing Committee for all services, education, and electric supply and transportation, (2) the Education Committee for primary education and (3) the BEST for electric supply and transportation. 1. The "House" The House consists of 140 elected councillors. Elections are held every five years but may be postponed one year if the State government deems it necessary. For electoral purposes, the Corporation has been divided by the State Governments into wards with each ward covering between 35,000 and 50,000 people. Until 1968, the city was divided into a number of wards with plural constituencies,and voting was on a cumulative basis. on the recommendation of the Corporation, the State Government modified the Act in 1966 by setting up 140 single-member constituencies with a non-transferable vote. The Act does not recognize any political parties. Nevertheless, the leader of the ruling party is termed the "Leader of the House' and the leader of the next group in strength assumes the role of the "Leader of the Opposition". The House h6lds monthly meetings. 6 - Figure 2: , PLITICAL ORGANIZATION OF TilE HUNICIPAL CORPORATIPN OF GREATER BHåAY as of 1972-73 KOR. elected by the louse liOISE or CORPORATION 140 Elected CounclUor3 FVE SPECIAL COMITTEES CONsjLTTIvE CaITTEES FOUR STi:TUTORY CO1V'ITTEES (4ad hoa) Cieettngs Monthly) (1) Standing Co=ittee (2) Inprovemants • Fach consisting of 24 Hembera Metings are held as an when ()eetInrgs Monättee 2 mjttec (1) Worka Committee (City) • fixed by the bayor 16 cour.c-Hors (1Meings llanthly) I. (2) Works Committee (Suburbs) (16 cunirillors) (3) Public Health Committe (1) Markets & Gardeis Committee (3) Ed.cation Cor"rittee (1) bay Electric Supply () Law, Revenue and General (O1eL Ings I:onthly) & Tra,nsport Comittee Purpoåds Committe 1' ccicil:ors (Nejtjr.s Fjrtnighxl:() 1 counrillor at least ö non-councillors (expert mnembers) (2 ((6) kas Issue of lrawkere Licensea Re Water Supply Project, etc. iRo Draft Amendmant3 to the Ra: Inplew.entatlon of Assurances 3.14.C. Act given by the Comissioner at the tiné of discussions on the Budget Estimates, M~ycretc. +11 MYator Co.,xuillors Councillord +29 Councillore Councillora (i((3)7( - Privat,3 Re Impenentaticn of Developmenxt R Drafting of Civic Addresa Re: Slum Cloarance Problem in Ro Frovi5ions of lterat va - . Plan' to Snt. Indira Ganchi the City R r i At v ac:odation to personsanoeit - Sheds, etc. contravene te T.P. yMayGr rsYarHyor ScheaM, Santac-az Ko. VI, etc. +15 +5 J-ayor Councillora .Councillors +8 Mayor Councillora +13 lrc ors 5 5 _____________________________________________________r -7- The Corporation is chaired by a Mayor who is a councilor and is elected every year by the House. No special power is conferred to this position. In contrast, the chief executive, the Municipal Commissioner, is appointed by the State Government after consultation with the Corporation; and the Commissioner can be removed fran office by the State government if at least five-eights of the Corporation councilors vote in favor of removal. However, the Corporation may appoint a Deputy Municipal Comnissioner subject toco confirmation by the State Government and may create one or more additional Deputy Commissioner posts with the prior approval of the State Government. Moreover, the C.orporation, subject to the approval of the State Government, appoints a General Manager for the BEST Undertakings for a term of five years, which can be extended by one additional term. The General Manager is removable at any time from office by the vote of at least half of the councilors. Similarly, the House appoints the Special Engineer, the City Engineer, the Municipal Executive Health Officer, the Municipal Hydraulic Engineer, the Education Officer, the Mnicipal Secretary, and the Chief Accountant, all of these appointments being subject to confirmation by the State Government. These officers are appointed for a (renewable) term of five years and can be removed from office at any time by the Corporation with votes of at least two-thirds of the members present at a meeting of the Corporation. The House also appoints such legally qualified medical practitioners as may be necessary to the charge of any hospital maintained by the Corporation. In general, local civil service salaries are determined by the Corporation, and the sanction of the Corporation is required for permanent appointments if the salary rate exeeds Rs 500 per month. 2. The Committee System The committee system includes three types of committees which are, by decreasing order of importance, four statutory, five special, and nine consultative committees. a. Statutory Committees (i) The Standing Committee consists of 16 councilors .n addition to the chairman of the Education Committee who attends meetings as an ex- officio member. The importance of the Standing Committee.:is underlined by its exclusive role in the budget process for all matters but education and activities related to the BEST. In addition, it makes recommendations to the House regarding the budgets prepared by the two following statutory committees. It also holds specific responsibilities in the appointments of non-statutory officers and in the field of regulations. (ii) The BEST Committee consists of nine members including the chairman of the Standing Committee who is an ex-officio member. Its members are appointed by the Corporation from among experts. This committee is responsible for the BEST Undertakings acquired by the Corporation in 1947. (iii) The Education Committee is composed of 16 members, which are appointed by the Corporation is a proportion of three-fourths councilors and one-f.ourth non-councilors. Its responsibilities are limited to primary education. (iv) Finally, an Improvements Committee of 16 councilors is appointed for the purpose of slum improvements and clearance and the management of the Bombay Improvement Trust's properties. This is the only statutory committee not directly concerned with budgetary matters. -' L 9 b. Other Committees The Corporation may appoint Special and Consultative Comittes for inquiry or for other special purposes. The list of these committees is given in Figure 2. The Corporation may also appoint special committees and may, by specific resolution carried by a vote of at least two-thirds of Corporation mnembers present, delegate any of their powers and duties to such committees. The Standing Committee, the Improvements Committee and the Education Committee also may appoint special committees. C. The Executive Branch The executive power for the purpose of carrying out the provisions of the BM Act is vested in the Municipal Commissioner and the General Manager of the BEST Undertaking, subject to certain restrictions. The General Maager's responsibilities are limited to the supervision and control of the BEST operations. The Municipal Commissioner's sphere of action is broader aince it encampasses supervision and control over the acts and proceedings of the municipal officers and employees other than the BEST, the Municipal Secretary, the Municipal Chief Auditor, a3ld their respective officers. These last mentioned oZficers are placed under the control of the Standing Committee. The Commissioner also has the right of intervening in the BEST operations al- though the General Manager is independent. However, this right of intervention is never exercised. 1. Administrative Organization of BMC The Municipal Commissioner as chief executive supervises directly or indirectly all municipal officers and employees. He is the only link between the Corporation and its committees and is the implementing agent because he is the maly one responsible to both political units. The Commis- sioner also has specific powers to initiate proposals involving policy. - 10 - The Commissioner delegates administrative responsibility to six Deputy Commissioners and various administrative departments at the centra- lized level and through ward officers at the local level (Figure 3). The Deputy Municipal Commissioners are appointed by the Corporation on the advice of and with the approval of the Maharashtra State Public Service Commission. The Deputy Commissioners have both functional and territorial responsibili- ties (Figure 4). However, some departments are directly under the Commis sioner's supervision. The departments are organized broadly along major types of activities of the BM0. Finally, most municipal services are de- centralized on a territorial basis called wards, of whi.ch there have been 17 since 1964. Each ward is administered by a ward officer, who has the delegated powers of the Commissioner; he reports to a Deputy Commissioner and to the heads of the various departments functioning at the central level. The Comissioner is a statutory officer appointed by the State Government for a maximum period of 3 years, renewable once after consultation with the Corporation. He can be removed at any time by the State Government if his services are no longer needed at that level or for incapacity, guilt, or misconduct. He is a State Government civil servant although his monthly salary and allowances are paid by the Corporation. a. Mnicipal Departments: General Administration Departments Accounting and Auditing: The Chief Accountant is the Internal Auditor and is a Statutory Officer of the Corporation. He is responsible for maintaining the accounts of all the financial transactions for the Corporation at the headquarters as well as the ward offices. As a financial adviser to the Municipal Commissioner, he deals with raising Municipal loans required for financing capital works of the Corporation and maintains both - 11 Figure 3: AM INISTRATIVE ORGANIZATION OF THE BOMBAY MUNICIPAL CORPORATION (1973) CUIF:AL1 C019,SSIONERI Devartments directly supervised: 1. City Engineer (excluding Conservancy and Transport) 2. Chief Accountant 3. Public Relations Officer including Civic Journal 4. Development Plan and matters pertaining thereto, including Town Planning Schemes 5. Hydraulic Engineer's Department (routine matters) 6. Project Engineer's Department (routine matters pertaining to Upper Vaitarna) 7. Legal Department 8. Schemes for Impivements, Management of Land and Buildings and also of ex-trust chawls and acquired properties MC-Personnel 0-Zone I EC-Zone II DC-Zone III 4-Zone IV MC-Special Engineering ards Dept. Wards pt. Ward Ward pt. Ward ept. Departments Supervised Super- per per- per- 'sed Esed sed jsed Source: BTE Staff. -12- Figure 4: RESPONSIBILITIES OF THE DEPUTY MUNICIPAL COMMISSIONERS - (1973) Deputy Municipal Fui tacal Geographical Commissioners (DMC) Responsibilities Responsibilities IMC-Personnel 1. Personnel, labour and union Administration of the matters of all departments Ward including markets, 2. Fire Brigade gardens, dispensaries, 3. Printing press maternity homes and 4. Department of the Admini- hospitals under the strative Officer (Enquiries) control of Executive 5. Stores Healti Officer within 6. Markets the "A" Ward. 7. Gardens 8. Labor Officer's 9. Security 10. Medical Colleges & Hospitals 11. Health MC-Zone I 1. Conservancy Department Administration of the including dumping grounds wards including markets, 2. Transport gardens, dispensaries, maternity homes and hospitals under the control of Executive Health Officer within the wards of E, F/South,: F/North, G/North, G/South. DMC-Zone II None - Administration of the wards including markets, gardeas, dispensaries, maternity homes and hospitals under the control of Executive Health Officer within the wards of H, K, F, and R. DMC-Zone III 1. Assessor and Collector's Administration of the Department including Octroi and wards including markets, Election Work gardens, dispensaries, maternity homes, and hospitals under the control of the Executive Health Officer within the wards L, M1, N, and T. DMC-Zone IV 1 License Administration of the 2. Shops and Establishments wards including markets, 3. Education including Research's gardens, dispensaries, Officer's section maternity homes, and 4. Estates (routine matters) hospitals under the control. control of Executive Health Officer within the wards B, C, ad D. DMC-Special Engineering 1. Hydraulic Engineer's (excluding routine matters) 2. Project &-gineer's (excluding routine matters pertaining to Upper Vaitarna Source: BIC Staff - 13 - the Sinking Fund Accounts and the accounts of the various Special Funds. He is responsible for contracts to be entered into by the Municipal Commissioner for the supply of goods and for the financial control over Municipal works as provided for in the BM Act. The Chief Accountant's Department also recei- ves tenders and tender deposits. Finally, he plays a significant role in the preparation of the municipal budget. Every year, the Chief Accountant is responsible for preparing draft estimates of Income and Expenditures together with Bstablishment Schedules (personnel and salary rolls) for the ensuing year, which are based on the past performance in respect of each department and an assessment of the needs as brought forth by various departments after taking into consideration the available financial resources of the Corporation. He supervises a Vigilance (Auditing) Section which visits the various Municipal Departments and officers in order to guide and assist the staff in accounts and finance matters. Collection of Revenue: The Assessment and Collection Department is the main revenue department of the Corparation; it collects nearly 90 percent of the total revenue of the Corporation. The Department levies property taxes, the tax on vehicles and animals, the theatre tax, and the octroi. The collection of water charges, of the municipal and state education cess, 2/ and the building repairs cess is also assigned to this Department. This Department is further in charge of the assessment of property for property tax purposes, with the assessment and collection function decentralized at the ward level. This is a form of municipal import tax. For a description of this and other taxes see below Chapter V. 2/ These are also described in Chapter V. -14- The Head Office of the Department controls the ward offices in the city, suburbs and extended suburbs. There is, nevertheless, a central sub- urban office (located at Bandra). Both offices have similar functions except in the matters of wheel tax and land policy matters, which are exclusively handled by the Head Office. The Head Office deals with the levy and collec- tion of service charges and grants in lieu of taxes payable by the Central Government, the Bombay Port Trust and the Railways. The transfer of proper- ties and the collection of survey data for the purpose of assessment of properties of a special character or for contesting appeals against rateable values in the courts of law also come under the auspices of the Head Office. There is a Deputy Assessor and Collector (Octroi) assisted by Assistants, Assessors, and Collectors to deal with all matters connected with octroi at the Head Office. This Deputy also supervises the work of the inspectorial and supervisory staff posted at the 47 octroi collection centers. Finally, the Assessor and Collector's Department maintains a mall permanent staff for work in relation to civic elections, i.e., the general elections as well as by-elections. Legal Matters: The Legal Department handles all litigations that arise under the administration of the Corporation laws: (1) the Bombay Manicipal Corporation Act, 1888; (2) the Bombay Shops and Establishment Act 1948; (3) the Food Adulteration Act, 195; and (4) the Maharashtra Regional and Town Planning Act, 1966. These litigations may be of both civil and criminal nature. Through the enquiry officers functioning in the Legal Department, the Corporation exercises its powers of evicting its tenants, licensees, or occupants in its premises for their failure to pay rents, or for breach of occupancy conditions. Labor Department: The Labor Department which is under the jurisdic- tion of the Deputy Municipal. Commissioner, deals with employees' grievances and generally with all labor matters concerning the 80,000 employees of BNC. The Labour Officer assists and advises the various Municipal Departments in the matter of personnel policy, labor disputes, conciliation procedures and other labor matters. Organization and Methods Division: This division was set up-in 1957 to undertake in-service training programs for emplpyees in the clerical cadre as well as for the other staff. With the assistance of the Bonbay Productivity Council, a number of officers have since been trained in manage- ment and productivity techniques. The Division also provides training in Marathi, which was introduced as the official language in 1964, to the Officers and other staff members whose mother tongue is not Marathi. Stores: The Stores are a central purchasing and storage agency of the Corporation for the purpose of procuring, and storing various materials and supplies to all the different departments of the Corporation. Enquiries Department: This department is responsible for ascertai- ning that the intricate labor laws are being followed. Investigations with respect to minor offenses are conducted by the individual departments, while those of serious nature, or requiring detailed investigations, are entrusted to the Administrative Officer (Enquiries). The Department also investigates cases of corruption, malpractice, misappropriation of Municipal property, and misconduct of various kinds by Municipal employees. Bambay Municipal Security Forte: The purpose of this force is to guard municipal properties and lands of the Corporation. It is headed by a Security Officer who is taken on deputation from the State Police at the rank of Assistant Commissioner of Police in Greater Bombay. This force, - 16 - which has a total strength of about 2,250 (1972-73), is supervised by 22 Security Assistants and three Assistant Security Officers under the control of the Security Officer. Before March 1966 there was no separate force, only watchmen and janitors appointed to guard the different properties and institutions. These watchmen were under the direct control of the respective officer in charge of such institutions and properties. Municipal Printing Press: The Municipal Corporation of Greater Bombay has its own printing unit.. It works on a semi-commercial, non-profit basis. Public Relations Department: Besides disseminating information about the various civic services and significant events, this department, with the assistance of numerous community welfare institutions, organize campaigns on public health education and preventive mass immunization. The Bombay Civic Journal, which is the official publication of the Municipal Corporation, is published every month through this Department. b. Municipal Departments: Service Departments Education: The Primary Education Department, administered by the Education Officer, is responsible for activities relating to education (primary as well as some secondary). The exceptions are medical colleges, and dental college libraries, which are attached to hospitals and administered by their respective deans. Health: The Health Department, supervised by the Executive Health Officer, carries out all the health activities of the Corporation, except hospitals. It also assumes the function of registration of births. and deaths. The Municipal Corporation maintains three general hospitals, which are under the ccntiol of their respective Deans, and three specialized hospitals, which -17- are placed under the control of the Municipal Commissioner. The Corporation has also recently set up a Municipal Laundry in order to provide a modern- mechanical laundry service to the hospitals and maternity homes. Engineering Department (City Engineer): The main functions of this department are: maintenance of roads, sewers and municipal buildings; planning, designing and execution of the Slum Clearance Act; housing and drainage and building projects for offices, schools and hospitals. It plays an important role in enforcing building by-laws, development control rules, zoning regula- tions; and it is in charge of conservancy or public cleansing, of the transport section, and maintenance of mechanical and electrical installations in all municipal units. The City Engineer is a full-time statutory officer of the Corporaticn and controls and supervises the entire engineering services exeept those relating to water works. Estate and Land Management: The Estate Department is concerned with the management of both Municipal properties constructed by the Ex- Improvement Trust and new properties constructed out of Budgets "B" and "A". It mainly deals with allotment and transfer of tenements and lease matters. It is also responsible for recovery of rent and taxes and keeps all relevant records and accounts. Fire: The Fire Brigade is in charge of fire protection and ambulance service. License Department: This department is in charge of the enforcement of licensing regulations in the matter of storage of hazardous and combustible goods and dangerous trades. Other related functions entrusted to it include: (1) licensing, (2) encroachment removal, (3) advertisement regulations, and (L) implementation of the 198 Bambay Shops and Establishments Acts, the 1936 Payment of~ Wages Act, the 1 948 MinimumnWages Act, and the 1923 Workmen' s Compensation Act. Markets and Slaughterhouses: All the markets in Greater Bombay are -under overall control of the Ward Officer (Markets). Slaughterhouses are managed by a General Manager under a special wing of the Market Adminis- tration. Recreational Activities: The Parks and Garden Department is headed by a Superintendent. Recreational units such as swimming pools, theatres, recreation centers, museums are administered by their respective managers. C. Ward Administration Officers of the 17 wards are appointed by the Commissioner on the advice of the Public Service Comission. They are full time civil servants of the Corporation and are responsible to the Commission. Such officers are responsible for organization and discipline but not for technical instruc- tion, for which the officers amplo7ed at a ward office look to their depalt-- mental chiefs. The Tmrd is basically a unit for tax assessment and collection purposes, maintenance work, and construction of very small works. All tax-es, including wheel taxes and water meter ch zges, are collf;,cted at the ward office. The assessment of lands and buildings foi~ property tax purposes is also made at that level. The ward officers also have some budgetary functions in that they prepare expenditure estimates by ftmaction for their respective wards. These estimates are submitted to the Municipal Ccmissioner. The level of expenditure estimated even at this decentralized level is determined on the basis of need, i.e., there is no relationship between the amount of revenue collected in the ward and the amount spent in the ward. The ward officer has some freedan to make minor expenditure alterations within budget sub-heads; but he cannot significantly alter the overall spending pattern in the ward. - 19 - The sectional make-up of atypical hard organization is a follows: assessment and collection; medical inspection, malaria inspection, and pest control; conservancy sweeping of roads and paths, refuse collection and halalkhore; engineering is divided into three sections: (1) building and factories, which includes inspection of private buildings, and town planning, (2) maintenance engineering, which includes drainage, roads and municipal properties (dispensaries and schools); and (3) engineering (water works); legal, mainly for complaints; education, regarding maintenance of school buildins, small works, licensing within the limit of.schedule M of the Act; markets (maintenance only); and parks, open spaces, and security. The Chief Accountant 's Department is not decentralized on a ward basis, though the possibility of making changes in this direction is under consideration. 2. BEST Organization In August 19L7, the BMC acquired the Bombay Electric Supply and Tramways Co. Ltd., which was providing transport and electric supply services under licenses granted in the Bombay Transway Act, the Motor Vehicles Act, and the Indian Electricity Act. By mutual agreement, the Comporation took over the bus service as well. The BES and,T undertaking therefore has two major branches of activities--namely, distribution of electricity in the city and public transport service, i.e., operation of buses in the Greater Bombay area. The entire executive power is vested in the General Manager, who is appointed by the Corporation subject to the State Government's approval. The organization of the BEST is suunarized in Figure 5. I - Figure 5: ORGANIZATION OF THE BCBAY ELECTRIC SUPPLY AND TRANSPORT UNDERTAKING as of 1972-73 GENERAL MANAGER Asst. General Manager Executive Asat. to Kiectronic Chief Controller 1) Internal Auditor General Manager Data Pro- Engineer of Stores 2) Chief Accounts Officer Chief Chief Legal Adviser Senior Engineer Supdt. cessing (Supply) 3) Secretary Traffic Engr; Personnel in Charge Consumers - Manager Manager (Trans- Officer (Bldgs Way port) & Work, Overhead) Chief Chief Public Senior Security Welfare Relations Medical Officer Officer Officer Officer Source: BMC Staff *0 - 21 - 3. Civil S-ecretariat and Municipal Audit The Corporation or "House" and the various committees are assisted in the day-to-day working by the Municipal Secretary, a statutory officer, and the staff working under him. The Municipal Secretary's Department is called the "Corporation and Standing Comittee Office" and is directly under the control of the Standing Committee. The Civil Secretariat is responsible for preparing agendas and proceedings of the meetings of the various committees and of the Corporation, and it assists elected representatives in matters connected with the deliberative work. Agendas of the various committees are issued in English as well as in Marathi in accordance with Corporation Resolu- tion No. 1334 dated January 28, 1964. The Municipal Secretary keeps the Seal of the Corporation and is the custodian of all official documents and papers connected with the Proceedings. The Municipal Chief Auditor is appointed by the Corporation to conduct statutory audit of transactions affecting the finances and accounts of the Corporation, and reports directly to it through the Standing Committee concerning material irregularities and financial improprieties detected from time to time. The Municipal Chief Auditor fTnctions independently of the Chief Executive and he and his subordinates are placed under the administra- tive control of the Standing Committee. He conducts similar audits in respect to BES and T Undertaking and reports irregularities directly to the BEST Committee. He further has to certify the financial capacity of the Corporation to raise and repay loans before the Corporation considers such requests by the Executive. - 22 - III. FISCAL STRUCTURE AND BUDGETING A. The Assignment of Functions The responsibilities held by the various public authorities, statutory agencies, and by the private sector within Great Bombay are summarized in Tables I and 2. These data suggest a number of important characteristics of local governments in Bombay: (a) The responsibilities of local authorities cover a wide range of activities, and within each sphere of activity,'the degree of involvement is very often exclusive or predominant. (b) The private sector does not play a major role in the provision of what are usually thought of as public sector activities. Private firms are predominant in the generation and transmission of electricity and the supply of gas and are involved to a minor extent in the distribution of electricity and water supply and in the provisinn of such services as education, cemeteries and markets. (c) The Central Government's primary responsibilities within Greater Bombay are for transportation (rail and air), education (higher education at the university level), and some public utilities (telephone and mail). (d) The activities carried out by the state government are rarely executed exclusively at this level, with the exception of law enforcement, but are usually shared in various degrees with the local authority. Welfare is predominantly a state function while health, secondary education and housing (to a significant extent) and roads and bridges (in a minor way) are shared with BM. As discussed below, the existence of these shared responsibilities results for a deliberate attempt by the Corporation to provide a higher level of social services than the State Government is able to offer. 긔 劇 25 - FOOTNOTES To TABLE I 1/ Some of the dams providing water to Bombay have been built or are being built and operated by this department. The 340 Act fixes a ceiling to halalkhore tax. The Commission scratinizes the expansion plans of the state electricity boards. The Atomic Energy Departmwt is engaged 'in powar generati;n (nucleax power station at Tarapur). Resr=-sible in the whole state of Maharashtra for power generation, trans- M13giUn and diatributiqn, it sells energy in bulk to Tata, supplies the Metropolitan regibn outside the license area of Tata. It also regulates the private utilities in the sector. Tata historically have been the sole power suppliers in thp Bombay area. It supplies power to their 3 sublicensees, BcmbW Electric Supply and Transport Undertaking, Bombay Suburban Electric Supply and Thana Electric; it also supplies Maharashtra State Electric Board and the Railw-ays; it also sell-s supplies power to the large industrial users directly in Greater Bombay but also to some areau outside this in Salsette lsla4d and to an industrial enclave near Kalyan. Their supply is cn17 in bulk and high tension. 6/ Distribution 'of electricity in Bombay Citywithin the municipal limits as they were before19-50. Z/ They operate main17 in suburbs and in Thana. Bcmbay Suburban has a license area that covers (roughly) the ao-called Eastern and West-ern su urbs and the Western Extended suburbs in Greater Bombay and in addition to this, part of Salsette Island outside the municipal limits. Thana Electric is a very small company and has a license area that caaprises Thana riandcipality and those parts of the Extended Suburbs in Greater Bombay that are not in the license area of Bombay Suburban. 8/ Produce some sewage gas in their largest sewage treatment plan. W 91 Supplies town gas to Bombay City. jO/ Set up in 1969 to make repairs on dilapidated private houses. 11/ Statutory autonomous Corporation. S2/ Supervisory function (curricula, textbooks and standards of teaching), Financial assistance programs. 13/ Approves Tom Planning Schemes prepared by the Corporation. 1h/ Article 138 of BMC Act, the State Government may t any time appoint an auditor for the purpose of making a special audit of the municipal acco=ts including the accounts of the BEST. . . . ........ .. - 26 - Table 2: LEVEL OF BOMBAY MUNICIPAL CORPORATION'S RESPONSIBILITIES IN EXPENDITURE FUNCTIONS 1. Exclusive Sewerage Drainage Water Supply Street Lighting Traffic Lights Bases Fire Protection Cemeteries Parks and Recreation Markets Slaughterhouses Primary Education Refuse Collection : 2. Predominant Roads and Bridges Health Electricity (distribution) 3. Sibstantial Sec o fdary Faucation Slum Improvement and Clearance. h. Minor Gas Housing Welfare Higher Edu6ation Police 5. None Telephone Railways Post Office Port Prisons 27- B. Expenditure Responsibility of the BMC The responsibilities of the Corporation are divided statutority into obligatory and discretionary functions (Chapter 111 of the BM Act, Articles 61 and 63 specially). Table 3 and Appendix A to this chapter provide a list of these functions. Most of the obligatory functions are carried out solely by the Corporation with a few notable exceptions, e.g. the State Government operates a number of hospitals and dispensaries.1/ The hospitals have never been turned over to the BC, hence it is required to contribute to the financing of these institutions in a fixed monthly amount of Rs34,541. The Corporation must provide for the maintenance of the mentally ill, provided that the rates prescribed by the State Government shall not exceed half the total per patient cost of maintenance. The Corporatio not only builds and maintains most roads and bridges, but also shares the construction costs of a few arterial rods and bridges which are being built by the State Government within Greater Bombay. The State Government operates a few dams, which supply some of Bombay's water, as a result of the Corporationis inability to develop 'an, adequate water supply system. 1/ Medical institutions in Greater Bombay maintained by the State Government are: (1) the Jansetjee Jeejeebhcy Hospital, (2) the Bai Motlibai (Obstetric) Hospital; (3) the Sir Dinsahw Manackji Petit Hospital for Women and Children; (4) the Dwarkadas Lallubhai Dispensary for Women and Children, (5) the St. George Hospital, (6) the Goculadas TejpalbNative General Hospital, (7) the Pestonji Hormusji Cama Hospital for Women and Children; (8) the Albless Obstetric Hospital; (9) the Jaffar Sulliman Dispensary for Women and Children; (1) the Jehangir Nassarvanji Wadia Dispensary, Mahim. - 28_- Table 3: DUTIES AND POWERS OF TE MUNICIPAL AUTHORITIES 1. Obligatory 2. Discretionary Drainage - other type of education Water Supply - parks and gardens Sewerage - survey of buildings and. lands Refuse Collectiqn - Population Cencas Roads and Bridges - Transportation (Tramways, buses) Fire Protection - Gas Health (prevention and - Supply of electric energy curative measures) Registration of Births and - Any measure likely to Deaths promote public safety, health, convenience, or Cemeteries instruction. Markets Slaughterhouses Street Lighting Primary Education 1/ As mentioned in the BMC Act, most of these functions are actually done by the Corporation except supply of gas which renains in the private sector. Source: Principally Articles 61 and 63 of the BMC Act. -29- The..Corporation has exercised much of its discretionary powers by extending its activities into sectors previously dealth with by the State Government (secondary education and welfare) or Central Government (higher education at the university level). This extention has been prompted because the higher levels of government failed to provide services deemed adequate by the Corporation. Extention has also taken place in fields which remain the sole responsibility of the local authority (parks and recreation, buses slum improvement and slum clearance). This last activity has been shared recently on a limited basis by the Maharashtra Housing State Board, Relatively few of even the utility-type functions remain in the hands of the private sector. Supply of gas and supply and distribution of electricity are notable exceptions. The Corporation is presently moving toward the take-over (by the BEST) of the private firms which are in charge of the distribution system of electricity. These private firms hold long- term licenses, awarded by the State Government, which will soon expire. Finally, it is interesting to note that the Corporation carries out all of its responsibilities directly through its departments axid as part of the general budget. This is in contrast to the common practice elsewhere bf using separate autonomous agencies or enterprises. A notable exception is the BEST, which operated as a separate enterprise before it was taken over by the Corporaticn and is still treated as a special account. 1/ The level of expenditures is determined by the Corporation. Higher levels of government are not involved directly since the expenditure estimates are not approved by the Government. However, the State Government indirectly affects the overall level of expenditures via influences on the level of 1/ But even for BEST the autonomy is only partial, since the General Manager is appointed by the Corporation and its budget is subject to Corporation approval. - 30 - revenues. It must approve every year the loans raised by the corporation internally and from the public; and, it must approve new taxes or rate changes if such changes set the rate at levels higher than the ceiling authorized in the Act. This is thought to control local spending in that the budgetary estimates cannot be overspent and budgets may not show deficits. If expenditures are incurred in excess of the estimates, they are charged to a suspense or advance account and included in the budget for the next year. Scrupulous care is taken to ensure that the free balance on the account in its totality is Sufficient to meet not only the budgeted item but also the suspended items. At the Corporation level, expenditure authority lies mainly in the hands of the Finance Committees, the Municipal Commissioner, and the General Manager for BEST. The Standing Comittee is the finance committee in the fields of all municipal services (Budgets A and B) except the following ones: education, and buses and electric supply (BEST undertaking) which have their own "finance comitteesl, i.e. the Education Committee and the BEST Comnittee. respectively. The Committees must approve the budget estimates on the basis of estimates prepared by the Municipal Commissioner and the General Manager. Then, the estimates ark sent to the House for approval. The House usually ratifies the Standing Committee's allocation of resources between the budget heads, without changing the estimates adopted by the Standing Committee. The approval of expenditure estimates by these finance committees is made at the level of major budget heads and major budget subheads for the current expenditures. Such approval is made on a project basis for capital expenditure and, in addition, for each major territorial division, city, suburb and extended suburb. - 31 - The Municipal Commissioner and the General Manager for BEST play a major role since they prepare the budget estimates and allocate- expenditures between heads. They set the budget level on the basis of the existing level of revenue, i.e. on the basis of present tax rates and charges. And since the Municipal Commissioner is also responsible for initiating changes in the revenue structure, he can also propose a level of expenditures based on revisions in the revenue system. During the fiscal year, the House can increase any amount of budget grants (a tbudget grant" is any sum entered under a major head on the expenditure side in the, terminology of the Act); or, make any additional grant on the recommendation of the Standing Committee in case of expenditure fr.m the Municipal Fund, on recamendation of the Education Committee for primary educational matters (Budget E) and on recommendation of the BEST Committee for BEST budget (Budget C). The only condition is that the overall balance cannot be reduced below 1 lakh of Rupees in case of the Municipal Fund and the BEST fund, and for primary.education, the cash balance of the Municipal Fund must not be reduced below Rs20,OOO. If an item of specific expenditure is provided for in a budget, but not actually incurred, it can be carried forward into the next annual budget; but if it then remains unspent, it lapses. Reductions in and transfers from a budget grant can be made under the following conditions: a) subject to the previous provision, the Corporation may, on the recommendation of theStanding Committee, sanction the transfer of any amount not exceeding Rs 15,000 fran one budget grant to another budget grant; b) the-Standing Gcmmittee may, at any time during an official year: (i) reduce the amount of a budget grant; (ii) sanction the transfer of any amount not exceeding Rsl5,000 fran one budget grant to another budget grant; and (iii) sanction the transfer of any amount exceeding Rs5,000 within a budget grant; c) the Municipal Commissioner may at any time during an official year sanction the transfer of any amount not exceeding Rs5,000 within a budget grant if such transfer does not involve a recurring liability, provided that every transfer of an amount exceeding Rsl,000 :-made under this clause is reported by the Commissioner - to the Standing Committee. The Education Committee and the BEST Committee have the same rights as mentioned above in their respective jurisdiction, with the General Manager serving in place of the MC. C. Borrowing Powers Subject to the approval of the State government, the Corporation may borrow from the Central or State Government,the private sector, or from its own internal funds. These powers may be exercised'only to finance capital works, to repay loans, to finance any deficit in budget estimates B, and to carry out building loans to persons desiring to erect buildings on former Bombay Improvement Trust (BIT) lands. Limitations to the borrowing powers of the B0 are set out in section 109 of the Act and are of two kinds. First, the overall debt position of the BXD is regulated as follows: the sums borrowed on account of budgets A and E, taken jointly and including the balances of all outstanding loans and debts borrowed, may not exceed twice the rateable value of the properties assessed for property taxes in Greater - 33 - Bombay. This rule also governs the borrowing on account of Budgets B and C, but in this case each budget is treated as a separate entity: Furthermore, the sums borrowed on account of budget B may not exceed 2 million rupees. The second type of restrictions concerns the two major types of borrowing which are authorized in the Act. The corporation may raise loans from the public as well as from its internal funds. It may set apart every yearas a sinking fund a sun sufficient to pay off loans when they come to maturity and invest these sinking funds in public securities includings its own securities. This type of internal borrowing is not subject to additional *restfictions. The use of a sinking fund is =>t required and the Corporation may, of course, pay off the money borrowed by equal annual installments. In any event, the scheduling of loan repayment must be approved by the State Government. External borrowing is likewise regulated by the State Government. The procedure works as follows: Before the beginning of the fiscal year, the State collects the estimated requirements of all its local authorities and makes estimates of its own borrowing requiLrements. These are then passed on to the Reserve Bank and the Finance Commission. The Reserve Bank est#ates what is thinks the market will bear, considering also the needs of the Central Government. The State Government then receives an authorization for a borrowing ceiling, which also includes a, 1imit which refers directly to the Municipal Corporations. Then the State may allocate -- by a method it selects -- this given total amount to each of the municipal corporations within the State. Finally, the Act fixes the maximu repayment period at 60 years; but, the Corporation may determine the period suitable for each loan with the State Government's sanction. Section 108 of the Act provides that loans other than government loans may be secured on immovable property, or on any of the taxes and charges which the BM is authorized to levy. 3)4- Usually, the Corporation does not borrow from the Central Government, with exception of same specific programs. For example, programs regarding the improvement of slums were partly financed with government loans. The BM borrowing policy currently relies more heavi;y on public loans than on its internal funds. D. Budgetary System The budgetary erganization of BPE reflects the four major divisions of the Corporation's activities: (a) municipal services, (b). Improvements (including slum clearance), (c) Education (primary education), and (d) Bombay 2 Electric Supply and Transport. To these categories correspond Budget A, Budget B, Budget 0 and Budget E, respectively. A fifth budget, Budget G, for the water and sewerage operations was created on April 1, 1973, on request by the IBRD as a loan condition. There is presently no separate budget for the three main territorial divisions of Greater Bombay (City, Suburbs, and Extended Suburbs); such a division existed until a few years ago under Budgets D and F respectively for suburbs and extended suburbs. This territorial division had its origin in the successive physical extensions of the City and the legal requirement that for ten years after the relevant extension, separate budgets (and accounts) should be kept for the added areas. Though separate budgets are no longer presented, the practice is continued in the presentation of the budget appendices because it facilitates demonstration that the added areas get their "fair share" of the expenditures, measured against the revenues collected. 1. Budgetary and Accounts Documents The Corporation publishes on-a yearly basis three types of major documents -- budgetary documents, annual accounts, and management reports. The ten most important are listed below: Budgetary Documento.: 1. Budget Estimates A and B, as approved by the Standing Committee of the Municipal Corporation of Greater Bombay under Section 126 of the BMC Act. 2. Budget Estimates A, B, C, and E as adopted by the Municipal Corporation of Greater Bombay (under Section 129 of the BM Act). 3. Appendices to the Budget Estimates A, B and E as adopted by the Mnicipal Corporation of Greater Bombay. Annual Accounts: h. Municipal Corporation of Greater Bombay Annual Accounts (city, suburbs, extended suburbs,, and education funds). 5. Annual Accounts (City) 6. Annual Accounts (Suburbs) 7. Annual Accounts (Extended Suburbs) 8. Statement of Accounts (BEST) Administration Reports: 9. Administration report of the Municipal Commissioner for Greater Bombay (city, suburbs and extended suburbs). 10. Report of the General Manager, Administration report and statement of accounts, BEST. 2. Budget Documents Budget documents 1 and 2 above differ only in that the first is printed before the budget estimates are sent to the House for approval, and therefore does not include the fi-nal estimates as approved by the House. The second consists of five parts for the current budget: (1) general cmments on the budget for the caning fiscal year (which runs from Appil 1 to March 31) 4 by the Mnicipal Commissioner or the General Manager, and by the Standing C-ormittee, the Education Committee, or the BEST Committee. Also, remarks on the implementation of the budget for the current fiscal year are made; (2) revised estimates for the first eight months of the current fiscal year; (3) income and expenditures estimates for the coming fiscal year, (4) advance and suspense items; and (5) special funds. The advance and suspense items are used for internal accounting during the fiscal year and for -accounts of the departments or units servicing other departments such as the asphalt plant, printing press stores accounts, and municipal foundry. The capital budget is usually presented more briefly: by main budget heads (budget A)-, according to sources of funds (Budget B), and by geographical areas (budget E). Estimates are more detailed for budget C. The basic differences between the budget estimates and the budget appendices are: (1) presentation of the budget estimates (current and capital accounts) by major territorial divisions of BM; (2) greater detail in the presentation of current expenditures and of the capital budget for the Corporation as a whole, as well as by major geographical division; and (3) an enlarged number of tables (see Appendix C). 3. Annual Accounts The Accounts covering the whole jurisdiction of BM and the Education Funds are summaries of the accounts by territorial division. The accounts by division are often required for basic information. There is no consolidiation of overall financial operations at this level of detail. The accounts are published'every year and present actuals for that particular year. 4. Administration Reports These are published approximately 1 to 2 years after the end of a fiscal year- Their content is defined statutorily. They include: (1) document n=mber four on the list, i.e. Annual Accounts (City, Suburbs and Extended Suburbs and Education Funds), and (2) reports by department heads about their respective activities. 5. Structure of the Budget Documents The finances of BMC are presented in four major separate accounts on the basis of the Corporation's activities (Figure 6); and there is no consolidation between ludgets. Budget A, which covers municipal general services, is often referred to as "municipal budgetu; budget B, or the Improve- ments Budget, deals with slum improvement and slum clearance programs and the management of the Banbay Improvement Trust's properties. This budget is further divided into three separate accounts: slum improvement, slum clearance (city), and slum clearance (suburbs and extended suburbs). Budget E covers primary education (other types of education such as secondary and medical education are part of the municipal budget), and budget C deals exclusively with the BEST undertaking. Budget G or the water works budget, which came into existence in 1973, will cover accounts of water and sewerage works executed by the Corporation. Budget A is by far the largeqst budget and most transfers take place from this budget to othei- accounts (Table 4). These transfers are strictly reguluted in the BMC Act, although the exact amount is determined by the Standing Committee subject to a ceiling. They constitute obligatory expenditures for this account (see Figure 7). More specifically, the largest Figure 6: BUDGET STRUCTURE OF THE MUNICIPAL CORPORATION 1/ BUDGET A BUDGET B BUDGET C BUDGET E BUDGET G. BES&T Education Water & Sewerage -unicipal Services Slum Improvement Slum Clearance Slum Clearance Budget (City) Suburbs and Extended Suburbs .Revenue Income & Revenue Revenue Revenue Erpenditures Income Income Income General Account General Account and and and Expenditures Expenditures Expenditures General Account Loan Works Budget (Land-Buildings) Capital Account Capital Account Capital Account Loan Works loan Works Loan Works Loan Works Budget Budget Budget Budget for the purchase of plant & machinery Special Funds ciSpeaia F unds 1/ According to the terminology of the budget. C2 2/ New budget starting fiscal year 1973/74. - 39 - Table 4, RELATIVE IMPORTANCE OF THE VARIOUS BUDGETARY ACCOUNTS BASEQ ON 1971-72 ACTUALS Revenue Expenditures- Loan Works Budget- Total Expenditures ('000 Ra) ('000 Rs) ('000 Rs) Budget A 496,900 49.9 103,197 63.9 600,097 51.9 Budget B 33,1Lh 3.3 6,387 4.0 39,531 - 3.4 (1) 27,989 2.8 2,893 1.8 30,882 2.7 (2) 2,508 .2 3,494 2.2 6,002 .5 (3) 2,647 .3 218 .1 2,865 .2 Budget 334,538 33.6 37,600 23.3 372,138 32.1 Budget E 97,641 9.8 7,611 4.7 105,252 9.1 3/ 3/ TOTAL 995,367 100.0- 161,400 100.O - 1,156,767 100.0 1/ Corresponds roughly to a current expenditures account. Depreciation is included in these data, Corresponds to a-papital expenditures budget. It includes plant and machinery. 2/ Totals do not add to 100 due to rounding Soui*ce: BMC Annual Account 1971-1972 **1 Figure 7- TRISFERS BETWEE BUDGETARY ACCOUNTS Budget A Budget B Budget B Budget B Municipal Services Slum Improvement Slum Clearance (City) Slum Clearance Revenue Account General Account General Account Suburbs & Extended Suburbs) General Account Budget B Budget B Budget B Slum Improvement Slum- Clearance (City) SItzm Clearance 'Capital Account Capital Account (Suburbs & Extended Suburbs) Capital Account Budget A Budget C Special BEST Funds Revenue Account Budget E Budget C Education Fund Special Funds Account Budget A Budget C Loan Works BLoan Works Budget Source: BMC Budgets transfers in-monetary terms are from Budget A to Budget E (primary education budget), and to the general accounts of Budget B (slum improvement, slum clearance (city) and slum clearance (suburbs and extended suburbs). Transfers to the BEST undertaking occur only in exceptional circumstances, whereas the BEST is required to contribute to the municipal budget every year as specified in Section 460KK(2)(c) of the BM Act. Within Budget B, transfers take place between: general and capital accounts of each subaccount; general and capital accounts of the slum clearance (city); and general and capital accounts of the slum clearance (suburbs and extended suburbs). In addition to this lack of consolidation, the municipality's finances are also characterized by a large number of special funds that have been set up for specific purposes. These special funds are separated from the budget accounts mentioned so far. They usually have their own resources, but can also receive funds from Budget A and C, depending on the type of fund. In addtion to these funds, there are the important staff provident funds and the pension funds for all budgets, and several internal funds and reserve accounts for BEST undertakings. Though the budget accounts are spearate, they have common characteristics. First, all are prepared on a "cash basis", i.e. based on "actual receipts" and "actual disbursements". Second, each consists of a current and capital account. (The terminology adopted in the accounts is given Chart 6). The current account is called "Revenue Income and Expenditure" for Budget A, C and E, and "General Account" for Budget B. The current account includes all current expenditures subject to the restrictions mentioned below. Charges met out of special funds are not included in Budget A. These sums, however, are usually negligible. Third, the capital account is referred to as the loan works budget for Budgets A, C, and E, and capital account for Budget B. The loan works budget covers expenditures on lands and buildings, equipment, plant and machinery. All capital expenditures are included in the loan works budgets with one minor exception. The current budget includes same expenditures on capital workb under the head "New Works", which are works of a value below 100,000 Rs. The expenditure on new works under Budget A is restricted to 20.5 million Rs. which may be extended to 3 million Rs for the current fiscal year at the request of the Municipal Commissioner. The existence of special funds does not raise any problems here since expenditures out of special funds are (mainly on plant and machinery) included in the capital account (Budget A). Fourth, each account's historical trend is presented in the new budget. The basic budget documents (Budget Estimates) are made of a summary of income, a summary of expenditures, and a detailed description of each major budget head. In the summary parts, 13 figures are usually given by budget head (major budget heads and subbeads): actuals for five years, budget estimates for the current fiscal year, actuals for the last six months of the previous fiscal year, actuals for the first six months of the current fiscal year, and budgets estimates for the coming fiscal year. In the Budget Appendices, there is a further breakdown within the budget heads and by major territorial area (division I, II and III, which correspond - 43 - to city, suburbs and extended suburbs). For example, the line "establish- menit"is broken down into expenditures on supervisory and subordinate, labor (technical and other), and other operating charges (traveling and washing charges). Repairs and maintenance are broken down into repairs and special repairs. However, in spite of all this detailing, the budget document contains estimates for only one year in the future (the comming fiscal year), and is thus not a useful fiscal pajning tool over an extended period. 6. Budget A. Budget "A" is the main account of the Corporation representing over half the Corporation's total expenditures. It covers self-financed projects as well as expenditures financed with general revenues,and.is comprised of a current account and a loan works account. Major heads of budget A are presented in Table 5. These heads are mainly, determined by activities rather than by administrative department. Exceptions to this rule refer to the public health activities of the Corporation, which appear in two heads, namely: "?blic Health Depart- ment" (head V) and in part of head (VI)."Medical Relief and Education." The loan works accounts in budget A consists of two main parts -- a Loan Fund and a Trust Fund, with the Loan Fund being much larger than the Trust Fund. On the income side, the loan fund budget include loans (internal and external) and advances from various special funds; the Trust Fund consists of various contributicns from public and private parties for the provision of specific capital goods. The Loan Funds budget establishes a basic distinction between expenditures on lands and buildings, and on plant and machinery. Expenditures Table 5: FORMAT OF BUDGET A 1/ "Revenue Income and Ependiture" - (Current7Account) A. Summary of Income I. General tax; indirect taxation and miscellaneous revenues A. General tax B. Octroi C. Other receipts II. Waterworks A. Water tax B. Other receipts II. Museums IV. Free reading rooms, libraries and municipal high schools V. Public Health Department VI. Ybdical relief and education VII. Street cleaning, conservancy, and halalkhore service A. Halalkhore tax B. Other receipts C. Tax on dogs VIII. Roads, storm water drains, public lighting A. wheel tax B. Other receipts IX. Mechanical X. Building, land acquisition and management XI.,Fire Brigade A. Fire tax B. Other receipts 1/ Based on "Budget Estimates A, B, C and E 1973-74 as adopted by the Municipal Corporation of Greater Bombay under Section 129 of the BMC Act." Table 5 (Continued) XII. Licensing, removal of encroachments on public streets, administration of Shops and Establishments Act (1948) and theatre tax XIII. Gardens, recreation centres and open spaces XIV. Markets and slaughterhouses XV. Contribution from capital funds to revenue on account of loan works staff XVI. Extraordinary receipts XVII. Rebate from government on account of collections of the - urban immovable property tax in the city XVIII. Transfers from the BEST fund XIX. Receipts from government on account of urban immovable property tax XX. Grant-in-aid from central government on account of additional expendi- ture due to increase in emoluments of the employees of the Corporation XI. Rebate from government on account of collection of House Repair Cess in the City XXII. Receipts from government on account of reimbursement of cost incurred on civil defense measures for the years 1963 to 1966 B. Summary of Expenditures I. General supervision, collection of revenue, etc. A. General superintendence B. Collection of revenue C. Upkeep and guarding of municipal offices D. General stores E. Legal Department F. Miscellaneous chargo * G. Eection ezpenses H. Provident Find charges I. Debt charges Table 5 (Continued) II. Water Works A. Maintenance B. Income tax on income derived by the municipality for supply of water to areas outside municipal jurisdiction C. Provident Fund charges 'D. Pensions, gratuities and compassionate allowances E. Proportion of General Administration collection of revenue F. Debt charges III. Museums A. Victoria and Albert Museums B. Provident Fund charges C. Debt charges IV. Free reading rooms, libraries, etc. A. hnicipal free reading rooms and libraries B. Municipal high schools C. Provident Fund charges D. Debt charges V. Public Health Department A. General superintendence B. Supply of milk to the children attending m=nicipal primary schools C. Provident Fund charges D. Malaria eradication programme E. Debt charges F. Impounding stray cattle G. Filaria night clinics H. Census I. Filaria programme Table 5 (Continued) Vt. 1bdical relief and education A. Hospitals B. Maternity homes and children's welfare service C. Dispensaries D. Family welfare planning centres E. Medical education F. Statutory contribution to government medical institution G. Clinic for treatment of leprosy cases H. B.C.G. vaccination I. Grant-in-aid to public institutions J. Provident Fund charges K. Debt charges VII. Street cleaning, conservancy and halalkhore service A. Street cleaning and conservancy B. Collection, loading, removal and disposal of town refuse C. Halalkhore service D. Provident Fund charges E. Pensions, gratuities and compassionate allowance for halalkhore service F. Debt charges VIII. Roads, storm water drains and public lighting A. General B. Maintenance of roads C. Public lighting D. Maintenance of storm water drains E. Upkeep of ferry boats G. Rebate on account of the compounded wheel tax H. Provident Fund charges I. Debt charges J. Proportionate cost of collection of wheel tax at 5% of A & C's Department, excluding V.I.P. tax Table 5 (Continued) IX. Mechanical A. Mbchanical Engineer's office establishment B. Maintenance of electric installation C. Provident Fund charges D. Debt charges X. Buildings, land acquibition and management A. City Engineer's central office establishment B. Inspection and supervision of private buildings C. Architectural D. Land acquisition and management E. Inspection and supervision of factories and workshops F. Industrial estates G. Provident Fund charges H. Debt charges I. 20% proportionate cost on all of the staff of the General Planning Section of CE's Department XI. Fire Brigade A. Maintenance 3. Provident Fund charges C. Pension, gratuities and compassionate allowances D. Prcportion of general supervision L. Debt charges XII. licensing, removal of encroachments on public streets and administration of Shops and Establishments Act, 1948 XIII. Gardens, recreation centres and open spaces A. Gardens 3. New gardens, recreation grounds ... C. Roadside trees Table 5 (continued) D. Open air theatres E. M.G.M.O. swimming pool F. Raja Baldeodas Birla Kreeda Kendra G. Sirdar Vallabhbhai Patel Swimming Pool Xmdivali H. Ghathaper Lion's municipal a-ieming pool I. Provident Fund charges J. Debt charges XIV. Markets and slaughterhouses A. Markets and slaughterhouses B. Provident Fund charges C. Pension, gratuities and compassionate allowances D. Proportion of general administration E. Debt charges X7. Contributions to (a) Budget 'B' under section 125 (2) (d) of the BMC Act (b) Budget I.E' under section 126 a (e) of the BMC Act (c) Special contribution to Budget 'E' under section 126 C (c-1) of the BMC Act (d) Welfare and Fines Fund XVI. Miscellaneous A. Provident Fund, pensions, gratuities and compassionate allowances fII. Measures for civil defence XVIII. Contribution to Bombay Building Repairs Reconstruction Board constituted by government of Maharashtra IX. Contributions to B.E.S. and T. undertaking 50- on equipment, indiding idle stock, are --for the most part-- included in two heads, purchases of plant and machinery from different special funds (Division 1), and advances for purchases of plant and machinery (Division II and III). (See Table 6). Scme are also included in the budget head ":Medical Relief and Educationff 7. Budget B Budget B consists of two parts -- a slum improvement account, and a slum clearance budget (see Table 7). Originally, this budget was to include only the accounts of the Bombay Improvement Trust which, until its merger with BIC in 1933, was an autonomous agency operating within the city for the construction and maintenance of tenements for low and middle-income workers (mostly chawls). However, budget B was expanded to include the improvement of housing and housing amenities in general and later to include slum clearance. The first,part, the Slum Improvement accounts: (general and capital accounts), cover incomes and expenditures related to the BIT's properties and the slum improvement program started by the Corporation since 1968-69. Before this date, expenditures on slum improvement which were not yet part of the institutionalized program, i.e. Slum Improvement, were recorded in Loan works of Budget A, head XV, "Slum Service and Village Amenities". In fact, all expenditures incurred by the Corporation for the slum improvement program are recorded in the General 1/ This account is not explicitly called Slum Improvement in the Budget Terminology, but only "General AccountT and "Capital Account1t. - fl - Table 6: A Loan Works Bud2et A for the Pur&case of Plant and Machinery (Division I) I. Receipts - Opening balance - Advances from various funds: Net Fremia 1und; Fire and Accident Insurance Fund; Hospital Fund; Plant aid Machinery Depreciation Fund; K.E.M. Hospital and G.S.M.. College Equipment Fund; K.E.M. Hospital and G.S.M. College. lResearch Fund; Land Aeclamation and Acquisition Fund; Special Fund; Motor Vehicles (Third Party In- surance) Fund II. Payments Payments from the various special funds (classified by fund) to: I General supervision II Water Works V Tublic Health Department VI Medical relief and medical edacation VII Street cleansing, etc. VIII Roads, storm water drains and public lighting II Mehanical I Buildings I FiX-e Brigade XIII Gardens, etc. Mu=icipal Printing Press Mechanical Transport Rota Printing Unit 1/ Ba,,d on "Budget Estimates A, B, C and E 1973-74 as adopted by the unicipal Corporation of Greater Bombay under section 129 of the EIC Act. 52- Table 7: FORMAT OF BUDGET 3 I. Slm improvement Budget A. General Account Receipts - Rents and other proceeds of properties - Contribution towards improvement schemes from the Municipal Corporation under Section 125 (2) (d) of the Municipal Corporation Act - Grant-in-aid for meeting deficit in the general account - Interest and profit on investments - Miscellaneous receipts - Appropriation from capital account to meet deficit in the general account Expenditures Maintenance of properties and streets Cost of management and establishment - P'oportionate charges on account of municipal supervision - Debt charges - Transfer of surplus to capital account B Capital Account Receipts - Sale proceeds of lands and buildings - LOans - Surplus transferred to capital account Table 7 (Continued) Exenditares - Bombay improvement-trusts classified by property - 'ransfer to general account II. Improvement Schemes Account - SMum Clearance (City) A. General Account ReceiDts - Rents and other proceeds of properties -Contribution from the Mnicipal Corporation - Interest and profits on investments - Miscellaneous receipts - Appropriation from capital account to meet deficit in the general account Ependitures - Maintenance of properties and streets - Proportionate cost of management and establishment - Proportionate charges on account of Mhnicipal supervision - Debt charges - Surplus transferred to capital account B. Capital Account Receipts - Sale proceeds of lands and buildings - Miscellaneous - Revenue surplus - Improvement or betterment charges liable under Section 354 of the RMC Act Table 7 (Continued) - Subsidy from government Central government 37½ % State goverment 12½ % - Loans from government - Loans from the public Expenditures - brks to be carried out from Municipal Fand - Works to be carried out with government aid - Transfer to general account III. morovement Schemes Account - Slum Clearance (Suburbs and Extended Suburbs) A. General Account Receiots - Rents and other proceeds of properties - Contribution from Municipal Corporation (Suburbs); cf. C.R. No, 1193, of 19-11-56 - Interests and profits on investment - Miscellaneous receipts - Appropriation from capital account Exoenditures - Maintenance of properties and streets - Proportionate cost of management and establishment - Proportionate charges on account of municipal supervision - Debt charges on loans Surplus transferred to capital account Table 7 (Continued) B. Capital Account Receipts - Sale proceeds of lands and buildings - Miscellaneous receipts - Improvement or betterment charges liable under section 354 UA of the BMC Act - Subsidy from the government JTom cantral government 37½% From state goverment 12½ % - Loans from the public - loans from government -Revenue surplus Exenditures - Torks to be carried out from Municipal Fund - Works to be carried out with government aid - Transfer to general account Account of Budget B. The works executed under this program are not regarded as capital expenditures -- although some roads may be built or public lighting installed -- since these works are only temporary and will eventually be removed. Therefore, the Capital Account refers only to works done in connection with the BIT's properties. The second part is the slum clearance program, which is divided into slui clearance (city) and slum clearance (suburbs7and extended suburbs). 8. Budget E Budget E deals exclusively with primary education and therefore records only a part, albeit the largest one, of the educational activities of the Corprration. The format is described in Table 8. Revenues and expenditures in the fields of secondary education and medical education are recorded in Head IV, "Free Reading Roans and Libraries" and Head VI, "Medical Relief and Education" of Budget A, respectively. Figure 8 (see p. 68 below) describes the budget format in general lines. 9. Budget C All operations related to the activities of the BEST Undertaking are recorded in this budget. This budget is presented along lines similar to Budgets A and E (see Table 9). However, in the loan works budget, expenditures on equipment are integrated under each major function. They include'expenditures on furniture and office equipment, tools and equipment, and other items which are usually regarded as current expenditures. 10. Special Funds There exist a number of special funds attached to each budget. Two special funds are statutorily created, the Fines Fund and the Welfare Fund. The Corporation may create special funds and may occassionally transfer monies from the Municipal Fund to a Special Fund. Table 8: FORMAT OF BUDGET E (Primary Education Budget) I. Current Account Income - Education cess - Contribution towards primary education from Municipal Corporation under section 1260(c) of the BMC Act - Special Contribution from the Corporation - Contribution from government under clause 2(e) of Schedule BBA of the BMC Act - Interest on endowments and investments - Rents and other proceeds of properties - Interest and profit on investments of surplus, loan and other balances - Miscellaneous receipts Expenditures - General supervision and administration - Municipal primary schools - Private primary schools - Medical inspection of school children - Enforcement of compulsion - Educational activities - Pension and Provident F.nd - New works - Debt charges - Training facilities for municipal teachers - Proportionate cost of collection of education cess - Extracurricular activities - 58 - Table 8 (Continued) II. Loan Works Budget Income Loans Expenditures (by project) City Section Suburban Section Extended Suburban Section Trust Fund Source: BMC Budget Estimates, 1973-1974 . - 59- Table 9: FORMAT OF BUDGET C (Banbay Electric Supply and Transport Undertaking) I. QUrrent Accou t Sumary of Income I. Administration - Interests on internal funds and other investments - Miscellaneous II. Electric Supply - Sale of energy - Street lighting - Sales servicus - Show room, domestic electrical appliances, service depot Sales, hire, etc. - Sales, hire and repairs to electrical appliances - iscellaneous III. Buses - Traffic receipts - Engineering receipts - Rents of buildings and lands - Ticket printing press receipts IV. Trolley buses - Traffic receipts Transfer of surplus cash balance from Budget A to Budget C - 6o - Table 9 (Continued) Summary of Expenditures A. General administration B. Electric supply C. Buses D. Trolley buses E. Provision towards Renewals -,qnd F. Provision towards Third Par#y Insurance Fund G. Provision towards Fire and Riots Insurance Funds H. Suspense I. Writing off part of Goodwill paid to the BEST Co Ltd J. Tansfer to the Mnicipal Fund under Section 46OKK(2)(e) of the Municipal Act K. Transfer to various special Thnds II. loan Works Budget Income Internal Resources Public loans Exnenditures - General Administration Land and buildings Motor vehicles Tools and equipment Furniture and office -quipment - Electric supply Land, buildings and equipment Cables and Mains Table 9 (Continued) Meters . Meter installations Street lighting lamps Automatic control of street lamps DEA on hire Motor vehicles Tools and equipment Furniture and office equipment - Buses Land and buildings Purchase of buses Motor vehicles Tools and equipment Furniture and office equipment - Tramways Permanent way works Source: BM Budget Estimates, 1973-1974 -62- (a) Fines Fund This fund is used to enhance the well being of the municipal employees (excluding BEST employees) by: (1) maintaining libraries and readin27tg roams; (2) contributions to sports; (3) aiding institutions establishe, for the benefit of municipal employees; and (4) payment of compassionate allowances to municipal employees, dependents, or relatives. Receipts are comprised of fines recovered from municipal employees, contributions from the revenue budget (Budget A) and interest on investments. Expenditures are on : (1) welfare activities for municipal employees, and (2) payment of compassionate allowances to the widows of the municipal Lmpldyees. (b) Welfare Fund This fund is to meet the expenditure on welfare activities of municipal employees (including BEST employees). Receipts consist of: (1) contributions from Budget C (BEST budget) and Budget A; (2) fees charged to members of municipal staff library; and (3) interest on investments. Expenditures consist of: (1) welfare activities of the staff; (2) grants of scholarships to sons and daughters of municipal employees; and (3) provision of free medical aid to municipal employees. (c) Municipal Fire and Accident Insubance Fund The fund is designed to meet charges on account of loss or damage to municipal properties by fire or by accident. Receipts come from contributions from Budget B and E and interest on investments. (d) ,Net Premia Fund Formerly when capital market conditions were favorable, municipal loans could be, and were, issued at premium which were credited to a soparate fund called Net Premia Fund. There is no contribution to this fund from general revenue. Also, credits consisting of any amounts certified by the Accountant General of Maharashtra State to be in excess of Sinking - 63 - Fund, are transferred to this Fund. Other receipts are from the sale of watermarked paper and profits on sales of securities in the Fund. Expenditures are made on- losses on issue of debentures, cost of printing debentures of public loan loans, cost of watermarked papers, and to finance the deficit of the sinking fund. The interest of this fund is credited to the revenue budget. (e) Plant and Machinery Depreciation Fund This fund was constituted to meet the charges for replacing plant and machinery purchased out of revenue. The receipts consist of ammounts of depreciation on plant and machinery. Currently plant and machinery are being purchased with advances from Special Funds and the same is being repaid in installments debited to different service heads. (f) Hospital Fund This fund was started in order to improve hospital facilities in Bombay. The interest from this fund is used for maintaining the General Ward at the K.E.M. Hospital. The receipt' consist of contributions from government from the Hospital Day Race. Expenditure is provided for under the revenue service Head since interest on the Fund is credited to Revenue. Since the total of the fund is to be restricted to Rs 10 lacs, in the future, expenditures on capital works by certain added hospital facilities will also be met from this source. (g) K.E.M. Hospital and G.S.M. College Equipment Fund This fund was started for purchasing costly equipment for K.E.M. Hospital and G.S.M. College. Receipts consist of contribution from budget grants under head VI, medical relief and education. Expenditures are for replacement of plant and machinery, apparatus and furniture at K.E.M. Hospital and G.S.M. College. (h) G.S.M. College and K.E.M. Hospital Research Fund This fund was started to meet the cost of the Gtaff and equipment in connection with research undertaken by the College and the Hospital., Receipts consist of interest on investments, and subisidies given by the Government. Expenditures are made on staff, equipment, and for research carried out by the K.E.M. Hospital and G.S.M. College Staff. (i) Land R.A. Fund (1957) This fund was utilized to meet expenditures on land reclamation schemes and onsland acquisition -- especially for housing purposes. Originally an amount was credited to this fund liquidating the following funds: (1) depreciation fund; (2) renewal road surface fund; (3) precast concrete slab pavement renewal fund; (4) garden fund; (5) Victoria and Albert Museum Fund; and (6) slum service fund. Thus far, the amount has not been utilized for reclamation of land and acquisition of land for housing purposes so far. (j) Motor Vehicles Third Party Insurance Fund The fund was created to meet the charges on account of loss by,or damage to, municipal lorries. Receipts consist of contribution from municipal revenue, and the fund accumulation are to be limited to Rs 12 lacs. (k) Pension Fund (1960) This fund was started to meet the expenditure on account of pensions to the retired municipal employees. Receipts consist of contribution from budgets A, B and E and interest on Investments. (1) Gratuity-Fund This fund was started to meet the expenditure on account of gratuity payable to the municipal employees at the time of retirement. Receipts consist of contribution from Budgets A, B and E and interest on investments. -65 - 11. BEST SDecial Funds (Section 460LL of BMC Act) If, after making allowances for the matters mentioned in the Act, there remains any further surplus balance of incCMe over expenditure in the Revenue Account of the BEST Fund, each surplus is to be disposed of as follows: (a) 30 percent of the surplus shall be credited, under a separate heading in the accombs, to a special fund to be called "the Revenue Reserve Fund" if the balance of the Revenue Reserve Fund does not exceed 50 lakhs of Rs. If the balance exceeds 50 lakhs, the surplus (above 50 lakhs) shall be added in equal shares to the amounts., credited or transferred under clauses below. The Revenue Reserve Fund shall be applied to the following purposes: (i) to make good or reduce any deficit in the amount to be transferred in any year to the municipal fund (under section 46OKK). (ii) in meeting any charges to be defrayed ot of the Bombay Electric Supply and Transport Fund it the balance available in the fund is insufficient for the purpose. (b) 30 percent of the surplus and such additional amount as may be available under clause (a) shall be credited under a separate heading in the accounts to a special fund called the Bombay Electric Supply and Transport Betterment Fund. The Bombay Electric Electric Supply and Transport Betterment Fund shall be applied to the improvements in the services, amenities, and facilities provided for the public by the BEST undertaking. (c) 25 percent of the surplus and such additional amount as may be available under clause (a) shall be transferred to the municipal fund for credit to the Welfare Fund. - 66 - (d) 15 percent of the surplus and such additional amount as may be available under clause (a) shall be transferred to the municipal fund (Section 469L). 12. Budgetary Process Three major steps characterize the budgetary process, First, at the administration level the Municipal Commissioner and the General Manager prepare the budget estimates at the level of detail required by the House. They determine the aggregate level of expenditures on the basis of estimated income and allocate the expenditures between activities. They also propose changes in th-erates and charges. Second, at the committee level the Standing Committee, the Education Committee, and the BEST Committee study the estimates prepared by the Municipal Commissioner and the General Manager in sessions attended by these two officials, and approve them after consultation. They may change the structure and the composition of the budget only after discussion with these two officials. They must approve any changes in rates and charges. Third, at the House level, the estimates of the four budgets, as well as changes in rates and charges, are finally adopted by the Corporation. This last step is purely formal and no major change takes place at the level as may be seen from the comparison of adopted and approved budgets as in Table 10. There is no involvement of higher levels of government in this procedure. It can be seen from this brief description that the primary responsibility rests with the Municipal Commissioner and the General Manager. A more detailed description of the budgetary process is presented by budget below, and is summarized in Chart 8. Table 10: COMPARISON OF ADOPTED AND APPROVED BUDGET ESTIMATES j/ 67 Estimated Estimated Opening Closing Budget A Income Expenditure Balance Balance 6566(1000 Ra) ('000 Rs) ('000 Ra) ('000 Rs) hn!icipal commissioner 254,755 281,166 36,600 10,239 Standing Committee 264,837 283,702 36,600 17,785 Corporation 264,837 283,702 29,959 11,09 68-69 .*. xgnicipal Commissioner 395,334 411,150 37,117 21,301 Standing Committee 413,118 412,678 37,117 37,557 Corporation 413,118 412,678 52,835 53,275 73-74 1 - Municipal Commissiner. s744,516 735,796 1,34e2 10,062 Standing Committee 770,516 749,479 1,342 22,379 Corporation 783,916 762,037 .1,633 36,513, Budget C 65-66 General Manager (BES & T) 191,767 194,770 100 2,903 BEST Committee 193,267 193,267 100 100 Corporation 193,267 193,267 100 100 68-69 General Manager (BES & T) 260.,;6Pf 260,162 100 100 BEST Committee . 26,676 260,676 100 100 Corporation 260,676 260,676 100 100 73-74 General Manager (BES & T) 395,542 395,542 100 100 BEST Couittee 396,923 396,923 100 100 Corporation 396,923 396,923 100 100 BudgetE 65-66 Mnicipal Commissioner 50,630 54,068 -3,526 88 Education Committee 50,630 54,071 3,526 85 Corporation 50,630 54,126 3,629 133 68-69 iunicipal Commissioner 79,409 83,694 5,142 857 Education Committee 79,409 83,694 5,142 857 Corporation 79,409 83,694 5,328 1,043 73-74 Municipal Commiesioner 115,003 115,068 674 - 609 Education Committee 115,003 115,574 674 103 Corporation - 115,003 . 115,574 . 782. 210 - 1/ Approved by the Standing Committee and adopted by the Corporation. Source: BMC Budget Estimates 叫 69,- The Municipal Commissioner, in conjunction with the Chief Accountant, formulate budgets A and B on the basis of estimates prepared by the department heads and the ward officers. Each Department Head sends budget estimates of expenditures and incomes for their respective Department to the Municipal Commissioner. The Ward Officer also prepares expenditure estimates based on needr;, however, no income estima- es are prepared at-the ward level. In spite of this procedure, there is no specific method of allocating expenditures between wards. Such allocations, as presented in the Budget Appendic-es, are made ex-post. The Municipal Commissioner and Chief Accountant determine the level of expenditures on the basis of the overall metropolitan area needs, subject to the expected level of receipts. The Municipal Commissioner is required to submit a balanced current budget, but_ estimates of capital expenditures are larger than receipts because the level of expenditures actually incurred will be much lower. As noted above, the Municipal Cbmmissioner may, and does, initiate changes in tax rates or service charges. By November 10 of each year, he must provide: the Standing Committee with estimates, for Budget A, of expenditures, and of all balances which will be available for reappropriation or expenditure at the commencement of the next fiscal year. Also, estimates of both the Corporationts receipts and income for next year other than those from taxation, and the amounts due to be transferred during the ensuing year to the Municipal fund under provisions 460KK and 460LL are required (transfers from the BEST fund necessitate a statement of proposals as to the taxation necessary to impose under the provisions o.-"' the Act for the next year). For Budget V, the Commissioner must provide the Standing Committee with an - 70 - estimate of the transfer from budget A to budget V, an estimate of the Corporation's--receipts and income from budget B(sales and rents of lands and buildings, and interests and profits), and an estimate of other income and receipts of budget B (including state government grants). The Standing Committee, on the recommendation of the Municipal Commissioner, fixes tax and octroi rates subject to the provisions of the Act regarding taxation. It must also allow for payment of all sums aid of all installments of principal and interests for which the Corporation is liable under this budget; and allow for appropriations to budget estimates B and E of the sum estimated, subject to the statutory ceilings. Finally, it must allow for a cash balance of not less than 1 lakh rupees (budget A). The Standing Committee may, if necessary, make proposals to meet any estimated deficit in Budget B by borrowing, provided that borrowing for that purpose does not exceed 2,000,000 Rs. The Estimates as approved by the Committee must be sent to the House not later than December 15. The preparation of Budget E (Primary Education budget) follows a similar procedure. The budget estimates are prepared jointly by the Municipal Commissioner and the Education Officer, under the exclusive responsibility of the Municipal Commissioner. The Education Committee must receive no later than November 10 estimates of expenditures, all balances, the proposed transfers between budgets A and E and other receipts. The Education Committeee must provide for payment of interest and principal and allow for cash balances of not less than 20,000 Rs.; but it has no power to determine the rates of the earmarked taxes for education. Budget E is then forwarded before December 15 to the Standing Committee which must in turn prepare a report to the Corporation incorporating the remabks and recommnedations of the Standing Committee. - 71 - Budget C is prepared by the General Manager of the BEST under- taking. The Manager must prepare by October 10 an estimate of expenditures, an estimate of all balances, if any, which will be available for reappropriation or expenditure at the commencement of the next year, an estimate of the amounts which will be transferred to the municipal fund (under sections 46OKK and 46OLL) and an estimate of receipts and incomes. The BEST Committee fixes, on the recommendation of the General Manager, the levy of fares and charges at such rates as would, in its opinion, provide an adequate revenue for meeting the proposed expenditure, subject to the provisions of the Motor Vehi.cles Act 1939, and the Electricity (Supply) Act 1948. It must also provide for the payment of all sums and of all installments of principal and interest for which the Corporation may be liable under this Act by reason of the acquisition, extension, administration, operation, and maintenance of the BEST. Finally, it must allow for the amounts to be transferred during next year to the Municipal Fund (as provided in Sections 46OKK and 46OLL) and for a cash balance at the end of the next official year of not less than 1 lakh rupees. These estimates, as approved by the BEST Committeej for comments, no later than December 1. The Corporation must adopt, by January 30, municipal tax rates, the list of articles subject to the octroi tax, and the rates of the fares and charges for the BEST. -72- IV. EXPENDITURE STRUCTURE AND GROWTH AND CAPITAL FINANCING A. Expenditure Data The results presented here are drawn from the budget estimates and accounts documents of BMD - The activities of the corporation were divided along classical lines for analytical purposes, since one goal of this series of papers is international intercity analysis. The content of the functions is detailed extensively below. Finally, all data presented are actuals (as distinguished from budget estimates) unless other- wise noted and correspond to actual disbursements, since the accounts are prepared on a cash basis. A few remarks concerning the data and the terminology may facilitate understanding of the presentation below: "Total Expenditures" ara the sum of the annual current and capital expend- itures presented in the four budget accounts of the corporation from which net budget transfers were subtracted. Expenditures financed out of special funds were therefore excluded, with the exception of expenditures on plant and machinery met out of these special funds, which are all recorded in the various loan works budgets (this is particularly important in the case of budget A). The exclusion of special funds expenditures does not introduce a significant distortion in the cash picture presented. "Current expenditures".exclude depreciat.ion and expenditures on New Works. "Capital expenditures" include three main items: expenditures on lands and buildings, new works which are included in the revenue income and expenditure accounts, and expenditures on piant and machinery. To the - 73 - extent that-it was possible, only heavy and highly technological equipment were included, leaving in particular some rolling stock out of the capital expenditure category. For example, ambulances and fire trucks were indiluded whereas cars or trucks for the use of department staff were treated as current expenditures. It was not always possible to break down certain budget headings. Four main cases specially important here. Capital expenditures on Roads and Bridges are understated in our table since-no breakdown was given for some projects, including both works on sewerage and road works. In that case, these projects were imputed to the Storm Water Drains function. Careful interpretation is required regarding the current expenditures and capital expenditures allocated to sewerage works since data on night soil collection for all the selected years was unavailable. Similarly, the housing function is incomplete because of the absence of capital expenditures of the Corporation. Indeed, two types of housing are provided by the BMD-- namely, houses for municipal staff and housing in slum areas. Capital expenditures on the first type of house are credited to the departments concerned and no attempt has been made at this point to extract these statistics; in any event, current expenditures relating to this activity are not traceable. The;second type of housing is included in the slum improvement and clearance function. B. Expenditure Level and Trend A summary of total expenditures broken down both by major function, and between capital and current expenditures for three selected years is presented . 74- in Table 11,-The composition of each function is detailed in the extensive footnotes to the Table. The same data are presented on a per capita basis in Table 12. Population estimates are presented in Table 13. The consumer price index for the working class, established by the State, is used here to deflate expenditures (See Table 14). The state also prepares a_CPI for non- manual employees. On an overall basis, total expenditures at current prices increased by 10.5 percent between 1962 and 1971. Given"consumer price increases of 5.9 percent per annum, the increase in real terns has been substantially less. And, when measured on a per capita basis at constant prices, total expenditures increased only by 0.7 percent annually during the last decade. The ratio--of capital to total expenditures has been always relatively high despite a declining rate of invesitment growth in recent years; capital expenditures are presently 16 percent compared to 21 percent in 1962-63. With respect to the functional distribution of the expenditures, the major activities of B:MC are in the fields of social services, with public health and education each accounting for about 10 percent of total expenditures, and transportation and electric supply for about 16 and 13 percent respectively (Table 15). The relative share of debt charges is also significant, at about 14 percent of all expenditures. Comparisons with other service functions emphasize the relative importance of these expenditure classes: Water supply (7 percent), sewerage (3.5 percent) roads and bridges (6 percent) and refuse collection (4.3 percent). Over the decade compared in Table 15, there was some noticeable change in the ТвЪ1� 11: EКPENAINF�3 НУ FUNCTIOII • J�1YDA7 Y.ПNICIPkb coftPOIцTION . . 1962,1969, 1971 (R�.�OOOj �. ` 1 ' Averдgo Arinuяl Rдts оГ orotrth (2� 1 A�crare Аппиаl Аа;с of Crcvth (w) 1962 1969 1971 19 2_ q 19 9-71 9- 1962 19Ь9 1971 ое- „!- _ =�-. кt:ег Э1,5зз ,Ь,о59 г5,1з4 1з.ах -о.5� 1о.1х наиа�л 995 г,гбб гз,484. 15.7% (*) f+) - сп--е..� 1/ zo,e,z з7,8s4 а9,оз4 в.9� --ц.г�х з.зх �rsont 1z! 995 2,хбь г7,4вц 15.7� С•) i•) _:.�1 �1 - 1о,б!,1 38,1v 46,1оо zo.o� 9.9� 2.xyL сдрltаl- - - - - - - S^�.г r�,;o 16,285 29,153 Э8,978 8.Т� 15.Ь4 10.2;д , Tranз�tдilon д1,565 167,з17 174,57Ь 10.8� 2.I� B.II: Сц.-гвлt 3o,L69 22,197 27,319 ц.3¢ ц.о� 11.2х C�urrвnt 15! ЬВ,965 146,717 16о,бTб ц.41 4.ЬК 9.9К сс,�гз1 5,81з G,956 11,659 2.Ь;I 29.� 8.0� Capltal IS/ 12,600 20,600 13,90� 7.Э� -18.C1,i 1.1х &�ь;лr��^_ 2,551 8,764 13,оз7 18.8� 22.ОК 19.9А Eleatrlclty 47,814 114,7o�i 14Ь,711 1з,3� 12.3� 13•1х -f'-'.l.l" .� Currвnt 1?f 39,485 92,Т24 цг,792 13.0� 15.1� 13.�° Q:r^ent 3J Зз�, 1,187 2,372 19.9;� 42.0� 24.0$ Сдрltаl I8/ 8,329 21,981 21,919 1L.97 - 0.5� 11•%+5." �.р1�1 Г/ z,u7 7,577 1о,б65 19.2� 18.6� 19.i� , j Debt Сhдгр,оа 91,696 137.о45 15В,453 5•9А 7.5° Ь.3f � ��г'-'^ 2 зз,1�8 50,235 65,27Т 6.1� 13.9� 7.Bz - `'-��"з Current 19/ 91,696 1Э?,olti 158,45Э 5.916 1.5Х Ь•Эл capltal - - - - - ' с�г.с:�с s/ 1г,5эг зт,т;ь 45,h54 17.х� 9.7� 15.4� �-:.ig.zal о/ 2с,ь11 12,509 ь9,323 •- 6.8А гб.о� - о.5� рагм� а г,1зз 4,ЬЬ5 4,67ь ц.8$ о.1� 9.�' Gг.г-7спз ° Р-�?{с 31,114 В9,1;Е6 110,l:67 16.9� ц.1� 15.1Z � �rrвnL 2�/ 1,159 Э,29о ",5С8 16.1� 3.3;[ 13.1р `_-4.у ' Capital 974 1.,375 1,16В 5•1А В.о$ 2.о7Е ' i`�rrenL 7/ 27,684 82,6Э5 1o5,3�t2 16.9� 12-9� 16.0� � ' с�.._r<1 - з,hзо 6,851 5,125 1е.4� --14.о� 4.6� магквtз а� з,з95 16,194 1ь,ь09 25.с� 1.3� 1я.з� ' s-'7ca�;Ti`гег- _ �._�._:::1�ам зт,7з5 ед,бзб ц4.г!•Ь 1г.zр 1Ь.5Р 1з.2$ -l, ofi'ŭar_� - . �.:_,е:�с 8/' 29,зо4 7г,423 91+,678 11,.9� 10.Ь� 13.9� 'Сиг^ent � 2,741 5,493 6,926 1о.4� 12.з° 1с.г� еаеlг�l - 8,431 7,z13 zо,оь8 - г.э 65.о� 1o.19i сдрlс�l 654 1а,7о1 S,Ьд3 49.еп - 5.0' ЭL.стХ Fc�1:= ci,�1 Р� 4о9 4,856 Ь,б91 42.о� 17.4Х зб.о� •' cemetвriвs 292 774 7.,оз9 14:94 15.9� 15.1l6 � _е:ез-sе . carrвnt z2/ 34 626 есг 5о.о� 1з.1� 4г.сk с.,ггепt 9! Lo9 4,85б б,б91 4г.оР 1Т.4� Эб.о� � cspital r г58 ц,8 2з6 - 7.5� 27.о;; - 1.0,'. i.д71 �С1 - - - - - - . . ��. s 51ит 7тргоv. 21,247 18,246 2Ыb41t � 2.ОР ц•� 1•S°а _�.-е 2,13Э Э,711 4,576 8.2°г 11.о°. 8.9� а С1е:ьгдпсо , t о�:ге„z 10/ 1,65з з,5ьо з,871 ц.ь� 4.з� 9-9� с��тспt гЭ/ 5,451 1з,з7о 19,бз9 iз.з2 21.ед 15.з� c�Y�ta1 "-' 48о 151 7о5 -15.2� (+) 4.1,� Capitвl '�,к/ 15,796 4,876 з,tю5 -16.о� 19•9� - г.5� у�--1��= з7,о57 эз,499 4т,боо 1о.1� з.9•2х 1г•1� rвизlдпа � 1э,015 28,эзо з�,э5з ц.е� 1е.1к ц.4х �°' Гсс1± а' Insŭr:.ncв , Sсhет�ез �'.�е7� ц/ 1г:701 33,499 44,lt5S 9.6;L 15.2$ � 10.8р• е л с�р. са1 ьl;ц - 3,w5 ' . � с»ггАп+. zк/ 1Э,л.хS 28,эзп зЬ,з57 ц.8о хс.1� ц.ь. Сдр1t¢Q - - - - - - ��-,__ ^____�;п{у_ 19,ar5 45,г,s5 5о,эз1 1з.з� з•1� 1o.zys . �ц,�,{, г П Мiзсеllапваив Сиггеп t - - - - - - ; ::г�+-лti i2� 15,871 зе,95z 4.5;t 1о.1� caplt,al 26/ 1,917 1,э49 г,8з5 - 5.о 45.ор 4.цr f .sр�i.з1 1д/ , 42,Ь99 1Э.7� 3,15� 6,543 7,8з2 11.о� 19.7� 10.6� . _се .з��s г5-та тотяг 455,обо 9хб,ез4 1,114,221 1о.5� 1о.!„ 1о.;р _„� г::: k:г.�:ч2 3cc„anLs, 1)Ь2-19'Л. Curren2 360,395 -7б9,83о 93Ь,Э51 ц.5р 1о.}р 11.2' - сдрl w'х 94,бь5 147,о04 181,е7о б.зэ� ц..г� т.4� , �. � • ��,• , , Footnotes to Table 11 Table 11: &UENDITURES BY FUNCTION - BOMW MUNICIPQ CORPORATION 1962-1969,1971 (Rs.1OOO) J/ "Whter *rks" Budget A., Head II include A. Maintenance: expenditures on establishment2 transport charges., costs of water supplied to the areas merged into Greater Bombay., Payment to the Goverment for Ulhas TAUter. B. Income tax on income derived by the municipality from supply of water to areas outside municipal jurisdiction. - ater meters., supervision and departmental works on major capital works. 2/ "Halalkhore". Budget A., C of Head VII: cleansing and sanitation; transport; Pumping Compression Stations., Purification Works and Flo6ii Gaies; cleansing of severs., street connections and house drains; New severs. 31 "Maintenance of Storm Water Drains" Budget A., D oZ Head VIII. Includs expenditures related eaclusively to SW Drains as well as expenditures made jointly on SW Drains and Roads-when these expenditures could not be broken down. "Roads,, SW Drains and Pablic'Lighting" Budget A., Head VIM; General Maintenance of roads; Public lighting; npkeep of ferry boat (negligible); rebate on account of compounded wheel tax. 6/ "Roads, SW Drains and Public Lighting" loan Works Budget of Budget A., Head III. Some expenditures on roads are included in the 11SW Drains" function -whenever the expenditures were jointly incurred on Drainage and roads. 7/ "Public Health Department"., Budget A., Head V and 1%dical Relief and Education" Budget A, Head VI. Head V: General Superintendence (mims cemetery); supply of milk., snacks...to ihe children attending Municipal Primary schools; Malaria Eradication Programme; Tmpoundii,,; Stray Cattle; Filaria Nigh Clinic; Filaria Progr *. Head VI-. Hospitals; Maternity Homes and Children Wellare Service; dispensariP.s_,-_b1_a_="7 Welfare Planning Centers; statutory contributions to Government Medical Institutions; clinic for treatment of leprosy cases; BCG Vaccination; grant-in-aid to public institutions. 8/ Education Budget (Budget E): general supervision and administration excluding general supervision and administration (e=luding Corporation and Standing Committee., Municipal Commissioner's Office establishment, Audit and Account establishment); Maricipa:1 Primary, schools; Private Primary Schools; Medical Inspection of School children; Enforcement of compulsory educational activities (hamely operation of a Junior College of Education, Refresher Course for =nicipal teachers); Training facilities for Municipal Teachers; Extra curriculum activities. - "Free Reading Rooms., Libraries and Municipal High Schools"., Budget A. Head 17. - %Iseums", Bidget A, Head III. - 111%dical Education", Budget A, Head E of V1. (Continuation of Footnotes to Table 11) 77 9/ "Measures for Civil Defense", Budget A,'Head XVII: Bombay Municipal Security Forca, Budget A, Head B of i of A of I. 10/ "Fire Brigade", Badget A., head II. 11/ "Street Cleansing, Conservancy and Halalkhore Servicef, Budget A, Head VII. Street cleansing and conservancy (Superintendence and inspection; destruction of dogs, licensing of dogs); collection, loding, removal and disposal of town refuse. 12/ "Cneral Administration, Collection of Revenue", Budget A, Head 1: General Superintendence minus Bombay Mnicipal Police Force; Upkeep and guarding of municipal offices; general stores; legal department; miscellaneous charges; election expenses. - Budget-A, Read IX. "Mechanical* Mechanical Engineer's office esta- blishment; maintenance of electric installation. - Budget A, Head I. "Building, Land Acquisition and Management". City Engineer's Central Office and establishment; Architectural; Land Acquisition and Management; Industrial Estates. - Budget A, Head II. "Licensing, Removal of Encroachments on public streets and Administration of Shops and Establishment Act, 198". - Budget C, Head A, part of general Adinistration. (ees to BEST Committee Members, Management and Secretarial Establishment, Public Relations Establishmsnt, Accounts Establishment, Chief Accounts, Officer's Office Establishment, Commercial Superintendent's, Office Establishment, Mechanized Accounting General EstabliLhment, Internal Audit Establishment, Legal Establishment, External Audit Charges. - Budget E, general supervision and administration (Corporation and Standing Committee, Municipal Commissioner's Office establishment, Audit and Account establishment). 13/ For budget C, loan Works Budget - include lands and Buildings, Motor Vehicles, Tools and equipment, furniture and office equipment. 14/ Budget A, Head I: Inspection and Supervision of private building and maintenance of concrete testing laboratory in Bombay; Inspection and supervision of factory workshops and work places. Budget A, Head XVIII: Contribution to Bombay Building Repairs Reconstruction Board constituted by Government of Maharashtra. 15/ Budget C, Heads C and D: Buses and Trolley Bases. Include also Tramway for the year 62-63. 16/ Budget C, Loan Works Budget - Capital Expenditures, include: lands and Buildings, Purchase of Bases, Motor Vehicles, Tools and equipment, furniture and office equipment. 17/ Budget C, Head B, "%Iectric Supply" -78- (Continuation of Footnotes to Table 11) 18/ Budget C, loan Works Buadget - Capital Expenditures, include: land, buildings and equipment, calbes and mains, meters, meters installations, street lighting lamps, automatic control of street lamps, DEA on hire, Motor Vehicles, Tools and Equipment, Furniture and Office equipment. 19/ Sun of debt charges in Budgets A, B. C and E. Debt charges include debt service and repayment of loans. 20/ Budget A, Head III, "Gardens, Recreation Centers, and Open Spaces." 21/ Budget A, Head XT. "Markets and Slaughterhouses." 22/ Cemeteries in Budget A, Head i of e of A of V. 23/ Budget B: Slum improvement General Account Slum Clearance (City) General Account Slum Clearance (Suburbs and Extended Suburbs) General Account 24/ Budget A, Head XV, Slum Service and Village Amenities Budget B, Slum Improvement - Capital Account Slum Clearance (City) - Capital Account Slum Clearance (Suburbs and Extended Suburbs) - Capital Account. 25/ "Provident Fhnd, Pensions, Gratuities and Compassionate Allowances", Budget A, Head XVI. 26/ Reclamation Works, Development Plan for Greater Bombay and Acquisition of Land for various purposes, TP schemes. Table 12: PER CAPITA EXPENDITURES BY FUNCTION - BMC (in rupees) Avg. Annual % Avg. Annual % Avg. Annual 7 Rate of Growth Rate of Growth Rate of Growth 1962/63 1969/70 1971/72 1962/69 1969/71 1962/71 1. Water 7.32 13.70 12.58 9.4 - 1.0 6.2 2/ Current 4.85 6.82 4.86 5.0 -16.0 ---- Capital 2.47 6.88 7.72 15.8 5.9 13.5 2. Sewerage 3.78 5.25 6.53 4.8 11.5 6.3 Current 2.43 4.00 4.58 7.4 7.0 7.3 Capital. . 1.35 1.25 1.95 - 1.0 25.0 4.2 3. S.W. Drains 0.59 1.58 2.18 15.1 17.4 15.6 Current 0.07 0.21 0.40 . 17.0 38.0 21.0 Capital 0.51 1.36 1.79 15.0 14.7 15.0 4. Roads and Bridges 7.70 9.06 10.93 2.3 9.8 3.9 Current 2.90 6.80 7.61 12.9 5.8 11.3 Capital 4.79 2.25 3.32 -10.0 21.0 * 4.0 5. Public Health 7.23 16.12 18.50 12.1 7:1 11.0 Current 6.43 14.88 17.64 12.7 8.9 11.9 Capital 0.80 1.23. 0.86 6.3 -16.0 0.8 6. Education 8.76 15.24 19.22 8.2 12.3 9.1 Current 6.81 13.94 15.86 10.8 6.6 9.8 Capital 1.96 1.30 3.36 - 2.5 60.0 6.2 7. Police Civil Defense 0:10 0.87 1.12 3640 .. - 13.5 31.0 Current 0.10 0.87 1.12 36.0 13.5 31.0 Capital . ---* 8. Fire 0.49 0.67 0.77 4.5 7.2 5.2 Current . 0.38 0.64 0.65 7.7 1.5 6.2 Capital 0.11 0.03 0.12 -17.0 100.0 0.1 9. Refuse Collection 3.96 6.03 7.97 6.2 15.0 8.1 Current 4.11 6.03 7.45 5.6 . 11.0 6.8 Capital Cr. 0.15 --- 0.53 ..-- ---- ---- 10. General Administration 4.42 8.19 8.43 9.2 2.9 7.4 Current 3.69 7.02 7.12 9.6 1.4 7.5 Capital 0.73 1.18 1.31 7.1 11.0 6.7 11. Housing *. 0.23 0.41 4.60 8.6 + 40.0 Curre:t * 0.23 0.41 * 4.60 8.6 + 40.0 Capital ---- 12. Transportation 18.94 30.13 29.24 6.9 - 1.5 7.4 Current 16.01 26.42 26.91 7.4 0.9 6.0 Capital 2.93 3.71 2.33 3.4 -21.0 - 2.5 13. Electricity 11.10 20.66 24.24 9.3 8.3 9.1 Current 9.17 16.70 20.57 9.0 11.0 9.4 Capital 1.93 3.96 3.67 10.8 - 4.0 7.4 14. Debt Charges 21.30 24.68 26.54 2.1 3.7 2.5 Current 21,30 24.68 26.54 2.1 3.7 2.5 Capita. -- ----- . -- ---- ---- 15. Parks and Gardens 0.50 0.84 0.78 7.7 - 3.5 5.1 Current 0.27 0.59 0.59 11.8 0.0 9.1 Capital 0.22 0.25 0.19 1.8 -13.0 - 1.5 16. Markets and Abbatoirs 0.79 2.92 2.78 20.0 - 2.5 15.0 Current 0.64 0.99 1.16 6.4 8.2 6.8 Capital . 0.15 1.93 1.62 44.0 - 5.5 30.0 17. Cemetcries 0,.07 0.14 0.17 10.4 10.2 10.3 Current 0.01 0.11 0.13 41.0 8.7 33.0 Czpital 0.06 0.03 0.04 - 9.5 15.5 - 1.5 18. Slum Improvement and Clearance 4.93 3.29 4.46 - 2.5 16.4 - 1.0 Current . 1.26 2.41 3.29 9.7 16.8 11.3 . Capital . 3.67 0.88 1.17 -18.5 15.3 -12.0 19. Pension and Insurance Schemes 3.02 5.10 5.75 7.3 6.2 7.4 Current 3.02 5.10 5.75 . 7.8 6.2 7.4 Capital .----- ----- -. .--. .. ..-. 20. Miscellaneous 0.45 0.24 0.47 - 8.5 40.0 0.5 Current ----- -----..... ... Capital 0.45 0.24 0.47 - 8.5 40.0 0.5 TOTAL 105.69 165.12 187.29 6.6 6.5 6.6 Current 83.70 138.64 136.83 7.5 6.4 7.2 Capital 21.99 26.48 30.46 2.7 7.3 3.7 1/ Over 100.0% increase per year / Under 0.1% incruase per year .cee: Table 11 - 80 - Table 13: POPULATION: GREATER BGCMBAY 1960 3,998,30 1961 4,152,056 1962 L,305,682 1963 4,6.,992 1964 h,630,196 1965 4 ,801.,513 1966 4,97 ,168 1967 5,163,397 1968 5,354,442 1969 5,552,556 1970 5,7613565 1971 .55970,5752 1972 6,191,486 Average annual growth rate: 3.7% 1/ Population Census 1961 2/ Population Census 1971. Populations for other years are intrapolated on the basis of the canpounded amaual rate of growth between 1961 and 1971. - -81 - Table 14: CONSTR:.TRICE INDEX: GREATER BCEBAY (1961=100) OPI for CPI for -. Non-manual Working Employees Class (tUrban) 1960 100.0 100.0 1961 102 1962 106 1963 112 1964 122 1965 130 1966 143 139 1967 158 150 1968 166 155 1969 173 160 1970 180 1971 188 1972 198 Source: 1/ Maharashtra, An Economic Review 1972-73. 2/ Statistical Abstract of Maharashtra State for the year 1969-70. *1 -82- Table 15: PECENTAGE DISTRIBUTION OF EXPENDITURES B FUNCTION - EMC - 1962, 1969, and 1971 1962 : 1969 1.971 Function -Current Caital Total Current Caoital Total Current Capital. 'btal Water 5.80 11.09 6.91 4.92 25*97 8.30 3.10 25*35 6.72 Sewerage Services -. 2g0 - 6.06 3.57 2.88 4.73 3.18 2.92 6.l1 3.49 S W Drains 0.09 2.31 o.56 0.15 5.15 0.96 0.25 -. 5.86 1.17 Roads & Bridges. 3.48 21.48 7.26 4.91 8.51 5.48 4.85 10.90 5.84 Health 7.68 3.57 6.82 10.73 4.66 9.76 11.25 2.82 9.88 Education 8.13 8.79 8.27 1o.o6 4.91 9.23 10.11 11.03 10.26 Police Civil Defense 0.11 - 0.09 0.63 - - 0.53 0.71 - o.60 Fire 0.46 o.5o o.47- .-- o.46 0.10 0.40 . 0.41 0.39 0.1 Refuse Collection 4.91 0.67 3.74 4.35 0.00 3.65 4.75 1.73 4.26 General Administration 4.40 3.29 3.17 5.06 4.45 4.96 4.5k 4.31 4.50 Housing 0.28 - 0.22 0.29 - 0.25 2.94 - 2.46 Transportation 19.14 13.13 17.87 19.06 14.01 18.25 17.16 7.64 15.61 Electricity . 10.96 8.68 10.48 12.04 14.95 12.51 13.11 12.05 12.94 Debt Charges 25.44 - 21.09 17.80 - 14.95 16.92 - 14.17 Parks & Gardens 0.32 1.02 0.47 0.43 0.94 0.51 0.37 0.6k 0.42 Markets & Slaughterhouses 0.76 0.68 0.74 0.71 7.28 1.77 0.74 5.32 1.49 Cemeteries 0.08 0.27 0.06 0.08 0.10 0.08 0.09 0.13 0.09 Slum Imorvrnt & Clearance 1.51 16.46 4.66 1.74 3.32 1.99 2.10 3.85 2.38 Pension & Insurnce Schemes 3.61 - 2.8% 3.68 - 3.09 3.67 . - 3.07 Miscellaneous - 2.00 0.42 - 0.92 0.15 - 1.56 0.25 TOTAL 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Source: Table 11 -83- budget distribution. For example, functions whose share increased by at least 20 percent include health, education, general administration, electricity, storm water drains, markets and slaughterhouses, and cemeteries. Substantial increases are also notable in the field of police, civil defense, and housing (See Table 16 and 17). The choice of the year 1971 biases the result since emergency measures had been taken by the Corporation to help the government of India during the Bangladesh war. Moreover, the increase in housing is somewhat overstated because-its results partially from the creation and activities of a new state government agency designed to improve the supply of the housing stock in the city of Bombay, It is important to note that ificreases in eependitur on infrastructure and public utility services accounted for nearly 50 percent of the increase in total expenditure over the period 1962-1971, as compared to 33 percent for social services and acout 20 percent for general and administrative services (Table l). This trend is also confirmed in Table 19 which deals with the functional sources of current expenditure increase. C. Means of Financing Expenditures To analyze the financing of this expenditure increase, revenues have been classfied in five broad categories: tax revenues, non-tax revenues, self-financing projects, external aids and borrowing. A detailed study of revenues, presented below, shows a:.:reliance on these financing sources as follows (See Tables 20 and 21). 1. There is little reliance by the Corporation on external aid -- on an average since 1962, less than 2 percent of the total expenditures have been financed with grants. Table 16: FUNCTIONS WITH DECREASED OR INCREASED SHARE BASED ON TOTAL EXPENDITURES -BI 1962-71 Increase Share Decrease Share S.W. Drains 108.9% Water 2.8% Health 44.9% Halalkhore 2.2% Education 24.1% Roads & Bridges 19.6% Police Civil Defense 566.7% Fire 12.8% Refuse Collection 13.9% Transportation 12.7% General Administration '42.0% Debt Charges - 32.8% Housing 1,018.1% Parks & Gardens 10.6% Electricity 23.5% Slum Improvement & Clearance 49.0% Markets & Slaughterhouses 101.4% Miscellaneous 40.5% Cemeteries 50.0% Pension & Insurance Schemes 7.7% 1962-69 Increase Share Decrease Share Water 20.1% Halalkhore 10.9% S.W. Drains 71.4% Roads & Bridges 24.5% Health 44.9% Fire 14.9% Education 11.6% Refuse Collection 2.4% Police Civil Defense 488.9% Debt Charges 29.1% General Administration 56.5% Slum Improvement & Clearance 57.3% Housing 13.6% Miscellaneous 27.0% Transportation 2.1% Electricity 19.4% Parks and Gardens 8.5% Markets & Slaughterhouses 139.2% Cemeteries 33.0% Pension & Insurance Schemes 8.4% . Source: Table 11 Table 17: FUNCTIONS WITH WCREASED AND INCFEASED FUNTIONS BASED ON CU NT EPEDITURES -B 1962-71 Increase Share Decrease Share Sewerage 0.7% Water 46.6% S.W. Drains 177.8% Fire 1019% Roads & Bridges 39.4% Refuse Collection 3.3% Health 46.3% General Administration 3.2% Education 24.3% Transportation 10.3% Police Civil Defense 545.3% Debt Charges 33.3% Housing 950.0% Markets & Slaughterhouses 2.63% Electricity 19.6% Pension & Insurance Schemes 1.7% Parks & Gardens 15.6% Cemeteries 12.5% Slum Improvement & Clearance 39.1% 1962-69 Increase Share Constant Share Decrease Share S.W. Drains 66.7% Fire Water 15.2% Roads & Bridges 41.1% Cemeteries Halalkhore 0.7% Health 39.7% Refuse Collection 11.4% -Education 23.7% Transportation 0.42% Police Civil Defense 472.7% Debt Charges 30.0% -General Administration 15.0% Markets & Slaughterhouses 6.6% -Housing 3.6% Electricity 9.9% ,Parks & Gardens 34.3% Slum Improvement & Clearance 15.2% Pension & Insurance Schemes 1.9% SOURCE: Table 11 -86- Table 18: FUNCTIONAL SOURCES OF TOTAL EXPENDITURE INCREASE - BMC (OORs) 1962-71 1969-71 Amount of 1962-71 Amount of 1969-71 Increase % Distribution Increase % Distribution Total Expenditure Increase 663,181 100.00 201,387 100.00 Increase due to: Water 43,601 6.57 - 925 - 0.46 N Sewerage Service 22,692 3.42 9,825 4.88 S.W. Drains 10,486 1.58 4,273 2.12 Roads & Bridges 32,129 4.84 14,992 7.44 Refuse Collection 30,543 4.61 14,101 7.00 Miscellaneous 918 0.14 1,486 0.74 Transportation 93,011 14.02 T,259 3.60 Electricity 96,897 14.61 30,006 14.90 Subtotal - 330,277 49.80 81,017 40.23 Health 79,353 11.97 20,981 10.42 Education 77,011 11.61 30,110 14.95 Housing 26,489 3.99 25,218 12.52 Slum Improvement & Clearance 5,397 0.81 8,398 4.17 Subtotal 188,250 28.39 84,707 42.06 _General_Administration 31,306 4.72 4,836 2.40 Police 6,282 0.95 1,835, 0.91 Fire 2,443 0.37 865 0.43 Debt Charges 66,757 10.07 21,408 10.63 Pension & Insurance Schemes 21,342 3.22 6,027_ 2.99 Subtotal 128,130 19.32 34,971 17.37 Parks & Gardens 2,543 0.38 11 0.01 Markets & Abbattoirs 13,214 1.99 415 0.21 Cemeteries 747 0.11 265 0.12 Subtotal 16,504 2.49 691 0.34 Source: Table 11 Table 19: FUNCTIONAL SOURCES OF CURRENT EXPENDITURE INCREASE -B (000 Rs) 1962-71 1969-71 Amount of 1962-71 Amount of 1969-71 Increase % Distribution Increase % Distribution Total Current Expenditures Increase 575,956 100.00 166,521 100.00 Increase due to: Water 8,142 1.41 - 8,850 - 5.31 Sewerage Service 16,850 2.93 5,122 3.08 S.W. Drains 2,038 0.35 1,185 0.71 Roads & Bridges 32,917 5.72 7,678 4.61 Refuse Collection 26,754 4.65 10,956 6.58 Miscellaneous ------- ------ * .. . --.... Transportation 91,711 15.92 13,959 8.38 Ele-tricity 83,307 14.46 30,068 18.06 Subtotal 261,719 45.44 60,118 36.10 Health 77,658 13.48 22,707 13.64 Education 65,374 11.35 17,255 10.36 Housing 26,489 4.60 25,218 15.14 Slum Improvement & Clearance 14,188 2.46 6,269 3.76 Subtotal 183,709 31.90 71,449 42.91 General Administration 26,628 4.62 3,547 2.13 Police 6,282 1.09 1,835 1.10 Fire 2,218 0.39 311 0.19 Debt Charges 66,757 11.59 21,408 12.86 Pension & Insurance Schemes 21,342 3.71 6,027 3.62 Subtotal 123,227 21.40 33,126 19.89 Parks & Gardens 2,349 0.41 218 0.13 Markets & Abbattoirs 4,185 0.73 1,433 0.86 Cemeteries 767 0.13 175 0.11 Subtotal 7,1301 1.27 1,826 1.10 Source: Table 11 Table 20: THE FINANCING OF EuPEiDIURES - BMC 1962-71 1968-71 71-72 70-71 69-70 68-69 67-6C 66-67 65-66 64-65 63-6h 62-63 Expenditures 3,848,459 1,118,221 977,476 916,834 835,927 859,83h 726,379 658,612 539,136 523,O10 k56,3h8 (RS,000) Financing from: Percentages from, Tax Revenues . 37.17 37.96 38.26 36.Oh 36.06 31.14 36.66 32.19 28.25 27.38 28.53 General non-tax 7.18 7.95 7.04 6.85 6.67 6.51 7.31 7.03 7.49 6.54 7.6 Ravenues Self-Financing 40.37 38.76 42.83 40.14 39.87 35.33 38.17- 39.44 45.72 44.80 14.79 Project Revenues External Aids 1.17 .99 1.18 1.31 .1.26 1.31 1.25 1.22 2.52 1.71' 2.63 Borrowing ih.11 14.35 10.69 15.61 A16.4 25.71 16.60 20.12 16.03 19.56 16.59 Source: BMC Annual Accounts, 1962-63/1971-72 ler Table 21: THE FINANCING OF EXPENDITURE INCREASE - BMC - 1962-1971 68-71 71-72 70-71 69-70 68-69 67-68 66-67 65-66 64-65 63-64 Net Expenditure 306,201 140,745 60,642 80,909 23,907 133,455 67,767 119,476 16,126 66,662 Increse (Rs,000) Financing from 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Percentages from: Tax Revenues 51.19 35.84 71.89 35.82 141.00 1.06 80.08 49.99 56.37 19.51 General non-tax 10.75 14.29 9.82 8.71 -0.82 2.15 10.07 4.96 38.08 0.26 revenues Self -Financing 42.32 10.46 82.74 h3.47 123.42 19.88 25.81 11.12 75.66 h6.88 Project revenues External aid - 0.07 - 0.37 - 0.71 1.82 - 3.17 1.65 1.59 - 4.65 28.56 4.55 Revenues from 19.79 39.78 -63.77 10.18 -360.h2 75.26 -17.95 38.58 -98.44 39.90 Borrowing Source: Table 20 - 90_- 2. - Revenues fraa borrowing are significant. In 1965-66 and 1967-68 loans accounted for more than 20 percent of the total expenditures, primarily because of catital expenditure financing. 3. The share of tax revenues can be regarded as relatively low. In recent years, tax revenues were financing about 37 percent of total expenditures,, while revenue from self-financing activities (i.e. user charges, etc.) account for almost 140 percent. However, the tax revenue share has grown throughout the period studied. D. Financing of Capital Expenditures: BMC Nearly all BC capital expenditures are financed by laans, since current surplus and capital receipts other than loan proceeds have been relatively small. Loans are raised from the government, the public, and fran internal funds. Government borrowing represents a very small proportion of total borrowing and is usually earmarked for specific programes., As noted above, these loans are issued in conformity with the requirements of the Reserve Bank of India and of the Central Government. The State Government establishes every year a ceiling to the borrowing that the Corporation can make from the public. This ceiling is based on the ceiling authorized by the Reserve Bank on the borrowing of all municipal corporations in the State of Maharashtra and on the estimated requirements of the BMC. The loans are for the most part made by banks and other institutions and rarely by individuals. Currently, these loans must be raised at a prescribed interest rate ard for a life of 12 years. In 1973 the prescribed rate of 6 percent was well below the free market rate, -91- thereby providing a form of subsidy to the BMC. The Corporation apparently has no problem in raising such loans; the availability of subscriptions to these loans is attributable to the fact that banking institutions are required to invest a minimum proportion of their deposits in a narrow range of public securities (Central Government, State Governments, and the Bombay Municipality). A valuable new source of loan money was first tapped in 1967-66 and then 1968-69,7iz.- the nationalized Life Insurance Corporation of India. 7hese loans have carried a 7 percent-interest rate and have been raised either for 12 years (1967-68 issues) or 15 years (1968-69 and 1969-70 issues). Internal loans are generated either by the investment of special funds or the investment of sinking funds. All public loans are repayable by sinking fund provisions. Every year, a certain proportion of the principal of the loan, based on appropriate periods and the interests due, is paid to a sinking fund. Sinking funds are for the most part invested in internal loans and not in external securities. For example, about 90 percent of the total sinking funds of Budget A are invested in EBC loans. The internal loans are in turn repayable through sinking fund provisions which again generate more internal loans. Hence sinking funds are reused for new capital purposes instead of being externally invested. The consequence of this policy is that the total amount of loans raised externally is reduced. Repayments are in effect financed out of the general stock of loan money including new loans. The repayment period for internal loans is 25 years; such loans carry interest at the - 92 - prescribed current rates for public loans. Details on the book value of sinking funds are given in Table 22-. There are five separate sinking funds for the Corporation, excluding the BEST undertaking. Budget B has three funds corresponding to the three major accounts, Slum Improvement, Slum Clearance (City), and Slum Clearance (suburbs and extended suburbs). The aggregated amo=nt of the sinking fund was 453 million Rs. as of March 31, 1972. In addition to the sinking fund, there are internal special funds representing an important source for internal financing. Among them, the Staff Provident Fund and the Pensiors Fund are notably large (see Table 23). The greater part of*the balance of the serveral funds is either invested in Bombay Corporation Loans or is applied in making repayable advances, at interest, for the purchase of short life assets, e.g. plant and machinery. These advances, which are usually made for 5 years, are repayable by annual equal payments at the prescribed interest rate. An illustration of loans made by the provident funds and of advances made out of special funds is given in Table 24. Tables 25 and to 31 present an aggregated view of the BMC borrowing activities and borrowing by budget. As noted above, Government loans constitute a minor part of total borrowing and are concentrated in budget B. The major contribution bf the Government was directed to the slum clearance (city and suburbs) programs .which were started.in the early 60's by the Corporation. Since this program is being progressively reduced by the Corporation and replaced by a slum improvement program, no government aid has Table 22: Book Value of the Sinking Funds by Budget - BMC (Rs '000) 1 2 3 h 5 6 Budget B Total Budget Slum Slum Total Budget E IMC A Improvement Clearance (2 + 3) Fduc. (1+h+5) 1962-63 185,192 70,355 857 71,192 5,801 262,185 1963-64 218,129 68,926 1,302 70,228 9,858 298,215 196h-65 803,367 68,243 4,128 72,371 11,810 287,548 1965-66 223,226 68,656 2,326 70,982 16,279 310,h87 1966-67 228, 97 71,h21 2,912 74,333 21,824 324,754 1967-68 235,246 74,986 3,753 78,739 25,061 339,06 1968-69 262,850 77,310 h,757 82,067 30,872 375,789 1969-70 291,012 73,107 5,879 78,986 33,454 403,352 1970-71 316,76h 70,368 7,074 77,462 36,988 431,214 1971-72 330,450 75,632 8,333 83,965 38,575 452,990 Source: BMC Annual Accounts Table 23: Balances of-Special Funds -RC as of March 31, 1972 (Rs) Advances for Amount Held in Plant and Fixed Deposit Machinery and Cash 1. Municipal Fire and Accident Insurance Fund 3,041,537 868,860 2,172,677 2. Net Premia And 4,567,678 2,320,29)z 2,234,886 * 3. Hospital Fund 2,014.,3864 787,919 1,226,165 4. Plant and Machinery I Depreciation Fund 3,307,092 1,311,908 883,99h * 5. M Hospital and GS4 College Fquipment Fund 180,971 32,599 148,372 6. GSM College and KM Hospital Research Fund 105,731 13,002 92,729 7. Fidelity Guarantee Insurance Fund. .476,115 - 476,115 8. Motor Vehicle (Third Party) Insurance Fund 1,591,534 228,860 1,362,674 9. Land (Reclamation and Acquisition) Fund 9,528,398 6,695,352 2,833,086 10. Public Monument Maintenance Fund 131,816 - 131,816 11. Endo-nent Fund 1,337,843 - 1,337,843 Subtotal 26,283,099 12,258,794 12,900,617 12. Provident Fund 236,903,781 LOANS - 13. Gratuity Ftnd 10,905,180 - 10,905,180 14. Pension Fand 116,959,977 - 116,959,977 Subtotal 364,768,938 - 127,865,157 TOTAL 391,052,037 12,258,794 140,765,774 * The difference is accounted for by amount advanced for purchase of plant, machinery for Municipal Printing Press pending adjustment against the provisions for depreciation in subsequent years. 4* Difference is accounted for by amount advanced for meeting expenditure on levelling. metaling, etc. private sheets. Source: BMC Annual Accounts Table 2h: Advances Made by Special Funds and Securities Held in the Provident Fnd 1971 - 1972 (Rs) Advances from Special Funds for Purchase of Plant and Machinery Net Premia Fund 1,17,878 Municipal Fire and Accident Insurance Fund 210,232 Advance fra K.E.M. Hospital Research Fund 10,017 Land Acquisition and Reclamatim Fund 3,330,259 Hospital Fund 335,689 KEM Hospital Equipment Fund 0 Plant and Machinery Depreciation Fund 0 Motor Vehicle Third Party Insurance Fund 0 TOTAL 5,062,075 Investments of the Provident Fundi-/ Public Securities 19,276,557 EKC Loans 1964 to 1971-71 217,627,200 TOTAL 236,903,757 1/ Actual cost at purchase rate - Source: BMC Annual Accounts Table 25: Borrowing Activities,, BMC . (Rs '000) Total Sources of Funds Capital Total Expenditures Borrowing Government Public Internal Advances 1961-62 63,421 1,543 22,000 38,500 1,378 1962-63 72,552 81,916 782 41,500 37,500 2,134 1963-61 83,961 78,974 1,270 42,500 33,500 1,704 1964-65 83,366 68,359 1,280 42,000 22,500 2,579 1965-66 124,701 117,690 5,492 35,000 75,000 2,198 1966-67 140,763 134,735 1,173 40,000 91,500 2,062 1967-68 180,276 159,200 673 57,095 99,500 1,932 1968-69 137,284 145,312 1,039 90,500 49,500 4,273 1969-70 102,370 145,519 180 143,598 - 1,741 1970-71 10,952 93,565 4o5 88,541 - 4,619 1971-72 124,491 108,562 99,000 4,500 5,062 1/ Budgets A, B and E Source: BMC Annual Accounts Table 26: Total Borrowing. Percentage Distribution of the Source of Funds Sources 'of Funds Total Borrowing Government Public Internal Advan-es 1961-62 100.00 2.h3 3h.69 60.71 2.17 1962-63 100.00 0.95 50.66 45.78 2.61 1963-6h 100.00 1.61 53.82 42.42 2.16 1964-65 100.00 1.87 61.44 32.91 3.77 1965-66 100.00 4.67 29.74 63.73 1.87 1966-67 100.00 0.87 29.69 67.91 1.53 1967-68 100.00 0.h.2 35.86 62.50 1.21 1968-69 100.00 0.72 62.28 34.06 2.94 1969-70 100.00 0.12 98.68 1.20 1970-71 100.00 0.h3 94.63 '4.94 1971-72 100.00 91.19 h.15 4.66 Source: Table 25 Tablp 27. Outstanding Debt - MC Total Per Capita Total Debt Net Debt Debt Net Debt Outstanding Outstanding Outstanding Outstanding (Rs,000) (Rs,OOO) (Rs) Per Capita 1962-63 827,608 566,644 192.21 131.60 1963-64 879,517 584,171 196.98 130.83 1964-65 878,97 595,165 189.75 128.h 1965-66 952,186 641,699 198.31 133.65 1966-67 1,043,78 718,725 209.57 144.35 1967-68 1,154,89 815,543 187.33 132.32 1968-69 1,272,397 896,108 237.60 167.41 1969-70 1,375,450 971.,998 247z71 175.05 197 -71 1,415,405 984,191 26!.66 170.82 1971-72 1,461,179 1,008,189 244.73 168.86 Source: BMC Annual Accounts Table 28: Outstandin Debt by Budget - BMC (Rs '000) 1 2 3 _4 5 6 7 8 9 10 Budget B Budget A Slum Improvement Slum Clearance (3 + 5) (4 + 6) Budget E Total Net Total Net Total Net Total Net Total Net Outstanding Loan Outstanding Loan Outstanding Loan Outstanding Loan Outstandin'g loan Debt Debt Debt Debt Debt Debt Debt Debt Debt Debt 1960-61 520,493 399,562 152,131 83,875 - - - - - 1961-62 559,064 409,500 153,258 84,055 17,045 - - - 27,350 - 1962-63 6o8,064 424,113 159,368 89,013 22,826 21,969 182,194 110,982 37,350 31,549 1963-6h 645,525 430,265 157,545 88,619 24,097 22,795 181,642 111,414 52,30 42,492 1964-65 635,456 436,205 151,436 83,193 28,684 24,556 180,120 107,749 63,021 51,211 1 1965-66 699,225 475,999 156,319 87,663 28,785 26,459 185,10 114,122 67,857 51,578 \0 1966-67 772,467 5h3,870 158,236 86,816 39,921 37,009 198,157 123,825 72,854 51,030 1967-68 875,521 640,275 160,602 85,616 45,555 11,802 206,17 127,418 72,911 47,850 1968-69 981,563 718,713 163,95 86,645 49,019 44,262 212,974 130,907 77,660 L6,788 1969-70 1,095,189 804,177 154,212 81,105 49,156 43,277 203,368 124,382 76,893 43,439 1970-71 1,143,405 826,640 145,302 74,915 L9,548 42,474 194,850 117,389 77,150 4o,162 1971-72 1,187,869 857,419 144,006 68,374 51,854 43,521 195,860 111,895 77,45o 38,875 Source: BYC Annual Accounts Table 29: Borrowing Activities - Budget A - EMC (Rs,000) Sources of Loan Funds Total Advances Borrowing Government Public Internal Plant & Machinery 1961-62 45,378 - 16,500 27,500 1,378 1962-63 56,134 - 39,000 15,000 2,134 1963-.64 57,704 - 27,500 28,500 1,7oh 1964-65 51,579 - 29,500 19,500 2,579 1965-66 97,198 - 35,000 60,000 2,198 1966-67 113,562 - 37,500 74,000 2,062 1967-68 146,027 - 57,095 87,000 1,932 1968-69 129,523 - 87,750 37,500 h,273 1969-70 142,589 - 140,848 - 1,741 1970-71 89,860 - 85,241 - h,619 1971-2 100,762 - 95,700 - 5,062 Source: BMC Annual Accounts Table 30: Borrowing Activities - Budget B - BMC (Rs,000) Source of Funds Total Borrowing Government Public Internal Advances 1961-62 11,543 1,543 - 10,000 - 1962-63 15,782 782 - 15,000 - 1963-64 6,270 1,270 - 5,000 - 1964-65 4,280 1,280 - 3,000 - 1965-66 15,492 5,492 - 10,000 1966-67 16,173 1,173 - 15,000 1967-68 10,673 673 - 10,000 1968-69 11,039 1,039 - 10,000 1969-70 180 180 - - 1970-71 405 405 1971-72 2,500 - 2,500 Source: BMC Annual Accounts Table 31: Borrowing Activities - Budget E - BMC (Rs,000) Source of Funds Total Borrowing Government Public Internal Advanops 1961-62 6,500 -5,00 1,000 1962-63 10,000 -2,00 7,500 1963-64 15,000 - 15,000 - 1964-65 12,500 - 12,500 1965-66 5,000 - - 5,000 - 1966-67 5,000 - 2,500 2,500 - 0 1967-68 2,500 - - 2,500 - 1968-69 4,750 - 2,750 2,000 - 1969-70 2,750 - 2,750 - 1970=71 3,300 3,300- 1971-71 5,300 3,300 2,000 Source: BMC Annual Accounts - 103 - been received during recent years. The distribution of total borrowing between internal and external loans indicates that the Corporation is currently relying on external sources for nearly all of its borrowing. There was no recourse to internal funds in 1969-70 and 1970-71, and in 1971-72 internal funds accounted for about 4 percent of total borrowing. This current position differs sharply from that in previous years when internal borrowing was sometimes equal to twice the amount-.of external finance. This change in borrowing policy seems to have resulted fran increasing availability in external funds more than fran exhaustion in internal funds available for borrowing. Tables 27 and 28 give the total debt outstanding for BMC and by budget. The total outstanding debt includes external and internal debt. The outstanding debt per capita increased from 192 Rs. in 1962- 1963 to 245 Rs. in 1971-72. If total general revenue of the BMC may be viewed in some sense as an indicator of the ability to repay debt, the overall 9debt burdenT has actually declined over the 1960-1971 period. Another measure of the debt burden was obtained by subtracting the value of the various sinking funds (based on book value) from the total outstanding debt. This measure may be taken as a first approximation of the external debt; however, it overestimates the external debt since the outstanding debt resiilting fra other internal funds have not been excl),ded from thetotal debt outstanding. Using this measure per capita debt outstanding increased from 132 Rs to 169 Rs over the same period. Finally, a few points concerning the debt poligy of the BID should be noted. First, the loan repayment policy is conservative. The average period for both internal and external loans is about 19 years. The greater part of the properties and assets created by application of loan funds probably have an average physical life of 40 years or more. Second, the reuse of sinking funds has resulted in keeping the amount of external debt to a minimum. Moreover, it avoids the risks of depreciation, the delays and the expenses of external investment, and the constant adjustment of sinking funds to reflect the diffe.ence between the rate actually earned and the rate on which the sinking fund was originally calculated. The reuse of sinking funds in the United Kingdom has long been held to be perfectly sound and has been almost universally adopted by municipal authorities for all loans other than those repayable to the lender by annual installments. Indeed, it has been taken to its logical conclusion in the form of a loans pool or consolidated loans fund whereby sinking funds as such are abolished. All loan funds are taken into a pool and advances made from this to the serveral borrowing accounts. Annual repayments, based on appropriate periods, are made directly to the pool. 1( E. Financing of Capital Expenditures: BEST The definition of capital expenditures used here is that adopted by the BEST undertaking: expenditures on land and buildings, rolling stock, plant, machinery, equipmnt tools, furniture and office equipment. 1/ See also Arthur Collins & Co., "Bombay Water Supply and Sewerage project-- Finances of the Municipal Corporation of Bombay,t Unpublished IBRD paper, Puolic Utilities.Department, May 1, 1969. -- 105 - All capital expenditures are financed by loans. There is no capital contribution by the Corporation or the State Government. There was one exception, however. In 1966, the Corporation did make a temporary advance of 10 million Rs. to the BEST. It is of interest- to note that this absence of aid is being strongly challenged by the Undertaking. In the 1973-74 Budget Estimates, the General Manager notes that Tthe Isocial cost' in maintaining such facilities could be met by the Corporation/State Government by way of suitable subsidy."1 BEST capital expenditures may be financed by public loans (external borrowing) and funds generated by the operation of the Undertaking, which will be called internal borrowing. The amount of external finance available each year to the BEST is determined concurrently with the BMC, which places the enterprise in a competitor's position vis-a-vis the rest of the Corporation's departments. The maturity period of these loans is usually 12 years and they have been raised since 1964 at 6 percent interest. The funds available for internal borrowings are internal funds and surpluses on the current accounts (X) defined as: X= (Income) - (Operating Expenditures) - (Overhead Charges) - (Statutory Contribations) - (Other Contributinns). Income is the receipts from current operations and rents and sales of properties. Statutory contributions , by decreasing order of priority, are: statutory contributions to the Municipal Fund, and to three special funds - The Revenue Reserve Fund, the BEST Betterment Fund, and the Welfare Fund. (The details concerning the disposal of suplus balance to these special funds were discussed above). It is sufficient to note here that the BEST is - 1o6 - required to contribute a fixed annual amount of 4 million Rs. to the Municipal Fund. Such a contribution has been recently challenged by the BEST and the Corporation has already agreed to abandon this requirement, subject to the State Government approval. Other contributions are payment to a financial reserve (since 1969) and contribution to various special funds created on a voluntary basis by the BEST under section 460 II1 of the BE Act. The current surplus can also be expressed in the following way: X = (Depreciation Allowances) + (ebt Charges) + (Interest on -Internal Funds) + (Profits) The two branches of the BEST must contribute each year to a Depreciation Fund on the basis of their respective assets. Part of this fund is used to write off depreciated assets and part for internal fund borrowing. Similarly, each branch is subject to debt charges which include the annual repayment of the public loan principal and the interest. The use of debt charges as a source of internal borrowing through the operation of a sinking fund is similar to that described above for the Corporation. The BEST operates a sinking fund separate from that of the rest of the Corporation. In general, all public loans are repayable by sinking funds P ?ovisions. For the greater part, the monies in the sinking funds are invested in internal loans and not in external securities. Such internal loans are in turn repayable through sinking fund provisions, which again generate more internal loans. About 10 percent of the sinking funds were invested in public securities as of March 1972. Interest - on funds borrowed from the sinking fund are recorded in the budget head "Interests on Internal Funds." Profits are defined as a residual., Profit X - (Depreciation Alloaances) - (Debt Charges) - (Interests on Internal Funds) - 107 - "Advances frcm special funds" are composed- of internal funds created and operated by the BEST. A list of these funds may be found in Table 32. Their resources consist of contributions from the revenue budget by the BEST as well as own resources including interests received on funds invested internally and externally. These funds are earmarked, but the BEST can use excess balances whenever available. In practice, the sources of internal borrowing are determined according to the method described above with one exception, concerning contributions for various funds. These contributions are made on an ad hoc basis whenever sufficient current funds are generated, and not necessarily on the basis of the order of priority set in the'Act. The BEST carries formzd important arrears regarding the contribution t.d the Municipal Fund, while payment to other special funds are still currently made. The importance of public loans in BEST financing has increased recently. The recourse to internal funds is now more restrictLd since special funds do not generate sufficient balances annually. The result is that the BEST relies mainly on internal funds accumulated during the current financial year (debt charges and depreciation allowances). On the average, the BEST raises 20 million Rs. internally every year. The level of long term (public) borrowing since 1965, as shown in the balance sheets of the BEST, shows that the absolute level increased by about 66 percent from 1965 to 1972. The accumulated sinking funds increased byahout 56 percent, Rs 71 to 112 million. This trend is expected to continue in a near future. The budget Estimates for 1973-74 propose to raise a Public Loan of an unprecedented amount of 80 million Rs. to meet the capital expenditures of 88.5 million Rs. envisaged - 108 - Table 32 . Internal Funds Advances (000s Rs) Funds 1965-66 1966-67 1967-68 Fire & Riots Insurance 1,500 1,000 ----- Third Party Insurance 1,000 1.,500 Renewals ----- ---- ------ Depreciation 10,06 12,003 3,969 Provisions for Special Provident Fund 3,500 2000 Contribution on Termination of Service (Gratuities Accruing Fund) Provision for Furlough & Leave Pay to 1,400 1,500 ---- Staff and Passage to Officers Accrued and Accruing Electric Supply Contingencies Reserve 527 1,369 TOTAL 18,433" 19,372 3,969 Source: BMC Annual Accounts -109- in the current loans works budget. Loans of this magnitude have never been raised before. Such a policy may be difficult to implement in the long run because of the reluctance of the State Government and Reserve Bank to approve loans of such magnitude for the BEST. V. REVENUE STRUCTURE AND TRENDS A. Revenue Authority The Corporation is entitled to'levy-four kinds of taxes: property taxes, tax on vehicles and animals, theater tax, and octroi tax. The levy- of any new tax requires approval by the State Government. Tax rates are determined by the Standing Comm=ittee (which is the main finance camittee of the Corporation) subject to the restrictions statutorily determined in the BMC Act. As a general rule, the Corporation is allowed to fix tax rates within a range stated in the Act. The Municipal Commissioner initiates changes in tax rates and in the tax structure. 1. Property Tax Powers There is no sailing for the water rate levied on rateable value, i.e. the Standing Committee can determine the rate freely. The Halalkhore (sewerage) tax cannot exceed 5 percent of the rateable value. The minimum and maxnum rates of the general property tax are 8 percent and 26 percent respectively-of the rateable value, these rates excluding a fire tax rate which can be fixed between one-eigth and three-fourths percent of the rateable value. An education cess not exceeding 5 percent of the rateable value may be levied with the approval of the State Government. 2. Tax on Vehicles and Animals Taxes are levied on animals and vehicles on the basis of weight according to a complicated rate schedule as shown in Table 32a. There is also a tax of a maximum of Rs. 5 per annum on dogs of at least 6 months of age. 1/ Property taxation is dicussed in further detail in the next chapter. Table 32a: TAx ONVEHICIES An ANIAIB / m^gixiUM amount of tix per quater. Seria - Dscaripriän ovehicle or anmml. Fo,r vhicles For vehielo fo. with phu. without latio tyre. pt4muzratie - tyrea. . Rae. Rs. 1 Vohialnsimpelled bv machieryatnd uedforcommercial purroes ot-her:hanu the carringo of p Weiehiug up Lo 2 tund empty ... ... 45 05 Do. 4 du. ... ... 5 30 Do. 8 do. ... ... 65 95 Do. 12 do. ... ... 75 110 Over 12 do. ... ... 85 125 2 Ea"hvehiclödr.wu or intendeidtobedrawby any vehicem falling undor berial No. I and uhed for comzmrcial purpose (L..nilers)-. Weiging up to 2 tons empty. ... ... 30 45 Do. 4 do. ... . 40 60 Do. 8 do. ... ... ^6 75 Do. 12 do. ... ... 60 90 Over 12 da. ... l... 100 3 Råch vehicie impelled by machinery aud uced d*.2y for crrying WCighing up to 13 ewt.c=pty ... . 5 40 Do. 30 do. ... .. 35 50 Do. 45 lo. ... ... 50 75 Over 4J do. ... ... . 5 4 Vehicle dirswn or intenried! to Lodrzwn by anyvchicle fallingunder Seria Xo. 3(i.. tr.aler) ... ... ... 12 20 5 Each three.wiheeledvehicleinpelled.by ma.chinery and umed quoy. for carrying pasangrru ... ... ... 15 25 6 Each two.wheeed vehicle imzpelled by maichinery ... ... 12 20 7 Fach four-whekeled vehico drawn by horsen, ponien, mules, doakeys or bullock.- (a) Labvurcarts ,.. ... ... 2 8 (6) OthoerTehiclein thila .. ... ... 8 12 B Each two.whceled vehicle drawn by horses, ponics, mulcs, donkeys, or buljechs- (a) Labour carts ... ... ... 8 (6) OthCvchiclesin thisass ... ... ... 4 9 Each vohicie drawn or hmpUcd otherwiec than by borsec, ponies, mule, donkwys, bullock" or uachinery 10 E.ah hore, pony orimulof al h<iciht,'f 12 hands or upwarda ... Ra. 8 11 Each hotc,n ofa al t ha 1ad ... ,, 4 . 12 buek er L ... ,, 2 13 d for d.u-ht or p.k purps:: or to.iing ... ,. 2 Source: Schedule G of BMC Act -112-. 3. Theater Tax This tax is levied on cinemas, theaters, circuses, carnivals, and other performances or shows. The maximum rates are shown below (see Table 33). Table 33: TEATER TAX Type of Emtertainment Ma3d.mm Amount- of Tax Class I Cinema Theater Rs 10 per show Class II Cinema Theater Rs 7 per show Drana, concert, variety..entertainment Rs 7 per show or tamasha Circus, carnival, or fete Rs 10 per da Any other entertainaent Rs 7 per show or if there are not separate shows, Rs 7 per day Class I Cinema Theater means a theater which usually presents first- r= movies and Class II Cinema. Theater means awy other cinems theater. Source: BI Act b. Octroi There is a tax levied on commodities imported into the corporate area. The number of articles liable to the payment of this tax and octroi rates are determined by law. Nevertheless, the Commissioner frames rules with respect to the levy, assessment and collection of octroi subject to the approval of the Standing Committee. He may regulate: (a) the 'amination of articles liable to payment of octroi; (b) t'de inspection, - weighing, or examination of the contents of any package for the purpose of ascertaining whether it contains any articles in respect of which octroi is payabl6, (c) the seizure and confiscation of articles liable to cctroi in case of refusal to pay such tax; (d) measures to prevent tax evasion; and (e) any other matter which is to b.a, or may be, prescribed for the levy, assessment, or collection of octroi. All these rules must be first sanctioned by the State Government. S-113- B. Trends in Revenue Growth The BMC relies heavily on tax revenues and user charge financing and very little on external assistance. The structure of revenues for consolidated local governments, i.e. the Municipal Corporation including the BEST, is shown in Table 34. While the total self-raised revenues increased by more than three times over the 1960-72 period, the amount of external aid increased by less than 70 percent. Among self-raised revenues property taxes (rates) are by far the largest source of income (Table 35),. but over the period under consideration have decreased by nearly 10 percent of total tax receipts. The share of tax revenues has risen from 38 to 49 percent even though the water tax on property value has been steadi-ly replaced by metered charges on water consumption. The revenue structure of the Municipal Corporation may also be viewed after excluding the revenues raised by the BEST since this Undertaking is run independently from the rest of the municipal services. Also, as a result of its impomtance relative to other accounts, its inclusion drastically increases the share-of user charges. In other words, it may be of interest to look at the sources of financing placed under one camon management and at the relative importance of general revenues. Table 36 shows the revenue structure of the BMC when the BEST accounts are excluded from 1960 to 1972-73. In this case tax revenue-s are 0y far the largest source, providing about 73 percent of all.self-raised. revenues in 1972 as compared ta11 percent for rates and other sources of revenues which are quite negli'ible. All municipal taxes with the exception of minor components of the property taxes are general revenues. Table 34: REVJE STRUCTURE AM TREMDS IN REVENUES -EMC 1960 - 1972 -14- (In thousand rupees) hf 1960-61 1961-62 1962-63 1963-6h 196h-q 1965-66 1966-67 1967-8 1968-69 1269-g 1970-71 171-72 1972-73 Tax Revenues 116,006 126,992 141,120 154,759 164,039 225,592 281,828 284,289 318,773 309,058 31,802 444,635 539,545 Revenues from Rates 149,L68 155,753 181,387 207,677 219,700 229,086 243,035 268,919 296,59 328,821 376,753 385,050 430,150 Revenues fran Licenses 2,566 2,879 3,656 3,885 7,252 9,089 8,365 8,970 8;722 - 9,78 10,32 il,163 11,215 Revenues fran Fees 9,033 8,207 8,93 9,705 10,149 12,838 13,534 13,737 16,791 15,408 16,897 17,804 26,233 Revenues fran Rents 9,452 9,644 9,927 10,476 11,371 13,970 14,861 11,2192 10,037 12,974 13,281 28,156 21,977 Pevenues fran Interests 5,389 6,261 6,668 8,53 8,132 8,300 12,302 13,817 9,481 13,856 14,889 30,505 22,492 iscellaneous 14,529 22,653 22,445 21,809 18,910 19,640 22,974 28,664 57,71 36,171 37,652 29,582 ' 41,442 TOTAL Local Revenues 306,43 332,389 374,1L6 416,854 439,953 518,515 596,899 629,688 717,73 766,036 861,598 96,895 1,093,05 Grants 7,449 8,272 9,672 8,707 14,313 7,661 9,893 11,632 11,80 12,035 11,486 11,036 12,368 TOTAL REVNUES 313,892 340,661 383,818 425,561 454,266 526,176 606,(92 641,320 729,214 778,071 873,085 957,931 1,105,22 Tota3. Local 306,413 313,574 334,058 350,297 349,169 389,861 417,411 398,537 432,470 442,795 478,666 503,668 552,0 8 Revenues at Constant Prices Total Revenues 313,892 321,378 342,694 357,614 360,529 395,621 424,330 405,899 434,286 449,752 485,047 509,538 558,29 at Constant Prices Annual average rate of increase 1960 - 1972 Total local revenues at current prices: 11 .2% Total revenues at current prices: -11.1% Total local revenues at constant prices: 5.0% Total revenues at constant prices: 4.9% 1/ Budget estimates. Source: BMD Annual Accounts Table 35. LOCAL REVENUE STRUCTURE AND TRENOS IN LOCAL REVENUES FERCENTAGE DISTRIBUTION - IWC 1/2 (1960 - 1971) 1960-61 1961-62 1962-63 1963-64 1964-65 1965-66 1966-67 1967-68 1968-69 1299-70 1970-71 1971-72 1972-73 T:x Revenues 37.86 38.21 37.72 37.13 37.38 43.51 47.22 45.15 44.41 45.57 45.47 66.96 49.36 Revenues from Rates 48.78 46.86 48.118 49.82 49.94 44.18 110.72 42.71 41.30 42.73 43.73 40.66 39.35 Revenues from Licenses 0.84 0.87 0.98 0.93 1.65 1.75 1.40 1.42 1.22 1.27 1.20 1.18 1.03 Revenues from Fees 2.95 2.47 2.39 2.33 2.31. 2.48 2.27 2.18 2.34 2.01 1.96 1.88 2.40 Revenues from Rents 3.08 2.90 2.65 2.51 2.58 2.69 2.49 1.79 1,140 1.69 1.54 2.97 2.01 Revenues from Interest 1.76 1.88 1.78 2.05 1.85 1.60 2.06 2.19 1.32 1.81 1.73 3.22 2.06 Others 4.74 6.82 6.00 5.23 4.30 . 3.79 3.85 4.55, 8.01 4.72 4.37 3.12 3.79 Total Local Revenues 100.00 100.00 100.00 0 100 0 00 100 100.00 100.00 100.00 100.00 1/ Based or Table V-1. ot~~~~~~ e ieur10.0100 Fures nmay not add up to 100.%0 due to rourding errärs. Soo'e Table 34 ! gie mu no ade up to 100 ico« 1 10oo oo ,0o 100*0 10 looC,0 00' Table 36: REVEY4UE STRUCTURE AND TRENDS IN REVENUES WHEN BEST ACCOUNTS ARE EXCLUDED (1960 - 1972) (In thousand rupees) 1/ 104 1961-2 192-(,3 19A3-Ah 1964-65 1265-M 1966-67 1967-6 8 1969-7 1970-71 1971-72 1 -3 Tax Revenues Property Taxes 92,558 108,818 1114,303 126,977 133,287 140,970 157,030 166,886 196,1143 201,202 215,6514 237,092 299,966 Octroi 12,323 13,39 14,A69 13,710 15,34 66,950 105,761 95,575 100,46 1214,028 150,198 178,610 203,205 Wheel Tax 6,1,56 - 5,57 6,615 7,810 9,061 9,217 9,110 9,719 10,809 10,620 11,808 12,419 20,130 Other Taxes i4,669 4,278 5,733 6,261 6,659 8,654 10,176 10,109 11,375 13,208 13,8h2 16,314 16,244 , TOTAL TAX REVENUES 116,006 126,992 141,120 1514,759 1614,1439 225,592 281,828 2814,289 318,773 349,058 391,802 414,63 539,545 Revenue.from 33,747 36,629 46,931 52,370 50,545 5b,484 53,637 55,2214 57,631 60,853 75,207 66,558 79,848 Rjates2/ Revenues from 2,566 2,879- 3,656 3,885 7,252 9,089 8,365 8,970 8,722 9,798 10,324 11,163 11,215 Licenses Revenues from 9,033 8,207 8,943 9,705 10,149 12,838 13,534 13,737 16,791 15,408 16,897 17,804 26,233 Fees Revenues fra 8,982 9,096 9,317 9,7142 10,498 13,087 13,727 13,558 15,113 16,678 17,3814 19,532 18,850 Rents Revenues £'an ,397 5,1166 5,429 7,377 7,187 7,666 8,960 9,823 8,435 11,248 11,495 26,270 19,992 Interests Miscellaneous 9,827 13,620 16,201 14,011 15,321, 10,789 13,826 1L,318 141,156 214,590 24,375 25,012 33,698 TOTAL Local Revenues 184,558 202,569 231,593 251,849 265,391 1333,323 393,877 399,919 466,621 1487,584 5147,4814 610,974 729,381. Grants 7,4149 8,972 9,672 8,707 14,313 7,661 9,893 11,632 11,480 12,035 11,1486 11,036 12,368 TOTAL REVENUES 192,00? 210,8141 2'e1,265 260,556 279,7014 3140,9814 1403,770 1411,511 1478,101 1499,619 5568,970 622,101 741,7149 Total Local 18L,558 191,103 206,780 211,638 210,628 250,619 295,439 253,113 281,097 281,8141 3014,158 32h,986 368,371 Revenues ai, Constant Prices Total Revenues 192,007 19P,907 215,1415 218,955 221,987 256,379 282,357 260,1475 288,013 288,797 310,539 330,856 376,621 at. Constant Prices Average annual rate of growth 1960 - 1972 Total local revenues at curren' prices: 12.1% Total revenues at current prices: 11.9% Total local revenues at constant prices: 5.9% Total revenues at constant prices: 5.B% , /Budget estimates Source: B1O Annual Accounts * 2/ Water rates , . , hV Table 37: LOCAL REVENUE STRUCTURE Å.ND TRENDS IN LOCAL REVEUES WHEN BEST'S ACCOUNTS ARE EXOLuDED (Percentage Distribution - IM) (1960-1973) 1960-61 1961-62 1962-63 1963-64 1964-65 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 1972-73 Tax Revenues -- Property Taxep 50.15 51.25 149.36, 50.42 50.22 42.29 39.87 41.73 42.03 141.27 39.39 38.81 41.13 -- Octroi 6.68 6.63 6.25 5.44 5.82 20.09 26.85 23.90 21.53 25.44 27.49 29.27 27.86 -- iheel Tax 3.50 2.69 2.86 3.10 3.41 2.77 2.31 2.143 2,,32 2.18 2.16 2.03 2.76 .- Other Taxes 2.53 2.11 2.143 2.49 2.51 2.54 2.58 2.53 2.44 2.71 2.53 2.67 2.23 Total Tax Revenues 62.86 62.69 60.93 61.45 61.96 67.68 71.55 71.09 68.32 71.59 71.56 72.77 73.97 Revenueýs from Rates 18.29 18.08 20.26 20.79' 19.05 16.35 13.62 13.81 12.35 12.48 14.74 10.89 10.95 Revenues from Licenses 1.39 1.142 158 1.54 2.73 2.75 2.12 2.24 1.87 2.00 1.89 3.83 1.54 Revenues from Fees 4.89 4.05 3.86 3.85 3.82 3.85 3.44 3.43 3.60 3.16 3.09 2.91 3.60 Revenues from Rents 4.87 4.49 4.02 3.87 3.96 3.93 3.49 3.39 3.24 3.42 3.18 3.20 2.58 Rever.ues from Interest 2.38 2.54 2.34 2.93 2.71 2.23 2.27 2.46 1.81 2.31 210 4.30 2.74 Others 5.32 6.72 7.00 5.56 5.77 3.24 3.51 3.58 8.82 5.04 4.45 4.01 4.62 Total Local Revenues 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Source: Tablo 36 lr - 118 - Tables 38 and 39 give the municipal revenues on a per capita basis, with and without the inclu.ion of the BEST accounts respectively. Total municipal revenues increased at an annual compounded rate of 7.1 percent and tax revenues at 9.6 percent per year from 1960-1973. When adjusted for price increases, the annual rate of increase of local revenues per capita is relatively low. The revenue tables show that the tax system of the Municipal Corporation is based on two major taxes: the property taxes and octroi duties, which accounted for between 90 and 93 percent of total tax revenues over the period 1960-1972. Until 1965-66, the property taxes had heavily daninated the tax system with a relatiIe share of total tax revenues usually above 80 percent (Tables 40 and_hl). Since then, the relative share held by the receipts from octroi duties has been increasing from 7 percent in 1960/61 to nearly 30 percent in 1971-72, while the property tax share has decreased. As a result of these changes, the present tax system shows a somewhat more balanced picture based on these two taxes. All other local taxes together account for only about 7 percent of tax receipts. While per capita tax revenues grew at a rate of 9.7 percent over the same period, the price level increased by 5.9 percent. Thus real per capita tax revenues grew at a rate of 3.8 percent over the period (Table 42). Table 38i MUNICIPAL REVEIS PER CAPITA - BMC (1960 - 1972) (In rupees) Est.i/ 1950-61 961-62 1962-63 163-6h 196h-65 W 66 1966-67 1967-68 1968l6- 1969-70 1970-71 19 71-72 1972-7 Tax Revenues 29.01 30.59 32.78 31.66 35.51 h6.95 56.60 55.06 59. 53 62.86 68.00 74.47 87.114 Revenues from Rates 37.38 37.51 142.13 1#6.51 47.45 47.71 h8.81 52.08 55.37 59.22 65.39 64.49 69.47 Revenues frcma Licenses 0.64 0.69 0.85 0.87 1.57 1.89 1.68 1.74 1.63 1.76 1.79 1.87 1.81 Revenues from Fees 2.26 1.98 2.07 2.17 2.19 2.67 2.72 2.66 3.14 2.77 2.93 2.98 4.24- Revenues from Rents - 2.36 2.32 2.31 2.35 2.14 2.91 2.98 2.19 1.87 2.34 2.31 4.72 3.55 Revenues from Interests 1.35 1.51 1.55 1.91 1.76 1.73 2.47 2.68 1.77 2.50 2.58 5.11 3.63 Others 3.63 5.146 5.21 4.88 4.08 h.09 4.61 5.55 10.73 6.51 6.54 4.28 6.69 TOTAL Local Revenues 76.6h 80.05 86.90 93.36 95.02 107.99 119.88 121.95 134.oA 137.96 19.5h 158.59 176.54 Grants 1.86 1.99 2.25 1.95 3.09 ' 1.60 1.99 2.25 2.14 2.17 1.99 1.85 2.00 TOTAL REVEIES 78.50 82.05 89.1h 95.31 98.11 109.59 121.87 121s.21 136.19 140.13 151.54 160.1sh 178.54 Total Local 76.64 75.52 77.59 78.45 75.1 81.21 83.83 77.18 80.75 79.75 83.08 84.36 89.16 Revenue per Capita at Constant Prices Total Revenues 78.50 77.41 79.59 80.18 77.87 82.40 85.2 78.61 82.04 81.00 84.19 85.34 90.17 per Capita at Constant Prices Average annual rates of increase 1960 - 1972 Total local revenues per capita at current prices: 7.2% Total local revenues per capita at constant prices: 1.3% Total revenues per capita at current prices: :7.1% Total revenues per capita At constant prices: 1.2% 1/ Budget Estimates Sources Table 3h hV Table 39: MUNICIPAL REVENUES PER CAPITA V'HEN BESTACCOUNTS ARE E(GLUDED (1960 - 1972) (In rupees) 1960-61 1961-62 1962-63 1963-611 196h-65 1965-66 1966-67 1967-68 196-691 969-70 1970-.71 1971-72 1972-73 Tax Revenues Property Taxes 23.15 25.00 2A.55 28.1th 28.79 29.34 31.5h 32.32 36.63 36.24 37.43 39.71 48.44 Octroi 3.08 3.24 3.36 3.07 3.33 13.93 21.214 18.51 18.76 22.34 26.12 29.95 32.82 Wheel Tax 1.61 1.31 1.54 175 1.96 1.92 1.83 1.88 2.02 1.91 2.05 2.08 3.25 outer Taxes 1.17 1.03 1.33 1.40 1."6 1.76 2.04 1.96 2.12 2.38 2.40 2.73 2.62 [TOTAL TAI I REVENUES 29.01 30.59 32.78 34.66 35.51 h6.95 56.60 55.C6 -9.53 62.86 68.00 74.47 87.14 Revenues from 8.44 8.82 10.90 11.73 10.92 11.3h 10.77 10.70 10.76 10.96 13.05 11.15 12.89 Rites Revenues fran 0.64 0.69 0.85 0.87 1.57 1.89 1.68 1.74 1.63 1.76 1.79 1.87 1.81 Licenses Revenues from 2.26 1.98 2,08 2.17 2.,19 2.67 2.72 2.66 3.14 2.77 2.93 2.98 4.2 Fees Revenues fran 2.25 2.19 2.16 2.18 2.27 2.72 2.76 2.63 2.82 3.00 3.02 3.27 3.01 1Rents Revenues from 1.10 1.24 1.26 1.65 1.55 1. 1.55 1.80 1.90 1.58 2.03 2.00 4.40 3.23 Inturests -Others 2.46 3.28 3.76 3.11 3.31 2.25 2.78 2.77 7.69 4.43 4.23 4.19 5.44 TOTAL LOCAL REVEUES L6.16 h8.79 53.79 56.41 57.32 69.38 79.10 77.5 87.15 87.81 95.02 102.33 117.80 Grants 1.86 1.99 2.25 1.95 3.09 1.60 1.93 2.25 2.114 2.17. 1.99 1.85 1.99 TOTAL REVENUES h8.02 50.78 56.03 58.36 60.41 71.02 81.09 79.71 89.29 89.98 97.02 104.18 119.80 Local Revenues at Constant Prices 16.16 46.03 18.03 47.140 h5.49 52.17 55.31 49.02 52.50 50.76 52.79 54.43 59-49 Total Revenues at Constant Prices 18.02 47.91 50.03 9.04 47.94 53.40 56.71 50.45 53.79 52.01 53.90 55.141 60.5 Average annual rate of increase 1960 - 1972 0 Local revenues at current prices: 8.1% Total revenues at current prices: 7.9% Source: Table 36 Loca3 revenues at constant prices: 2.2% Total revenues at constant prices: 2.0% #C Table ho: Tax Bevenues - B4C - 1960-1972 CRa '00) 960-61 1961-62 1962-63 193-64 1964-65 195-66 1966-67 197-68 1968-69 1969-70 1970-71 1971-72 1972-7 Property Taxes 92,558 103,818 114,303 126,977 133,287 140,970 157,030 166,886 196,143 201,202 215,654 237,092 299,966 General tax . 66,656 68,490 72,850 90,532 97,374 104,039 117,992 126,048 118,918 151,267 164,435 180,854,, 224,262 Fire Tax 2,498 2,658 2,775 2,970 3,173 3,1438 3,863 11,075 4,907 4,907 5,310 5,926 6,600 Water Tax 6,886 7,119 7,090 7,052 7,391 7,892 8,148 8,687 8,685 8,929 9,038 ' 9,060 15,000 Halalkhore Tax 11,532 11,5514 11,606 12,978 13,813 15,201 16,441 18,087 19,240 20,881 23,531 25,149 35,000 EducatIon Cess . 4,672 4,707 5,672 8,537 8,855 9,823 10,337 9,445 14,250 15,128 14,306 16,070 19,030 heceipts from Gov't. on account of Urban Immovable•Property Tax 314 9,290 14,400 4,909 2,680 577 250 497 143 90 34 33 74 Octroi 12,323?j 13,4392J 14,469j 13,710 15,434! 66,950 1p5,761 97,575 100,446 124,028 150,498 178,810 203,205 Theater Tax 867 934 940 964 971 1,014 1,041k 1,038 1,073 1,154 1,274 1,310 1,355 Tax on Dogs 55 58 55 57 67. 71 72 70 73 75 76 79 114 wheel Tax 6,456 5,457 6,615 7,810 9,061 9,217 9,110 9,719 10,809 10,620 11,808 12419 20,130 3/ Others- 3,747 3,286 4,738 5,2o40 5,621 7,369 9,060 9,001 10,229 11,979 12,492 14,925 1,775 TOTAL 116,006 126,992 141,120 154,759 164439 225,592 281,828 284,289 318,773 349,058 391,802 4U4,635 539,5145 1/ Eu:dget estimates. 2/ Tow,n duties. 3/ Water tax capourded rate and halalkhore special service. Source: BIE Annual Accounts be Table hl: TAX REVENUES AND TREND IN TAX REVMWES - PERGE1TA0E DISTRIBUTION -B 1960 - 1972 1960-61 1961-62 1962-63 1963-64 1964-65 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 1972-73 Property taxes 79.79 81.75 81.00 82.05 81.06 62.49 55.72 58.70 61.53 57.64 55.04 53.32 55.59 General tax 57.46 53.93 51.62 58.50 59.22 46.12 41.87 44.34 46.71 43.33 41.96 40.67 41.56 ire tax 2.15 2.09 1.97 1.32 1.93 1.52 1.37 1.43 1.53 1.40 1.35 1.33 1.22 Water tax (rateable value) 5.94 5.61 4.96 4.46 14.49 3.50 2.89 3.06 2.72 2.55 2.30 2.03 1.78 fltaikhore tax 9.94 9.10 8.22 8.39 8.40 6.74 5.83 6.36 6.03 5.98 6.00 5.65 6.48 Education Cess 4.03 3.71 4.02 5.52 5.38 4.35 3.67 3.32 4.47 4.33 3.65 3.61 3.52 Receipts from Gov't. on account of urban immoveable property tax 0.27 7.32 10.20 3.17 1.63 0.26 0.09 0.17 0.04 0.02 0.0 0.00 0.01 Octroi 10.62 10.58 10.25 8.86 9.39 29.68 37.53 34.32 31.51 35.53 38.41 . 40.21 37.66 Theater tax 0.75 0.74 0.67 0.62 0.59 0.45 0.37 0.37 0.33 0.33 0.32 0.29 0.25 T22 ou dogs 0.05 0.05 0.04 0.04 0.03 0.03 0.02 0.02 0.02 0.01 0.01 0.02 lqh.eel tax 5.57 4.30 4.69 5.05 5.51 4.09 3.23 3.42 3.39 3.04 3.01 2.79 3.73 IÖrhers 3.23 2.59 3.35 3.39 3.42 3.27 3.21 3.17 3.20 3.43 3.18 3.35 2.72 Total Tax Revenues 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 1/ Based on Table V-7. 2 0.00 = less than 0.01. Source: Table hO 1~1 Table 42: TAX REVENUS PEIR APITA - *10 (1960 - 1972) (In rupees) 1960-6i 1:,61-62 1962-63 1963-64 1964-65 1965-66 1966-6' 1967-68 l968-69 i969-7o 1970-71 171-72 972-73 Propercy Taxes 23.15 25.00 26.54 28.43 28.79 29.36 31.54 32.32 36.63 36.24 37.43 39.71 48.44 General tax 16.67 16.50 16.92 20.28 21.03 21.67 23.70 214.41 27.81 27.24 "28.37 30.29 36.22 Fire tax 0.62 0.64 0.64 0.67 0.69 0.72 0.78 0.79 0.92 0.88 0.92 0.99 1.07 Water tax (on rateab1e value) 1.72 1.71 1.63 1.58 1.60 1.64 1.64 1.68 1.62 1.61 1.57 1.52 2.42 ianhdmore tax 2.88 2.78 2.70 2.91 2.98 3.17 3.30 3.50 3.59 3.70 4.M8 4.21 5.65 du,caticn cesa 1.17 1.13 1.32 1.91 1.91 2.05 2.08 1.83 2.66 2.72 2.48 2.69 3.07 Receipts from Gov' t. on account of urban imoveable property tax 0.08 2.24 3.34 1.10 0.58 0.12 0.05 0.10 0.03 0.02 0.01 0.01 0.01 Octroi 3,08 3.24 3.36 3.07 3.33 13.94 21.24 18.90 18.75 22.33 26.12 29.94 32.82 heater tax 0.22 0.22 0.22 0.22 0.22 0.21 0.21 0.21 0.20 0.21 0.22 0.22 0.22 Tax or. dog. 0.01 ,0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 M02 Wheel tax 1.61 1.31 1.54 1.75 1.96 1.92 1.83 1.88 2.02 1.91 2.05 2.08 3.25 Cthers 0.94 0.79 1.10 1.17 1.21 1.53 1.82 1.714 1.91 2.16 2.17 2.50 2.39 Total tax revenues 29.01 30.59 32.78 34.66 35.51 46.98 56.60 55.06 59.62 63.02 68.47 74.81 87.63 Tax revenues per capita at 29.01 28.86 29.27 29.13 28.18 35.32 39.58 34.e5 35.92 36.43 38.04 39.79 44.26 constant prices Average annual rate of increase 1960 - 1972 Tax revenue per capita at current pricing: 9.7% Source: Table 34 Tax revenues per capita at constant pricing: 3.6% 1/ Budget estimates. et -124- VI.. PROPERTY TAXES A. Introduction Property taxes in Greater Bombay are of three kinds: (1) a tax on improved properties and on lands which are vacant but capable- of being built upn; (2) taxes on unearned increment in connection with town improvement (betterment) schemes, and (3) a stamp duty on transfer of property. The first two categories are of concern here since they are levied by the Municipal Corporation, while the stamp duty is a State Government tax. The .tax levied in connection with town planning schemes is dealt with separately below. Property taxes include both general taxes and service taxes. There is one general rate with a minor cemponeinA of service tax (fire tax) and three service taxes: Halalkhore tax, water charge, arnd education cess. The Goverment has introduced in this past decade a number of surcharges to the municipal rates for education and housing purposes. There are, in chronological order, the State Education Cess (1962), the Building Repair Cess (1969), and the Additional State Education Cess (1971). These taxes are collected along with, and assessed on the same basis,as the general tax. B. Property Tax Base The base of the property tax in Bombay is the "net rateable value", which is defined as the annual rent (gross rental value) for which a property might be reasoTa Y_ expected to let from year to year less a 1/ The first category of taxes is levied by all municipal councils, municipal corporations and Village Panchayats in the State of Maharashtra. The second category is levied only by those local authorities which undertake improvement schemes. A fourth category is a cess on lands which-is usually assessed on land revenue and is levied by Zilla Paris1rads and Village Panchayats. 125 10% statutory deduction and all "tenants" property taxes.I Gross rents to be adopted for assesmnent purposes should be an hypothetical rent which hypothetical tenant would be willing to pa and a rent which is pa7able fran year to year. More specifically, net rateable value is canputed in the following manmer: NRV .9RV- T where NRV = net rateable value RV = annual gross rental value T = tenant's taxes Property as defined here includes land and buildings. The term "building" refers to any.type of structure--house, outhouse, stable, shed, and hut-built of any material--whether of masonry, bricks, wood, mud, metal, or others. In practice, however, temporary structures with a life of less than six months, such as sheds and shelters constructed while building work is in progress, are not assessed. The term "land" includes land which is being built upon or covered with water, benefits to arise out of land, things attached to the earth and rights vested by legislative enactment over any street. Land which is vacant or stored up with material dr is.being built upon is treated as land for assessnent purposes. 1/ Section 154 of the BD Act. - 126 - The .concept of "gross rental value" which is adopted for assessment purposes requires explanation when applied to buildings. The part of rentals which.is. concerned .ith- buildings refers . to the value of the bare building and to the value contributed to the building by the presence of facilities conon to all tenants. For exanple, gross rents here include the part of the rentals accounted for -by lights in the passage, staircases, privies and washing places. Deductions are made from actual gross rentals when the rents charged by the landlords include charges for facilities which are provided to the tenants on an individual basis. When a property is let with furniture, a deduction to the extent of 10% of the cost of furniture is allowed from the total rent, When rents include charges cfor electric lights and deduction is claimed on that account, a deduction on the basis of the average for the whole year is allowed if bills for the whole year are produced; otherwise, the deduction is allowed at the rate of Rs 1.4 per light. The value of machinery is excluded fra the rateable value of industrial properties according to section 154(2) of the BM Act. However, this section has been interpreted to mean that the value of machinery cannot be included in the gross rental value when the premises are assessed on a capital value basis; but, in estimating the rent an hypothetical tenant would pay, the effect of the presence of machinery in enhancing the letting value of the premises is to be taktwi into account provided they are in the premises with the purpose of achieving the use intended for the premises. - 127 Tenants' taxes include balalkhore and water taxes (which are services rendered by the Municipal Corporation to tenants) and the State Education Cess and a portion of the Building RepaIrs Cess, both of which are surcharges to the municipal property taxes levied by the Government. Under the BMC Act, these taxes are paid by the landlords, which corresponds to the practice in Bombay of including service taxes in rents. No deduction for property tax liability is authorized when the tenant pays water charges. The statutory deduction of 10% is intended to represent the probable annual average cost of repairs,'insurance and other expenses necessary to maintain ' a property in a state which commands this rent. The term "other expenses" usually refers to a sinking fund that might be annually contributed to with a view of replacing the property at the end of its lifespan. The deduction is always allowed even when repairs are not realized and it is usually granted to all types of properties with few exceptions (Central Government projects and vacant lands). In practice, the concept of "hypothetcal" rent -as defined above is not applied as a result of a Rent Control Act in existence in Bambay.- This Act defines a "standard rent" as the rent which was paid as of September 1, 1940, or--in the case of properties built after 1940--the first letting rate thereafter. This "standard" rent is taken as the annual rateable value for assessment purposes. The standard rent is determined in relation to premises and not in relation to persons. The adoption of the standard 1/ Banbay Rent and Lodging House Rates (Control) Act of 1947. - 128 - rent as opposed to the hypothetical rent as the rateable value to be used for assessment purposes results from recent court decisions. Until 1962, it was held,by the Courts that the Rent Restriction Act may not be 1/ considered in arriving at the annual value of a property. This position 2/ was reversed in a Supreme Court decision in 1962 which held that there cannot be any increase in Municipal tax unless the Municipality increases the rate of the tax. On this basis, it has become a common argument that, while determining the annual letting value of any property, the restrictions placed by the Rent Control Act cannot be disregarded on the gounds that a Court has to determine the value of a property to the landlord and not to the tenant. It is further argued that if a landlord cannot recover anything in excess of a standard rent, then there is a limitation which acts on section 154 of the BMC Act. -This means that the benefits of the interpretation of the words reasonable and fair incorporated in this section should be considered 3/ in favor of the landlord. The Rent Control Act applies to all residential premises let for residence, education, business, trade or storage. Exemptions from the Control Act concern all Goverxment and Corporation owned premises. The Act, 1/ In angharam Jiwandas vs. Bombay Municipal Corporation (1951) Ban. 713; 1953 Ban. IR 145-55. 2/ In Corporation of Calcutta vs. Smt. Padma Devi and others AIR 1962 Sc. 151-155. 3/ From "A Study of the Adverse Effects of Rent Control Act on the Assessment of Properties in Bombay", the All Indian Institute of Local Self-Goverment. - 129 - - - ** however, applies to premises let to the Goverrment or the Corporation. It also applies to hotels and lodging houses. In these cases, a "fair rate" which is determined by a Controller appointed by the Government is to be charged for board, lodging or other service provided in a hotel or a lodging house. In 1973, the Act was extended to encompass premises given on a license basis. A specific clause was introduced in the Act in order to close a major loophole existing in the legislation. which allowed private developers to get around the problem of rent control by letting properties on a "leave and license basis". Under this system, the property is licensed to an individual, usually on a yearly basis, thereby allowing the landlord to raise the rent fra year to year. Finally, the implementation of the Rent Control Act rests with the Courts since no rent control board has ever been established. The tenant has the burden of the proof. C. Exemotions The system of exemptions frcm property taxes, including service * charges, has evolved progressively into a rather complex system. A summary on property tax liabilities by major types of property ownership is given in Table 43. 1. Exemption from the General Rate: The general principle governing exemptions is as follows: Table 43: Property Taxes Liabilities by Major Types of Ownership Municipal Properties State Government Central Government Budget A Other Non- Non- Bmbay Prop- Prop- Resi- Resi- Resi- Resi- Port Private erties erties dential dential dential dential Trust Property Taxes --General Tax and Fire Tax x 0 x x k 2 2 2 1/ -- Water taxes on property values (x)- x x - - - - -- Halalkhore Tax x x x x - - - -- Halalkhore Special Rate - - x x x x -- Municipal Education Cess x 0 x x 2 x x 2 --State Education Cess x 0 x x 0 0 0 x -- Building Cess X2/ 0 0 0 0 0 0 0 x - Subject to - - Not subject to 0 - Exempt f- Exempt with qualifications 1/ When no meter is installed 2/ Limited to City Limits Source: BMC Staff -131- There is a blanket exemption for buildings and lands, or parts thereof, exclusively occupied for public workshops or for-.dharitablP_--- purposes. Charitable purposes are defined as"relief to the poor, education, medical relief and the ad7ancement of any other object of geieral public utility." The exemption is not, however, extended to those in which any trade or business is carried on or in which rent is derived--reZardless of whether such rent is or is not applied to religious or charitable purposes. The portion of a building or land exempted from general tax is regarded as a separate property for purposes of taxation. There is an exemption for buildings and land used by the Goverment for public purposes or by the Corporation. Also exempt are buildings and lands belonging to diplomats or to a foreign state. Effectively, though not legally, buildings and lands valued Rs 5/- and under are not taxed because of collection difficulties. In addition to these exemptions, the BMC Act allows some concessions on the general rate charged to newly constructed small tenements. Under section 114A of the Act, concession of three tenths of the General Tax is admissable for a period of 10 years inthe case of buildings owned by the Cooperative Housing Society and used for residetial purposes. Similar doncessions are granted to the extent of two tenths of the General Tax in all other cases. This concession is granted providing that the building was completed, first let out, or occupied on or after April 1, 1956, and that it consists exclusively of tenements, 132 - Privately owned vacant land is subject to the general rate but 2/3 of this is rebated on grounds that no current annual rent receipts are accrue to the owner. Government owned vacant lands are exempt from the tax... The exemption of State Government properties is more nominal than real, since the Government pays the Corporation a contribution in lieu of the General Tax. The State Government pays a sum equivalent to 8/10th of the mount which would be payable by an ordinary owner on account of general tax. This principle is not applicable to the properties belonging to the Central Government. Due to the provision contained in section 15 of the Gover=ment of India Act of 1935 and the analogous provisions obtaining in Act 285 of the_Indian Constitution the Central Government properties, both residential and noh-residential, are divided 'nto 2 categories: (a) those built prior to April 1, 1937 and (b) those built after that date. In the first case, the Central Government pays a sum in lieu of general tax at 80% of the general tax payable by an ordinary taxpayer. In the second case, the properties are totally exempted but after several representations, the Central Government agreed in 1967 to pay service taxes in lieu of the general tax. . Tese '-s rvi tax rates depend upon the situation of Government properties, the extent of availability of civic services within the areas and self- sufficiency in all respects. The rates which have been determined by the Central Government are as follows: (1) For isolated properties where all services are available in the same manner as for private properties, the Government pays service charges equivalent to 75% of the property tax realized from private individuals. - 133 - (2) In the case of large and campact colonies which are self- sufficient with regard to services or where some of the senvices are being provided by the Government Departments themselves, the service charges are calculated as follows: (a) For colonies which do not (receive civic services within the areas and are self-sufficient on all respects, the payment is restricted to 33-1/3% of the normal rate of property tax applicable to private properties. (b) For colonies where only_a partial use of the service is made, serviccharges will be paid at 50% of the normal property tax rate. (c) For properties entirely serviced by the Municipality, service charges are 75% of the normal property tax ..... _ ,rate.- . Properties belonging to the Port of Bombay are liable to pay every year a sun in lieu of General Tax and equivalent to 95 percent of the amount which ordinarily would be payable. . . . - . . -- --- The exemptions applicable to municipal properties do not include the properties vested in the Corporation because separate provision have been made in the Municipal Act for taxation of the Bombay Imprqvement Trust and BEST properties. Specific arrangements are made in the matter of levy and adjustment of taxes for different classes of properties. Unlet goveregit- lands are assessed in the same way as other lands belonging to private individuals and let-out lands are assessed on the basis of rents realized. The rateable value is fixed once a year. Tenants of structures rented on Trust Lands of the BMC are directly liable for the payment of municipal taxes on the structures erected by them on Corporation land. BEST properties are required to pay municipal property taxes and are treated as privately-owned premises. Table 4h gives the number of properties totally exempted from the general rate. This table does not include municipal properties, goverxment-owned properties or properties owned by quasi-public institutions, since those properties are in practice subject to the payment of an amount in lieu of the property tax. Estimates of rateable value exempted from - the general rate were computed on the basis of the amount of tax exempted as reported in BMC documents. About 3% of the total number of properties registered on the Assessment Books are exempt and there is no significant difference in this percentage as between the City and the Suburbs nor has it changed significantly over time. However, the Core City has a markedly higher percentage of rateable value exempted than does the rest of Greater Bombay. Table L4: NMBER OF PROPERTIES EXEMPrED FROM GENERAL TAX, AMOUNT OF GENERAL TAX EXEMPTED AND ESTIMATES OF RATEABLE VALUE EEMPTED (1962 - 1971) 1962-63 1963-64 1964-65 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 City0 Number of Properties whero General Tax is Exempted 2,150 2,145 2,188 1,598 1,864 3,537 3,544 3,497 3,223 3,354 Exempted Properties as a % of All Properties 3.73 3.72 3.17 2.23 2.41 4.50 4.40 4.16 3.72 3.86 Amount of Tax Exempted (Rs '000) 5,249 6,958 7,167 8,119 8,461 8,880 9,088 9,601 11,435 12,917 Estimates of-Rateable Value Exempted (Rs '000) 21,208 28,113 28,958 32,804 34,186 35,879 36,719 38,792 46,202. 52,190 Exemptions as a . of Total Rateable Value (%) 6.47 8.22 8.06 8.85 8.79 8.68 8.51 . 8,39 9.39 9.95 Suburbs Number of Properties where General Tax is Exempted 1,202 1,427 2,285 2,274 2,390 2,423 2,205 1,861 1,910 1,962 Exempted Properties as a % of All Properties 2.29 2.55 3.65 3.44 3.41 3.26 3.04 2.47 2.45 2.44 Amount of Tax Exempted (Rs '000) 1,025 1,577 2,746 2,894 3,658 3,352 4,186 2,019 2,229 2,320 Estimates of Rateable Value Exempted (Rs '000) 4 141 6,372 11,095 11,693 14,780 13,543 16,913 8,158 9,006 9,374 Exemptions as a % of Total Rateable Value (5) ,.i 6.18 9.16 8.74 9.78 8.09 9.96 4.37 4.39 4.08 Extended Suburbs Number of Properties where General Tax is Exempted 344, 420 895 916 951 964 991 764 1,009 1,094 Exempted Properties as a % of All Properties 1.40 ' 1..9 3.12 3.05, 3.02 2.94 2.54 1.89 2.43 2.54 Amount of Tax Exempted (Rs '000) 103 181 233 522 550 559 561 1,610 1,794 2,053 Estimates of Rateable Value Exempted (Re '000) L16 73 941 2,109 2,222 2,259 2,267 6,505 7,248 8,295 Exemptions as a % of Total Rateable Value (%) 1.52 2.37 2.48 4.99 4.58 4.13 3.11 8.15 7.98 8.50 Greater Bombay Number of Properties where General Tax is Exempted 3,696 3,992 5,368 4,788 5,205 6,924 6,740 6,122 6,142 6,410 Exempted Properties as a % of All Properties 2.75 2.85 3.35 2.85 2.91 3.73 3.51 3.06 2.98 3.05 Amount of Tax Exempted (Rs '000) 6,377 8,716 10,146 11,535 12,699 12,791 13,835 13,230 15,458 17,290 Estimates of Rateable Value Exempted (Rs '000) 25,766 35,216 40,994 46 606 51 188 51 681 55 899 53 455 62 456 698 9 Exemptions as a % of Total Rateable Value (%) 5.77 7.40 7.91 .53 .70 .13 6.29 1.33 1.92 Source: Administration Reports of the Municipal Commisaioner for Greater Bombay. '%ji 1l36- 2. Exemptions from Municipal Service Taxes a. Water and -alalkhore Taxes are levied expressely to finance water and sewerage services. Where meters are provided, water charges are based on consumption. Properties without meters are charged a water tax based on property value--with the exception of suburban properties where a water tax on property values is not levied at all. On the other hand, some properties are charged twice. Hutments that, typically receive water service through standpipes are charged both the water reate and a standpipe charge. The criteria for water rate liability is not that every property should have a water connection or a privy, but whether water supply is available, whether sewerage services can be rendered by the municipality. Municipal properties are charged water and halalhore taxes; this rule is based on the argument that the Municipal Commissioner has no power to exempt Corporation properties from "service" taxes. These taxes are levied on property value even though the properties are metered and even on those properties located in the suburban areas. Properties which belong to the BEST and the former Bombay Improvement Trust are treated as private properties' by special provisions made in the Act. All Central Government properties, incldding residential buildings, most State Government properties and properties belonging to the Bombay -137- Port Trust are charged Halahkhore tax at a special rate approved by the Standing Co=mittee. The rate is fixed by the agency with reference to the cost or estimated cost of collection, removal and disposal of excrementations and polluted matter from the premises. It is based on the quantity, according to basket loads with the unit being five ba&ket loads per day. One half of the monthly pay of the Halahkhore is taken as the cost of collection and the other half as the cost of removal. -The cost of disposal varies with the expense for "traction". The present rate of Halahkhore tax is Rs 81.00 per month for the collection, removal and disposal including supervision charges of 5 basket loads (i.e., 21-5 lbs.) per day, based on a charge.per month of approximately p75 for an adult and p38 for a child. Residential buildings owned Jy the State Government are -treated on the same basis as properties owned by private individuals. 3. Exemptions from the Municial Education Cess Y Properties valued less than Rs 75 are not subject to the Cess. In addition, all lands and buildings vested in Central Government and all other buildings and lands which axe exempted from the General Tax, are exempted from this tax. State Gvernment properties used for administrative purposes are liable to pay a sium 1.r. lieu of the Education Cess equivalent to 80 percent of the Cess paid by private parties. 4. Exemptians from Government Servioe Taxes As a general rule, the exemptions from the State Education Cess are the same as those from the General Property tate. Only privately owned properties located in the City are liable to the payment of this Cess. Among them, newly constructed buildings are exempted under certain conditions. 1/ See Section 195 (E)(1)(a) of the BC Act. - 138 - D. Percentage Rate Structure The rates at which property taxes are levied are dete,mined every year by the Corporation at the time of preparing the annual budget. The BM4C Act, however, stipulates minimum and/or maximum rates and the Corporation may fix any rate within the prescribed limits. The Act does not determine any range for the water tax and the rate is the one which is deemed "reasonable". Table 45 indicates the statutory limits of rates for each component of the property tax, as well as the current rate of these taxes. The rate of the general propert,y tax varies to sane degree between the geographical subdivisions of Greater Bombay. Lower rates are appliedin sane villages which were merged into the Corporation during the last territorial extensions of the BM (see Table 46). Property tax rates have not changed frequently over the last decade The last increase in the General Rate, from 19.75 percent to. the current 24 percent, was in 1963. The water tax was increased from the 1963 rate of 4-1/2 percent to 7 percent as of April 1, 1973; the Halalkhore rate was raised from 3 percent to 3-1/2 percent in 1959, and has since remained at the same level. Water and halkhore tax rates were expected to be raised between 197j and 1975. 1/ Rates of taxation fran 1936-37 onwards for Babay City: (1) General Tax including fire tax 1936-1945 11-1/2% of rateable value 1945-1946 12-1/2% 1947-1952 14-3/4% 1952-1958 17-3/4 1959-1963 19-3/4% 1963 onward 24-3/4% (2) Water Tax 1936-1963 3-3/4% 1963-1973 4-1/2% (3) Halalkhore Rate 1936-1959 3 % 1959 onward 3-1/2% - 139 - Table 45$ Property Tax Rates as a Percentage on Rateable Value Taxes Statutory Current Limits Rate General Taxl/ min. 8%; max 26 24% Fire Tax min. 1/8%; max 3/4 3/14 Halahkhore max 5% 4.5% min 72 annas/year Water Tax 7% Education Cess- -- properties valued. Rs75 - Rs299 ) max 5 2% -- properties valued Rs300 and above ) 2 2/ State Education Cess2 --properties valued Rs7 - Rs299 2% --properties valued Rs300 and above Additional State Education Cess2/ --properties valued i7-Rs299/ 1% --properties valued Rs300/ and above -I1 . Building Repair Cessl/ 2%, 20%, 15% 1/ The rates above refer to the most common rate applied in Greater Bombay. However some areas located in the Extended Suburbs are still subject to lower rates due to necessary adjustments after their integration into the Corporation in 1957 2/ Levied on the aggregate value of properties belonging to the sane owner and falling in the same locality. 3/ By category of property based on their date of construction. Source: BM Staff - 140 - Table 6 GEAIL PROPERTY TAX RATES City & Suburbs remained constant throughout the periods 24 3/4%. Extended Suburbs changed in the following instances: Former Municipalities: 71-72 67-68 66-67 64-65 63-64 Malad 24 3/4% 24 3/4% 24 3/4% 24 1/4% 22 1/4% Kandiv1i 24 3/4% 24 3/4% 24 3/4% 24 1/4% 22 1/4% Boriv1i 24 3/4% 24 3/4% 24 3/4% 24 3/4% 22 3/4% Mulund 24 3/4a 24 3/4% 24 3/4% 24 3/4% 24 3/4% Villages of: Valnai 24 3/4% 23 1/4% 21 1/4% 19 1/4% 17 1/4% Dahanukar Wadi 24 3/4% 23 1/4% 21 1/4%.* -19 1/4% 17 1/4% Panchayat of 22 3/4% 20 3/4% 18 3/4% 16 3/4% 14 3/4% Goregaon Dahisar 20 3/4% 18 3/4% 16 3/4% 14 3/4% 12 5/4% Villages in respect of 18 3/4% non-Industrial properties Villages in respect of 24 3/4% 24 3/4% 22 3/4% 20 3/4% 18 3/4% properties occupied for industrial purposes Villages in respect of - 16 3/4% 14 3/4% 12 3/4 10 3/4% other properties in the villages which had no local bodies prior to their merger with BMC Source: BM Staff - 111 - The data in Tables 47 and 14 indicate that the total municipal nominal rate varies with rateable values from 35.25 percent to 41.5 percent. The Building Repair Cess levied on most private residential properties in Bombay City should also be added to these rates. Since this cess is levied on permanent structures whose rateable values can be reasonably assumed to be over Rs 75, it can be seen that certain properties are taxed at a rate of between 55.25 percent and-66.25 percent of their rateable value. E. Growth in Assessed Value Rateable value increased at an average annual rate of 7.3 percent during the 1960-1972 period; but when measured in terms of constant prices, the rate of increase has been at the low rate of 1.3 percent. As a result, real rateable value has not kept pace with population growth. In real terms, it declined from Rs 101 per capita in 1960-1961 to Rs. 77 in 1972-1973 (Table 49). There are, moreover, intraregional disparities in the rate growth. For example, rateable value(in current prices) of properties located in the city increased by 5.2 percent against 10.9 percent and 14.1 percent for suburbs and extended suburbs, respectively. (Table 49). The City's percentage of total assessed properties has declined over this period while its proportion of exempted properties has risen to a current level of over 52 percent. The number of newly assessed properties in Greater Bombay has declined , but the suburban areas' percentage exceeds z-by far--the city's share with 70.5t percent as compared to 29.5 percent Table 47: Effective Rates of the Property Taxes Rateable All Water Tax Value Property General (Rateable Halalkhore Educ atior Rs '000 Taxesl/ Tax2/ Value Tax Cess 1962-63 46,190 25,62 16.95 1.57 2.60 1.27 1963-64 475,841 26.68 19.65 1.48 2.73 1.79 1964-65 517,933 25.73 19.41 1.42 2.67 1.71 1965-66 546,158 25.81 19.68 1.44 2.78 1.80 1966-67 588,065 26.70 20.72 1.39 2.80 1.76 1967-68 635,092 26.28 20.49 1.37 2.85 1.49 1968-69 673,773 29.11 22.83 1.29 2.86 2.11 1969-70 728,290 27.63 21.45 1.23 2.87 2.08 1970-71 787,598 27.38 21.43 1.1h 2.99 1.81 1971-72 851,246 27.85 21.94 1.06 2.95 1.89 1972-73 937,602 31.99 2h.62 1.60 3.73 2.03 1/ Include also Urban Immovable Property Tax. 2/ Includes Fire Tax. 3/ Based on Budget Estimates. Source: Tables 34 and 49 _ 143 - Table h81: PROPERTY RATES BY VALUATION VALUE Type of Levy Rateable Value (in Rupees). Under 75 75-299 Over 299 General Rate (includes Fire tax) 24-75 24-75 24-75 Water Taxi/ 7.00 7.00 7.00 Halalkhore 3.50 3.50 3.50 Municipal Education Cess 2.00 2.50 Total BMC Rate. 3.25 37.25 37.75 State Education Cess - 2.00 2.50 Additional State Education Cess - 1.00 1.25 Municipal Rate and State 35.25 40.2 41.50 Education Cesses Building Repair CesS2/ 10.00 10.00 10.00 Municipal and State Rates 45.25 50.25 51-50 1/ Wter tax on rateable value, 2/ On residential, let out and privately-owned properties located in the City. Source: BMD Staff Table 49 RATEABLE VALUE FOR GREATER BOMBAY 1960 - 1972 (In thousand'rupees) Rate able Value Rateable Rateable per Value Value Capita at per at Extended Greater Constant Capita Constant City Suburbs Suburbs Bombay Prices (Rs) Prices(Rs) 1960-61 306,100 15,300 23,000 404,400 404,400 101.14 101.14 1961-62 316,300 81,800 24,700 422,800 398,868 101.83 96.06 1962-63 327,800 912,001 27,200 446,200 398,393 103.63 92.52 1963-64 341,965 103,093 30,783 475,841 399,866 106.7 89.55 1964-65 358,981 121,089 37,863 517,933 411,058 111.86 88.77 1965-66 370,275 133,618 42,235 546,158 410,645 113.75 85.52 1966-67 388,593 151,011 48,461 588,065 411,234 118.11 82.59 1967-68 413,228 167,254 54,610 635,092 401,957 123.00 77.84 1968-69 431 169,641 72,667 673,773 405,887 125.83 76.80 1969-70 462,012 186,545 79,733 728,290 420,977 131.16 75.81 1970-71 491,868 204,947 90,783 787,598 437,554 136.70 75.94 1971-72 524,139 229,535 979572 851,245 462,790 142.57 75.83 1972-73 565,918 260,798 111,604 938,320 473,899 151.55 76564 Average annual rate of growth 5.2% 10.9% 14.1% 7.3% 1.3% 3.4% - 2.4% :Sources: IBRD Report on Bombay "Public Finance and the Efficiency of Urban Development" 1971 for the years 1960 to 1962. Administration Reports of the Municipal Ccmmissioner for Greater Bombay. 145h - ,fCor the City. The number of properties enlarged has fluctuated over this period and the share of enlargements in the City area has increased--although. of all properties enlarged, less than 25 percent are in the City area. Finally, of all properties demolished -nearly one half have been in the city area, though this proportion is declining. Due to varying rates of increase in rateable value,.,# ratio between the per property value in the extended suburbs and the City has increased from 19.5 percent im 1960-61 to about 39 percent in 1971-72. Rateable value per property assessed, is approxi.mately Rs 4,00 as compared to Rs 3,1400 in 1960 (Table 50). When adjustment for price increase is made, this value actually declined over this period for Greater Bombay. However., suburban properties have remained approximately constant, while properties located in the far out suburbs have appreciated. Here again, the data show a markedl.y greater per unit rateable value in the city area than in either suburban area. Little information is available on the components of the rateable value by category or by property use-.In 1971-72, properties used for residential' purposes represented abou'76 percent of all properties in Greater Bombay and 59.5 percent of all rateable value (Table 5l). Again, geographical location is important. The suburban areas tend to have a higher proportion of residential properties than the city area and, in terms of assessed value, residential properties represent about 75 percent and 72 percent in the suburbs and extended suburbs respectively of all rateable valu,e versus approximately 52 percent in the city area. - i146 - Table 50: Rateble Value Per Property Assessed - BMC (R '000) Ratio Assumed Value Extended Greater Extended Suburbs City Suburbs Suburbs- Bambay City 1963-64 5,934 1,840 1,162 3,395 19.8 1965-66 9,1 97 1,932 1,318 3,228 25.36 1965 66 5,168 2,023 1,407 3,256 27.22 1966-67 5,106 2,155 1,54o 3,285 30.16 1967-68 5,255 2,248 1,667 3-1418 31.72 1968-69 5,356 2,341 1,861 3,508 34.714 1969-70 5,494 2,476 1,971 3,64 35.87 1970-71 5,683 2,626 2,182 3,820 38.39 1971-72 6,038 - 2,859 2,266 4,051 37.52 1972-73 - 6,h60 3,161 2,S21 4,377 39.02 Average annual rate of growth 1.0% 6.2% 9.0% 2.9% Average annual rate of growth of rateable value at constant - 4.3% 0.4% 3.0% - 2.9% prices (Base=1960=100) 3 Souc: Tables 44 and 49 Table 51: Number of Properties and Rateable Value City Suburbs Extended Suburbs Greater Banbay 1966-671/ 1971-72 1966-671/ 1971-72 1966-671/ 1971-72/ 1966-671/ 1971-72/ Number of Properties -- Residential 57,697 68,327 57,500 62,804 25,965 33,865 141,162'. 158,996 -- Non-Residential 19,772 24,474 12,565 17,470 5,494 9,186 37,831 51,130 % Residential 74.47 71.80 82.06 78.23 82.53 78.66 78.86 75.66 Rateable Value (Rs 'OO) Residential 190,791 275,161 107,363 170,80 26,266 60,782 324,420 506,423 -- Non Residential 197,802 248,978 43,668 59,05 22,195 36,790 263,645 344,823 % Residential 49.09 52.49 71.09 74.27 54.20 62.29 5.16 59.49 Rateable Value per Property (Rs) -- Residential 3,307 4,415 1,867 2,716 1,011 1,795 2,298 3,189 -- Non-Residential 10,004 10,173 3,474 3,380 4,040 4,005 6,969 6,74 % of Residential of Non-Residential 33.05 43.39 53.74 80.29 25.02 4.81 32.97 h7.22 Sources: All India Self Government Report. Assessor and Collector. h*ra -2148- Table 52: VARIATION AMONG WARDS IN SELECTED PROPERTY TAX STATISTICS Lomest - .11ighest Ratio of Highest Value to Lowest Value Total number of properties 3,007 26,940 8.96 Rateable value 24,224 122,600 5.06 Rateable value per capita 87.18 621.92 7.16 Residential value 9,322 77,242 8.24 Residential value per capita 35.27 226.75 6.42 Rateable value per property 2,098 39,5488 18.85 Rateable value per 19.88 residential property 1,124 22,300 .o.30 Rateable value per non- 28.63 residential property 1,)409- 70,818 Rateable value per owner-oCCpied properties 7.78 222.78 Source: Same as Table 51 -l9- Table 53.: Percentage Distribution of Ntnber of Properties by Valuation Range 1971-72 1963-6h tended tended Ci Suburbs Suburbs Total city Suburbs Suburbs Total Below Rs 200 34.83 25.65 31.42 30.62 29.01 25.32 31.96 22.68 Between Rs 201-300 4.59 11.52 9.98 8.3h 3.68 12.10 12.69 9.59 301-400 4.38 8.35 8.00 6.64 4.29 9.61 11.39 8.20 401-500 4.40 7.85 6.26 6.10 3.75 8.05 6.80 6.40 501-750 6.08 8.15 8.63 7.ho 6.00 9.73 9.25 8.61 " 751-1000 .38 6.65 6.52 5.68 4.87 7.93 6.35 6.78 1,001-1,500 5.32 6.92 8.11 6.50 7.65 7.84 6.71 8.08 1,501-2,000 4.48 5.85 5.72 5.26 6.48 6.23 5.44 6.62 2,001-5,000 12.35 5.73 9.1h 9.16 15.03 8.h0 5.82 11.52 5,001-10,000 8.53 5.92 2.85 6.37 9.68 2.88 2.22 6.07 10,001-20,000 6.03 h.12 1.50 4.37 5.31 1.18 0.65 3.05 20,001-30,000 1.64 1.45 0.74 1.38 1.57 0.38 0.26 0.93 30,001-40.,000 0.90 0.88 0.43 0.80 0.74 0.13 0.13 -o.42 40,001-80,000 o.64 0.48 0.27 0.50 0.56 0.08 0.12 0.31 80,001-100,000 0.88 0.33 0.02 0.05 0.79 0.05 0.17 0.42 100,001 150,000 0.37 -0.07 o.c6 0.20 0.26 0.02 0.01 0.13 150,001-200,000 0.21 0.01 0.00 0.10 0.11 0.04 0.01 0.07 200,001-250,000 0.14 0.01 0.00 0.06 0.08 - - 0.03 250,001-300,000 0.12 0.01 0.00 0.05 Oh 0.00 - 0.02 300,001-350,000 0.09 0.00 0.00 o.Oh 0.02 0.00 - 0.01 350,001-Above 0.11 0.02 0.00 0.05 0.06 0.01 - 0.03 Source: Same as Table 51 - lo - The differential in rateable valae per property between residential and non-residential properties is much less pronounced in the suburbs than in the city area. In the suburbs, rateable value per residential property is about 80 percent of the rateable value of non-residential property, compared to only 43 percent in the city (Table 52). Ratetble value per residential property in all geographical areas has increased faster than the rateable value per parcel on-non-3,esidential property. The rateable value per non-residential property actually decreased between 1967 and 1971 for suburban properties, and has been nearly constant for urban properties. The increase in the base is therefore attributable to an increase in the rate able value of residential properties. Finally, the components of the city and suburban property tax base growth may be analyzed by examining time series dita on the number of properties located in different rateable value brackets (Table 53 and 54). Between 1963 and 1971, the City area showed the largest increase in the number of properties in th& lowest rateable value class (below Rs 500); large increases also occurred in the highest rateable value classes in the three geographic'1 divisions. However, on average, suburban areas record larger increases in - 191 - Table 5)4: SUMEARY TABLE. PERCENTAGE DIST4IBUTION OF PROPERTIES ASSESSED City Suburbs Hx-tended--- --- Suburbs T63-64 1977-72 1963-64 1971-72 1963-6j 1971-72 Below Rs 200 29.01 3h.72 25.32 25.65 31.96 31442 Rs 201-1,000 22.59 23.73 47.42 42.52 W-48 39.39 Rs 1,001-10,000 38.84 30.58 25.35 24.42 20.19 25.85 Above Rs 10,000 9.54 11.03 1.89 7.39 1.36 3.02 Source: Table 53 classes above Rs 750. In the middle range of rateable values, the city area is characterized by relatively low percentage increases, and in same cases, even by declines. As a result, the percentage distribution of the property assessed by valuation range shows for the city an increasing concentration of properties in the low valuation brackets over this period. In contrast, the ratios for the suburban properties have remained approximately constant. An interesting characteristic is the relatively light concentration ratio of suburban properties in higher valuation ranges, as compared to the city area properties. In 1971-72, 41.6 percent of city properties are in the Rs. 100 and ab-ove range as compared to approximately 32 percent and 29 percent for suburbs and extended sububs respectively. The growth in the property tax base of the city area appears to be largely attributable to the extreme rateable value classes. In the case of the suburbs, the source of increase in the property tax base is more evenly distributed among properties with differing' rateable values, in particular in the middle and high ranges. The description of the composition and growth of the base of the property tax indicates that the growth in rateable value is quite income-inelastic. This inelastic response is underlined by the Municipal Authorities' estimate that no more than 10 percent of the annual increase in rateable value is due to new construction. The number,of properties newly assessed or enlarged is about 5 percent of all properties assessed each year (Table 55). This inelasticity is rooted in the effects of rent control. Indeed, the slow rate of growth and the uneven distribution of the city rateable value can be largely explained by the fact that a larger number of properties have been in existence and therefore have been let for a longer period. In addition, few new buildings can be built due to an acute shortage of building sites in the central area and the sururban areas are characterized by a considerably higher rate of population growth. The effects of rent control on the assessem6nt of properties are the object of a recent study by the Indian Institute of Local Government. 1/ The results for the years 1940-41 and 1970-71,2/ show that the rental values of 1/ The All India Institute of Local Self-Government - Regional Center for Research and Training in Municipal Administration - "A Study of the Adverse Effects of Rent Control Act on the Assessment of Properties in Bombay." 2/ Properties occupied for four different purposes such as resi- dences, shops, offices and factories, situated in all nine wards of the city prcper and two wards from the suburbs were randomly selected. The properties were surveyed for the year 1940-41 which is the base year under the Rent Act for the purpose of determination of standard rents of properties exdsting since prior to that year and for the year 1970-71. So far as the suburbs are concerned, as the Inspection Registers for the year 1940-41 were not at hand, the base year for comparison is taken as the year 1960-61. s153 - 163 -- Table 55: Total Number-of Properties, Properties Newly Assessed and Property Enlarged Total Properties Property Properties Newly Assessed Enlarged Number % Number $ 1963-64 140,19 6,573 4.68 3,592 2.56 1964-65 160,457 9,270 5.77 4,232 2.63 1965-66 167,720 8,213 4.89 5,897 3.51 1966-67 178,993 7,479 4.17 6,0P5 3.38 1967-68 185,824 7,629 4.10. 4,973 2.67 1968-69 192,080 7,974 4.15 3,859 2.00 1969-70 199,859 6,411 3.20 2,98L 1.49 1970-71 206,195 5,011 2.43 4,073 1.97 1971-72 210,126 5,360 2.55 4,481 2.13 Source: Administration Report of the Municipal Commissioner for Greater Bombay residential properties in the City proper have increased by four times. Rents in 1940 variad between Rs 6 and Rs 12 per 10 square meters of area while they varied from Rs 27 to Rs 48 per 10 square meters in 1970., The. rental value of residential properties in the suburbs have increased fran Rs 11 to Rs 26 per 10 square meters, i.e. by about 136 percent. For cmmercial properties located in the city, the average rate is respectively Bs 85 per 10 square meters in 1970-71 against Rs 19 per.10 square meters in 1940-41, i.e., an increase of 350 percent. Similarly, a very sharp rise in rates can be noted in respect of properties used for office purposes where the current average rate is 11 times as high as the rate in existence in 190-41. The rental values of commercial properties and particularly of offices apparently reached very high values in the central area. There as instances of small spaces called table spaces (measuring about 3 to 4 square meters) ~with charges as high as Rs 200 ad above per month. There are also instances recordedin the Municipal Registers whereby office premises fetch Rs 200 and more for 10 square meters per month. These values are expectedly much lower for the suburban properties but the average rate of increase is very high. The increases for suburban commercial properties and offices are 213 percent and 260 percent respectively. Finally, industrial properties have increased in the city fran Rs 6 to Rs 34 per 10 square meters. Factories located in the suburbs have peculiar aspects as most of them are self-occupied and are let only in rare cases. Wherever, they are let, the considerations are not the rents pure and simply but they include charges for hire of machinery, furniture, know-how and other items extraneous to assessment and are of the nature of license fees. Furthermore, on account of enforcement of Development Rules, new industries are not allowed to locate in the city but are allowed in the suburbs. The average letting rate of Rs 6.00 (in the suburbs a in the city) has spiralled up to Rs 53 per 10 square meters in 1970 or 775 percent. The study also attempts to assess the additional rateable value which would be generated if the properties were assessed at market rentals.., The rates of increase which is adopted in the computation are.. regarded as being reasonable rates after making allowances for the irregularities in the observations. On the basis of these computations, the rateable value thus determined would be increased by 610 million Rs or by 277 percent. A further reason for the underassessment of properties is the fact that the capitalization rates which are used to assess State Govern- ment owned properties amount only 4 percent of the cost of land and 6 percent of the cost of construction. These rates have been in existence for a long time and are now out of line with recent interest rates. The Municipal Authorities are attempting to raise these rates to a level of 9 percent of the cost of lands and buildings taken jointly but no decision has yet been taken on that matter. F. Assessment Method 1. Residtntial Properties Residential properties can be grouped into four classes for purposes of describing assessment procedures: rent controlled, rented on a lease and license basis, hutments, and owner occupied. 156 - As previously stated, the Rent Control Act of 1947 established as a standard rent that which prevailed before 1940, or the first letting rate thereafter. The standard rent less a 10 percent statutory deduction and a deduction for tenant's taxes forms the basis of rateable value for rent-controlled properties. Of the 165,968 residential units in Bambay, approximately 30 percent are under the rent control (Table 56). The standard rent may be increased in a few cases, mainly when tenants' taxes are increased and when improvements or structural alterations ,other than' normal repairs are made. In addition, for -those'properties let before 1940, the rate of increase authorized is as follows: Rate of Increase Category of Properties As a of Standard Rent 1) Residential premises: rent does not Not exceeding 5' exceed Rs 20/month 2) Residential premises: rent between Not exceeding 7 Rs 20 and Rs 80/month 3) Residential premises: rent over Not exceeding 10% Rs 80/month 4) Non-residential premises: a. Rent does not exceed Rs 50/month Not exceeding 74 b. Rent is over Rs 50/month Not exceeding 12 5) Premises used for the purposes of a Not exceeding 50% movie theater Table 56: NUMBER OF PROPERTIES UNDER RENT CONTROL AND OTHER;,PROFERTIES BY WARD - GREATER BOMBAY Residential Property Non-Residential Properties Total % Total Rent Number of % % Rent % Owner % Rent % Controlled Ward Properties Total Hutnents Control Occupied Others Total Control Other Properties A 3,100 2,000 42.25 51.0 1.15 5.10 1,100 72.73 27.27 59.03 B 3,007 1,483 - 94.81 1.08 h.11 1,524 - -6.76 C 5,727 5,3 - 62.90 0.79 36.31 288 69.79 30.21 63.2k D 8,123 4,312 3.83 64.59 10.64 20.94 3,811 h6.13 53.87 5.93 E 7,497 6,181 4.01 33.21 0.95 61.82 1,316 9-.83 v.17 kk03 F/S 11,ho 10,207 63.68 9.37 0.76 26.19 1,233 - - 8.35 F/N 9,372 8,326 51.3 11.76 12.17 24.65 1,06 2.49 97.51 10.72 G/S 12,128 9,107 60.93 22.22 10.50 6.35 3,021 18.kh 81.56 21.28 G/N 15,892 14,h60 2$.40 43.20 1.33 30.16 1,432 26.89 73.11 W-73 H 17,730 15,841 17.83 27.35 17.5 37,28 1,889 25.20 74.80 27.12 K 26,9h0 23,025 36.62 25.38 10.02 27.99 3,915 54.00 46.00 29.9h P 17,200 11,412 19.39 32.77 33.10 14.74 5,758 17.80 82.20 27.76 R 13,350 12,455 21.13 NA 23.99 NA 895 - - NA L 10,668 8,640 21.9k 44.80 1.91 31.34 2,028 41.03 58.97 4.09 M 1I,105 13,58 2. NA 3.36 NA $I7 - - NA N 11,547 9,312 9.66 NA 10.95 NA 2,235 - - NA T 12,65 10,180 63.63 8.21 9.70 18.46 2,475 16.36 83.64 9.81 City 76,286 61,515 34.5 33.97 4.61 26.86 14,771 33.68 66.32 33.91 Suburbs 75,220 62,763 25.66 22.18 1/ 18.89 33.27 1/ 12,47 29.01 :70.99 23.31 1/ Extended 48,975 41,690 39.32 25.01 2/ 8.53 27.14 2/ 7,286 16.98 83.02 25.48 2/ Suburbs Total 200,181 165,968 32.39 30.26 3/ 11.00 26.35 2/ 34,513 28.47 71.53 30.56 3/ 1/ On the basis of 3 suburban wards. 2/ On the basis of 2 wards in the Extended Suburbs. 3/ Based on 14 wards. Source: Office of Assessor and Collector Residential properties which are given on license are assessed on the basis of the actual terms of the license. These licenses are cononly renewable every year and thus the assessment of these properties should occur every year. However, where the terms of the license are not deemed to reflect market rents, a comparative rent analysis is used to determine rateable value. In Ward A, for example, average rent on a license basis is presently about 40 Rs per 10m2 per month for the ground floor of a property with a reinforced concrete structure and a slab roof. The present levels df rateable value of these properties used for residential as well a4 non- residential purposes account for about .7% of total rateable valle and 4.6% of all properties assessed in Greater Bombay. Owner-occupied properties, in general, are assessed on a canparative basis. However, there is an arbitrary preferential assessment of 80 to 85 percent of rateable value. These properties are periodically reassessed. About 11 percent of the residential properties in the municipal are owner- occupied, representing about 26 percent of the rateable value of residential properties. Hutments are assessed between Rs 2.5 and Rs 7 per month per square meter., The physical condition of the hut explains this range_to a larger degree than the location itself. In Ward A, which is located in the City, hutments are usually assessed at Rs 5/10square meters/month or Rs 60/year/10 square meters. Hut- ments represent about 32 percent of all residential properties assessed. 159 A circular prepared by the Assessor and Collector in Novnber 1971 gave same benchmarks for the assessment of unauthorized structures put up by persons other than the owner of the land on private, municipal ad government lands. (1) Structures of heights of 6.5 ft. or less and in unsanitary condition should be assessed only at Rs. 5 per year (i.e., not taxed). (2) Structures temporary in nature, of bamboo matting, leaves, grass, old 0.1. sheets or wood and 6.5 ft. or less in height should be assessed also at Rs 5. (3) Structures having height exceeding 6.5 ft. with a roof and walls of old C.I. sheets or A.C. sheets may be assessed on the basis of Rs 2 per month as estimated rent. (4) Structures having a roof either of tiles, C.I. sheets or A.C. sheets and brick walls may be assessed on the basis of Rs 3 per month as estimated rent. Government properties are not subject to the Rent Control Act. State Government owned residential properties,with the exception of Central Government owned properties,are assessed on the basis of the lease negotiated between the landlord and the tenants. Where rents are subsidized, as in the case of Maharashtra Housing Board, and "economically weak" and industrial housing progrens, the amount of the direct subsidy is included in the computation of standard rent. 60- 2. Non-residential properties a. Commercial properties may be subject to rent controls and in this case, the assessment is based on standard rents, as in the residential case above. If canmercial establishments are let on a leave and license basis, rateable value is established on the basis of the license provisions. A third possibility is for the assessment of camercial properties on a reconstruction cost basis, i.e. to estimate the current value of the land and structure. Such a process has been used for the newer hotels in the City. The land values are estimated on the basis of comparative sales and building values on a cost basis. To convert the capital. value estimates to annual value a rate of 614 and 9% for the building and land respectively was camnonly used until recently. Due to higher interest rates, the Corporation is currently attempting to increase these rates to 9% of the aggregate value of lands and buildings. Under this method, a rateable value of Rs 130/10m2/ month roan and Rs 12Q/10m2/month for the nonroan area has been established for the Taj Mahal Hotel, with estimates of land value not below Rs 3000. A final assessment method which could be used is a profits' test-- i.e. the rateable value of a camercial enterprise is the amount it may earn. This method has been used only for the race course. b. Industrial properties can be divided roughly into two categories: (1) small and more traditionally oriented factoriesland (2) large firms such as textile mills, Bombay Port Trust properties, oil refineries and railways. In the first case, the properties are usually assessed on the rental value by a comparative method--old factory types like blacksmith and foundry shops are currently assessed at Rs 5 per 10i2 per month. The assessment rate used for other industrial properties in this category are shown in Table 57. -161- Table 57: Rates Adopted to Property Used as Factories and Workshops in Suburbs and ,Etended Suburbs L 1972-7 (Rs per 10 m rer month) Semi- Sheds Factory Permanent & Kutcha Ward Office Factory Godowns Structures Structures 1. Suburbs 21 21 18 15 11 K West 18 16 14 11 9 K East 17 17 14 11 9 L Saki Naka and 23 19 16 11 8 Saki Vihar Rd L Chandivali 19 17 1h 11 7 L Agra Road 23 21 16 11 10 M Ghatkopas Mahol Rd 20 18 16 11 9 M Sion Trombay Rd 19 17 ( 1 11 9 ( 15 N Bombay Agra Rd 19 19 16 11 9 N Kanjur East 17 17 16 9 7 2. Extended Suburbs T Bombay Agra Rd 19 19 14 12 8 P Ward 20 17 14 13 9 R Kandivli Industrial Estate 15 1 - - - R Kandivli (East) 17 15 12 9 R Borivii (East) 15 15 12 9 1/ There are few properties of this type in the city. The rates are from Rs 2 to Rs 5 higher than those for properties located in the suburbs. 2/ No distinction is made on the basis of processing and non-processing areas. 3/ Old factor types like blacksmith and foundry shops are assessed at 5 Rs/ 10 mn/ month. Source, Office of Assessor and Collector - 162 - - The rates vary fran Rs 7 to Rs 23 per 10 m2 per month for those properties located in the Suburbs and Extended Suburbs respectively. Properties located in the City are assessed at rates of Rs 2 to Rs 5 higher than those for properties located in the Suburbs. Industrial Estates are currently assessed at Rs 35/10m2 for the ground floor of estates located in the City and Rs 30/10m2 for estates located in the Suburbs. Rates go down for higher floors. Other industrial properties are usually assessed on a negotiated basis. The textile mills, of which there are presently 70 in Bombay, are assessed every 5 years by mutual agreement between the Corporation and Millowners' Association on a capital value basis. The main criterion used for assessment purposes is the distinction between processing and non- processing areas. The assessment rates are shown below. In order to arrive at the net rateable value, the statutory deduction of 10% is allowed but tenants' taxes may not be subtracted. Also, the statutory deduction is not allowed on vacant land. Such textile mills account for 1.8 percent of total rateable value in Greater Bombay. The rates for textile mills during 1968-73 were as follows: (1) Processing areas: Rs 7.37 per 10m2 (2) Non-Processing areas: Rs 6.19 per 10m2 (3) Old Canteens (single shift): Rs 150/month (4) Old Canteens (double shift): Rs 225/month (5) New Constructed Canteens: Rs 6.19 per 10m2 (6) Lands within mill ccmpounds: 3% of capitalized value at Rs 30/m2 (7) Lands situated outside mill compounds: '5% of capitalized value at prevailing market rates in the locality 163- The rates for the period 1973-78: (1) Processing Areas: Rs 7.5/10 square meters (2) Non-Processing Areas: Rs.6.25/10 square meters Railway assessment is fixed by an arbitrat,or who is appointed by the Central Government. Details as to how the sums, in lieu of general and Halalkhore taxes, were determined are not available. In the past, the method,adopted by the arbitrators was based on the profits method. However' bhecause of the declining profitability of the railroads, the assessment is now based on a cost of construction method similar to that used for Central Govern- ment properties, i.e. with a 9 percent factor as the aggregate value of lands and buildings. c. Bombay Port Trust Properties (BPT) The rateable value is worked out every year by the Municipality on the basis of information furnished by the Port Trust Authority. Thereafter, the figures are submitted to the Central Government for sanction. These properties include land held on long building leases and lands and buildings held directly by the Trustees of the Port. The former are assessed in the names of leasees on the basis of rents at which they might reasonably be expected to let from year to year. The latter include docks, wharves, and railways are assessed on a profits basis; and buildings outside dock limits. Properties let out for residential or bffice purposes are assessed on the basis of rents in the same way as similar properties owned by private individuals. With regard to warehouses, the amount actually received by the Port Trust by way of rent is taken into account. -164 . Lighthouses are -assessed at.6 pericent of their .estimated cost.___ In the case of lands let out on a monthly tenancy basis fcr erecting temporary structures, the structures are assessed in the nane of the Port Trust on the basis of rents at which they might reasonably be expected to let from year to year. Vacant lands are assessed at 1/3 of their rateable value which is arrived at on the basis of a Contractor's Test; allowance of 2/3 of General Tax is being made on account of vacancy. The lands and buildings belonging tfo the BEST are assessed in the same way as similar properties owned by private individuals. Offices, workshops, and other buildings are assessed on a floor area basis, bus depots on a rental basis and electric substations an the Contractors, Test, i.e. by taking a percentage of the cost of land in its improved state. Bus shelters intended for the use of the public are not, however, assessed- Oil and petrol installations are assessed as follows: the structures are assessed on floor area basis, the tanks on licensed capacity basis and land on comparative basis. Petrol service stations are assessed by taking 50 of capital value for land and 6% for buildings. However, a rate of 9% on the aggregate value on lands and buildings is applied to pumps constructed after March 31, 1972. Private docks and shipwa7s are assessed ona floor area basis for structures; and dry docks on rental basis, i.e. on the basis of the average rents charged by the Port Trust. - 165 - d. Central Government Properties Central Goverment properties ; whether used for residential or non-residential purposes are assessed on a capital value basis. Until recently, a rate of L% on land and 6% on buildings was adopted; but the Government has now agreed to a rate of 9% on the aggregate value of lands and buildings. State Government properties used for administrative purposes are assessed at a 4% rate on the land and a 6% rate on the buildings. Comparative sales analysis is used to assess the capital value of the land and the architects certificate is used to assess the capital value on the buildings. The State Government has been under pressure to change this method to the one now agreed upon by the Central Government. Both State and Central Government properties are valued by an arbitrator appointed by the Government. The property values fixed by him are embodied in an "Award" and his decision holds good for a term of 5 years, subject only to proportionate variation in the number or extent of the buildings and lands. Rateable value assessed under these circumstances represent 5% of all rateable value (Table 58). e. Vacant LAnd Vacant lands are assessed at 1/3 of their rateable value according to a capital value basis, the latter being derived on a basis of comparative sales. The rate currently adopted is 9% but there have recently been legal disputes because the corporation has been assessing vacant properties which are bailding sites and on which building activity is going. G. Administration of the Property Taxes The Assessnent and Collection Department is responsible for the assessment and collection of all municipal taxes: property taxes, tax on - 166 - Table 58: RATEABLE VALUE OF GOVERNENT PROPERTIES FOR THE QUINQUENNITIM 196)4 - 1969 (In thousand :ruoees) Extended Greater Cit:c Suburbs Suburbs Bambay State Government 1/ 10,047 728 2,025 12,800 Central Government 14,412 9,4.32 1.,.478 25,321 Projects built after 9,390 9,213 1,470 20,073 April 1 , 1937 Total Government 24,458 10,160 3,503 38,121 Source: Rateable Valzie of the Lands and Bui2dings in the City of Bombay., in Suburbs and Extended Suburbs of Greater Bombay, vesting in Government it accordance with Section 144, Chapter VIII of the Municipal Act of 1888, 1964-1969. - 167 - vehicles and-animals, theater tax, and octroi duties. Its responsibilities also extend to the collection of charges for fixing street number plates on properties and of two taxes levied by the State Government--the Building Repairs and State Education Cesses. The organization of this unit may be seen in Figure 9. The Assessor and Collector, who is responsible for the overall Department, is assisted by five Deputy Assessors and Collectors, i.e. one Deputy Assessor and Collector for the old city limits; one for the Eastern suburbs, one for the Western suburbs; one for Vigilance; and one flor Octroi. The duties of the Deputy Assessor and Collector (Vigilance) are t~c check the under-assessment and to test-check sane properties. Th Deputy, Assessor and Collector (Octroi) is in overall charge of the Octroi wing of the Department. He is responsible for the levy and recovery of Octroi under Schedule "H" of the Act on foods entering the greater Bombay limits for consumption, use or sale. The Deputy Assessor and Collector in charge of property taxes in the old City limits sits at the Head Office and ensures that the provisions of the Act relating to the assessment, collection and refund are not overlooked, and that the registers are kept in the prescribed - forms in the wards placed under his responsibility. He is also vested with duties extending to Greater Bombay in such matters concerning establishment, record, printing and stationery. He also scrutinizes the Budget Estimates and Annual Report of the Assessor and Collector Department and investigates general complaints against the rateable values of properties. The Deputy Assessors and Collectors for the suburbs are in overall charge of the areas under them. The Assessors and Collectors are assisted by 22 Assistant Assessors and Collectors. One of them is exclusively responsible for the inspection of the work connected with the levy and collection of the tax on vehicles 0 Dy & DyA &C D A DA & C Department)C *r-or for Old City for Easter for Wester for for Limits Suburbs Suburbs Octron Vigilance 4 41 for 9AAsst. A & C 4 Asst. A & C 1 Assistant 3 Assistant Maharashtra 1 for each 1 for each 1 for each A & C A & C co Housing Board Ward Ward Ward Wheel Tax Ward A Ward B Ward L Ward H Wards City 0 Ward C Ward D WardM ad K .-- Wards Eastern . . -----S.uburbs 'ard E ard F ard N ard L ---- -Ward WidG W-dHard T Wad R Western Suburbs Source:- .BC Staff -169- and animals in all Greater Bombay. This branch functions as a separate unit and exercises general supervision and control over the wheel tax work in all ward offices and in the staff of the Motor Branch in the Head Office, where wheel tax registers are maintained. Bills for wheel taxes are prepared at the headquarters and are issued to the Ward offices for collection. There are three Assistant Assessors and Collectors posted in the Octroi Branch. The work concerning the property taxes is divided among 17 Assistant Assessors and Collectors with each being responsible for the supervision of a ward. The assessment and collection of the property taxes are made directly at the ward office. The Assistant Assessor and Collector exercises a direct control on special classes of properties where a rise of 25% or more on value is reported so that values may be estimated as correctly as possible. Each Assistant Assessor and Collector is assisted by one Superintendent, Warrant Officers, one or two Deputy Superintendents and one or two Assistant Superintendents. There is one Assistant Assessor and Collector especially appointed to look after the assessment and collection of the properties belonging to the Maharashtra Housing Board which is the biggest landlord in Greater Bombay. The work done in the ward offices comprises inspection and assessment of properties, verification of vacancies, issue of bills and collection of all taxes. The ward is divided into a number of sections which are under the responsibility of a Ward Inspector. The ward inspector is in charge of about 550 properties in the City area and between 750 and 980 properties in the suburban areas of the municipal Corporation (Table .9). The variation in the number of properties under the control of one Ward Inspector is largely - 170 - Table 59: NUMBER OF PROPERTIES AND SECTIONS IN BOMBAY Rateable Number Number of Properties Area in Number of Value in of Average in Sq. Kw. Wards Rs '000 Sections Total. Each Section city 6,776 9 565,918 160 87,608 548 Suburbs 17,563 ) 260,798 84 82,507 982 Extended Suburbs 19,424 4 111,604 59 44k,275 750 Greater Bombay 43,763 17 938,320 303 214,390 708 Source: Office of Assessor and Collector -171l- due to the physical characteristics of the properties in the various territorial divisions. In the City, properties are vertically developed, close to one another, and large in size. In contrast, the suburbs are spread over larger areas. This variation is also explained by other functions performed by a Ward Inspector which may vary slightly fran one section to another. The inspection of properties is made at least once ayear. His findings of inspection are noted in the Inspection Register which is checked by the Superintendent. It should be noted here that ward inspectors are not (formally trained) valuers. Only superintendents and their deputies have received this training, which means there are usually three to five trained valuers per ward. This limited number has a significant impact on the quality of the assessment since a large number of properties placed under the rent Control Act are not subject to assessment every year. It is claimed that this administrative set up is satisfactory with regard to assessment of properties and prevents major cases of underassessnent. The Tax Department, however, recognizes that the assessment of hutments presents difficulties and estimates that perhaps half of the total number of hutments in Greater Bombay are not presently assessed. The collection of property taxes also proves to be a difficult problem. The collection rate is quite high, especially in the City with an average of 83.34% in 1971-72 (Table 60); but it remains quite low, with rates of 54% and 49% respectively in the suburbs and extended suburbs. In spite of this, it seems that on an average the Municipal Corporation performs well when compared with the State of Maharashtra as a whole --where only about * Table 60; Tax Assessed and Collected in Respect with the Property Taxes for the City (Rs 'coo) Nature of Tax 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 General Tax Collection 67,982 70,201 75,4h8 82,342 87,335 93,977 105,546 Net Demand 85,699 87,247 92,953 99,015 105,009 111,968 123,521 % Collected 79.33 80.46 81.17 83.16 83.17 83.93 85.45 Water Tax on Value Collection 6,325 6,597 6,992 7,327 7,543 7,805 '8,297 Net Demand 8,33k 8,605 9,110 9,546 9,7h6 10,23 10,530 % Collected 75.89 76.66 76.75 76.75 77.39 76.26 78.79 Compounded Water Tax Collection 21 20 16 13 ' 15 16 15 Nei Demand 27 23 19 19 18 18 18 % Collected 77.77 86.95 84.21 68.42 83.33 88.88 83.33 Halalkhore Tax Collection 9,089 9,416 10,153 10,773 11,668 12,496 13,67 Net Demand 11,993 12,184 12,958 13,680 14,6h5 15,743 17,085 % Collected 75.79 73.48 ' 78.35 78.75 79.67 79.37 80.0 Special Halalkhore Tax Collection 694 761 801 81h 663 .646 753 Net Demand 792 82k 828 844 945 987 973 % Collected 87.63 92.35 1 96.74 96.45 70.16 65.45 77.39 Education Cess Collection 6,237 6,2h8 6,839 7,36 8,040 8,516 9,502 . Net Demand 8,13 8,276 8,802 9,263 9,980 10,588 11,563 % Collected 76.59 76.82 77.70 79.30 80.56 80.43 82.18 State Education Cess Collection 4,793 5,219 6,181 7,604 8238 - 8,817 10,050 Net Demand 6,515 6,742 8,079 9,471 10,144 10,823 11,985 % Collected 73.57 77.41 76.51 80.29 81.21 81.47 83.85 Additional State Education Cess Collection - - 1,066 Net Demand - - 2,881 4 Collected - - 37.00 TOTAL Collection 95,142 98,572 106,430 116,220 123,503 132,273 148,822 Net Demand 121,502 123,899 132,748 141,837 150,86 160,360 178,555 % Collected 78.30 79.55 80.17 81.93 82.06 82.48 83.3k Source: Office of Assessor and Collector -173- 56 percent of the net taxes are collected.1/ Methods used to recover arrears are usually quite time-consuming from an administrative viewpoint and achieve only limited results. After the service of the demand notice, if taxes are not paid within 15 days, a "warrant of distress" can be executed. However, when the goods of the defaulter are not worth the tax liability, the properties are attached and auctioned. If the property is heavily encumbered, no bidders come forward and the auction sale has to be post- poned. In such an event, the last resort is to get a Court Receiver appointed by the High Court. Under some circumstances, the owner may bring an injundtion and delay the process of recovery. An injunction can be even brought just before the auction sale and some owners are granted repeated injunctions by the courts. Every year hundreds of properties are attached in Bombay and a large number of them are auctioned. For example, at the end of 1972, 1,032 properties valued at 15.03 million rupees were attached. 412 properties were put on sale for an amount of 5.7 million Rs with the following results: Number of Amount Properties (Rs '000) Sales fixed for 1971-72 412 5,72L Property in which full payment 73 627 is received Properties actually sold 22 340 Properties on which injunctions 86 1,531 are received Properties in which installments 15 2,193 are granted Properties in which there were no 74 1,259 bidders or bids offered were less than reserved bid 1/ Committee of Ministers' Report: "Augmentation of Financial Resources of Urban Local Bodies". 1l74 There is a growing tendency to delay the payment of taxes by filing appeals in Court against the rateable value, since Appeals can be made without any prior deposit of tax arrears and because there are no rules regarding the fixation of the rateable value except for one section in the BMC Act. There is also no provision in the BMC Act for charging interest on the arrears unlike the Maharashtra Municipalities Act of 1965. There is, however, a provision of levying a 20% penalty. However, the penalty can only be levied once on any given arrears. The recovery of taxes fran the hutment dwellers is also a major concern for the Tax Department. These hutments are unauthorized and are either on Government or Municipal lands. The action of Idistress" is not possible. Since the land belongs to the Government or to the Municipality, the action of attachment and sale is also not feasible; there is no suitable law to deal with this problem. The data in Table 61 indicate the tax arrears for these holdings are equivalent on average to about three times the yearly demand fran these properties. It may be of interest to note striking differences in the ratio between arrears and the yearly denand among wards. The reasons for this phenomenon are i,_'J clear but apparently, the rate of collection is higher in the wards with a limited number of unauthorized structures when they are located in the City. The picture is quite erratic with respect to suburban wards--the inclusion of properties valued between Rs200 and Rs500 calls for a cautious interpretation of the results since our own inquiry concerning the assessment of hutments in the suburbs clearly did not reveal rateable values of this magnitude. In spite of this, the statistics presented in this table are of great interest since even when properties valued up to Rs500 are included, the ratio between the amount of -175- Table 61: NET DEMAND OF PROPERTY TAXES AND TAX OUTSTANDING RELATED TO UNAUTHORIZED HOLDINGS 1/ 1 2 3 4 5 Yearly Number of Demand Bills Amount of' of such Outstanding Taxes Amount of Properties in Respect Involved Taxes out- Rs of such in Bills standing Number (Properties Properties Shown in as a % of of with R.V. up as of 2/ Col. 3 Yearly Ward Properties to Rs 200/P.A. Oct.1,1971 Rs Demand A 964 15,.443 651 60,101 389.17 B 106 2,744 49 751 27.36 C 352 10,548 213 3,435 32.56 D 599 20,820 497 8,946 42.96 E 869 26,350 1,186 20,514 77.85 F/S 6,500 138,061 55,184 669,492 484.92 F/N 3,277 170,625 22,132 228,649 134.00 G/S 6,724 138,965 52,357 491,313 353.55 G/N 5,197 131,025 34,594 394,172 300.83 City 24,588 554,579 174,863 1,877,374 338.52 Rateable Value up to Rs 500 H 7,281 256,587 36,910 1,420,700 553.69 K 13,789 911,574 89,661 2,827,086 310.13 P 8,400 454,720 41,000 1,113,440 244.86 R 7,249 258,300 41,671: 1,160,478 449.27 L 5,060 395,474 24,942 987,214 249.62 M 9,800 577,000 20,000 347,000 60.13 N 3,967 326,343 24,749 878,912 269.32 T 5,417 291,135 34,489 1,379,560 473,85 Suburbs 60,963 3,471,133 313,422 10,114,390 291.38 Greater Bombay 85,551 4,025,712 488,285 11,991,763 297.87 Source: Note prepared by the Assessor and Collector 1/ The year of reference is not mentioned in the note but it is most likely to refer to the year 1969 or 1970 2/ Include bills up to March 31, 1970 -176- taxes outstanding, as a percentage of the yearly demand of these properties, is on average very high, and about only 40 percent lower than the ratio for hutments located in the City. In sumary, the Municipal Authorities face substantial problems in the collection of property taxes on holdings valued under Rs 200 and up to Rs 500. The Tax authorities are rather reluctant to undertake large tax collection drives among hutment dwellers because the cost of collection for low valued hutments is estimated to be very high when compared with the tax proceeds. The cost of-collection is presently estimated at Rs 8.5 per hutment. Moreover, the rateable value of these properties is a very small proportion of the total rateable vale--amounting to less than 2 percent,1/ while net demand represents about 2.25 percent of the total yearly demand of property taxes. The Tax Departmnt is also facing difficulties with regard to the National Government and other public semi- autoiomous agencies (Table 62). Taxes due from the State Government.are usually paid on,time. A major problem faced by the Tax Department concerns the collection of taxes fran the Railway Authorities, since the assessment of these properties has not yet been completely settled and the railways had been paying, until recently, a very low proportion of their taxes. This problem, however, is expected to be solved soon. As a result of all these factors, important arrears on the propertd-es have built up. The data in Table 63 indicate the high percentage of outstanding net tax demand. However, it is estimated that about 30 percent of the tax 1/ On the basis of total rateable valie in the year 1969-70. - 177 - Table 62: TAXES ASSESSED AND TAXES COLLECTED IN RESPECT OF GOVERME1T, RALIWAYS, ADD BOMBAY PORT TRUST PROPERTIES Property tax Property tax Percent Year - assessed (Rs) collected (Rs) Collected (%) 1964/65 Government 5,413,101 3,940,324 72.8 Railways 2,356,082 1,121,801 47.6 B.P.T. 6,085,927 5,549,851 91.2 13,855,110 10,611,976 76.6 1965/66 Government 4,963,382 4,093,433 82.5 Railways 2,324,926 1,111,220 47.8 B.P.T. 6,4o5,572 5,912,811 92.3 13,693,880 11,117,465 81.2 1966/67 Govemnent 4,839,991 3,059,809 63.2 Railways 2,166,601 967,034 44.6 B.P.T. 6,835,314 6,423,399 94.0 13,841,906 10,450,242 75.5 1967/68 Government 4,978,019 4,196,915 84.3 Railways 2,158,608 1,249,073 57.9 B.P.T. 6,380,878 5,786,219 90.7 13,517,504 11,229,207 83.1 1968/69 Government 5,706,531 5,047,454 88.5 Railways 2,860,843 1,627,494 56.9 B.P.T. 5,944,407 5,823,128 98.0 14,511,780 12,498,075 86.1 1969/70 Government 6,573,047 4,593,322 69.9 Railways 2,224,232 745,780 33.5 B.P.T. 6,188,823 5,994,056 96.9 14,986,102 11,333,158 75.6 1970/71 Government 5,176,624 4,327,592 83.6 Railways 1,467,445 1,168,451 79.6 B.P.T. 6,350,664 6,252,886 98.5 12,994,734 11,748,930 30.4 1971/72 Government 7,620,796 6,037,002 79.2 Railways 1,506,326 1,156,042 76.8 B.P.T. 6,009,300 5,397,951 89.8 15,136,422 12,590995 83.2 SoIrce: Office of Assessor and Collector -178- - Table 63: OUTSTANDIN OF MUNICIPAL PRCPERTI. TAXES IN 1971-1972 Rurees -. ,.of- Ne-t-Demand City 47,031,002 21.65 Suburbs 58,600,815 47,32 - Extended Suburbs 27,39,070 51.95 Greater Bombay 133,070,887 33.78 Source: AduinistfatFe Repor 1971 -72 outstanding at the end of the fiscal year are recovered by the beginning of the subsequent period. This is because the property tax bills are issued in advance and the tendency of the taxpayers is to pay their taxes after receipt of rents from the properties. . Taxes remain outstanding for many reasons.. On the basis of the year 1971-72, the major causes of tax arrears were tax involved suits, injunctions and appeals against values, disputes in rateable values, tax properties under attachment, tax on unauthorized structures, and disputed taxes (See Table 64). This table also indicates that arrears, especially in the category defined as "rate payersn are significantly higher in the suburban areas than in Bombay City. Tabl e 64 BREAK-UP OF ARREARS OF ALL TAXES AS OF AMIL 1, 1972 City Suburbs Extended Suburbs Greater Rmbay Effective Provision- Effective Provision- Effective Provision- Effective Provisicn- ( amerud Mp- Demmid at Demand Demand a Demand Demand Ll D'Mah.d T otAl of Evacuee Propertles-, 2,547 - 2,091 - 70h - 5,3112 - 5,342 (2) ailwaysl/ - 467 - leo - 1 - 568 568 (3) Bor.bay Port Trust 561 - - - - - 561 - 561 (11) EMC (Improvement) and Other Municipal Departments 4,186 - 1,310 - 329 - 5,825 - 5,e25 (5) Court ReDiver, Official Assignee - 2,509 - 843 - 721 - h,073 4,073 (6) Suits Filed, Injunctions and ApPeals Against Rateable Values5 - 9,500 - 7,207 - 2,1141 - 18,848 13,848 (7) Property Under Attachments 14,094 - 9,561 - 3,738 - 17,393 - 17,393 (8) CompLaints Aedant Rateable Valueg - 5,921, - 5,317 - 1,765 - 13,006 13,006 (9) Amounts Involved in Respect of Unauthorized Structures 1,869 - 6,875 - 3,822 - 12,566 - 12,566 (10) A:ounts Due from BEST Undertaking 189 - 917 - 11 - 1,117 - 1,117 (11) Insallment Allowed 507 - 1,213 . - 313 - 2,063 2,063 (12) Disputed Property Taxes 2,007 - 7,398 - 1,907 11,312 11,312 (13) Bills Issued at the Tag End of the Year - 7,088 - 6,272 3,777 17,137 17,137 (11) Monthly Tenancy Structures 488 - 2,067 I - 1,738 - 4,273 1,273 (15) Other P!te PLyers 17,224 - 27,615 13,105 - 57,974 57,974 Total 31,665 27,495 51,679 27,137 23,770 10,312 107,11; 64,94hb 172,055 Footnotes: If Include municipal property taxes, state education cess, additional state education cess, urban immoveable property taxes and water charges by meter movement. 2/ Payment not received from various government departments; the Dy Custodian of evacuee properties pays when funds are available. 3/ Assessment of railway properties for the quinquenniums 195h-59, 1959-64 and 1964-69 is sLill pending with the Railuay authorities. 3/ Payments are made when funds are available. 5/ Matters pending before the court. 6/ Payments can be demanded only after disposal of complaints against rateable values. Source; Adminietration Report of the Municipal. Commissioner for Greater Banbay fir the year 1971-72. - 180 - - VII. INTERGOVERNMENTAL GRANTS A. Historical Importance Grants are a minor source of revenues for the Municipal Corporation. In 1972-73, they accounted for little more than 1 percent of the total revenues and time series data in Table 146 show that the historical roleplayed by aid is equally insignificant. Even at peak importance in the early 1960s, the relative share of grants in total revenues was only about 2.5 percent. There are two major exceptions to this overall trend--a large one-time increase in grants in 1964-65 and again in 1969-70 designed to compensate for increases in local authority employee emoluments. Allocation was on an ad hoc basis. For fiscal planning purposes, these periods may be regarded as windfalls and not part of the established financial assistance program of the Goverment to the Corporation. Other indicators presented in Table 65 confirm the negligible role of external aid. On a per capita basis, the financial aid amounted to only Rs 1.00 in'1972-73 versus Rs 1.86 in 1960; this trend was exacerbated by the price increases during the period, with grants per capita in constant prices being about Rs.0.92 in 1972-73. B. Forms of Intergovernmental Assistance The grant system is characterized by programs designed to finance current expenditures. Indeed, current grants account for 88 percent of total grants received by the Corporation since 1961 and for about 95 percent in more recent years. This clearly indicates that the financing of capital expenditures is almost entirely supported by the Corporation through its own revenues or borrowing. The data in Table 66 show that all capital grants are allocabed to the Slum Clearance Program. The largest proportion of this Table 65: TOTAL GRANTS ALLOCATED TO THE BCMBAY MUNICIPAL CORPORATION 1/ AND GRANTS ON A PER CAPITA BASIS Per Percent Per Total Capita of Total Capita Current Current Percent Percent Revenues Grants Grant Grants Grants State of Percent Other Per at at at at Total Gov't. Current of than Capita Constant Constant Constant Constant Grants Grant Grants Revenues BEST Grant Prices Price Prices Price (Rs '000) % % % %____ (Ra) (Rs Iooo)V (Rs) (Ps o000)- (Rs)- 1960-61 7,9- 81.h4 2.37 3.87 1.86 7,h9 1.86 6,067 1.52 1961-62 8,272 81.95 75.93 2.43 3.92 1.99 7,804 1.87 5,925 1.43 1962-63 9,672 72.94 63.91 2.52 4.00 2.25 8,636 2.00 5,520 1.28 1963-64 8,707 86.17 81.56 2.05 3.3h 1.95 7,317 1.73 5,968 1.34 1964-65 14,313 63.80 90.04 3.15 5.11 3.09 11,360 2.45 10,229 2.21 1965-66 7,661 94.25 91.03 1.46 2.24 1.60 5,76o 1.20 5,244 1.09 1966-67 9,893 87.97 83.95 1.63 2.45 1.99 6,918 1.39 5,806 1.17 1967-68 11,632 93.10 90.86 1.81 2.82 2.25 7,362 1.h2 6,689 1.30 1968-69 11,480 95.95 94.61 1.57 2,0 2.14 6,916 1.28 6,543 1.22 1969-70 12,035 90.12 99.03 1.55 2.40 2.17 6,957 1.25 6,890 1.24 1970-71 11,486 100.00 96.47 1.32 2.05 1.99 6,381 1.10 6,156 1.07 1971-72 11,036 100.00 100.00 1.15 2.05 1.99 6,381 1.10 6,156 1.07 1972-732/ 12,368 91.00 91.00 1.12 1.66 2.00 6,2h6 1.01 5,685 0.92 1/ Based on all 4 budgetary accounts. 2/ Based on CPI for working class. Source: BMC Budget Estimates Table 66: GOVERNMENT GRANTS TO BMC (Rs '000) Slum Clear- Capital ance Grants Primary Secondary Improve- Total State Central Total Educa- Educa- ment Current Govern- Govern- Capital Total tion tion Schemes Others Grants ment ment Grants Grants 1960-61 5,312 - 511 244 6,067 1,382 1,384 7,449 1961-62 4,827 - 513 941 6,281 498 1,493 1,991 8,272 1962-63 5,314 - - 868 6,182 873 2,618 3,491 9,673 1963-64 6,260 - - 842 7,102 401 1,204 1,605 8,707 1964-65 6,8101 - 1,000 5,078 12,888 356 1,069 1,425 14,313 1965-66 6,257 - - 717 6,974 247 440 687 7,661 1966-67 6,300 - 1,000 1,006 8,306 397 1,190 1,587 9,893 1967-68 8,082 802 348 1,337 lO,569 261 802 1,063 11,632 1968-69 7,186 1,890 961 825 10,862 154 464 618 11,480 1969-70 7,361 3,002 39 1,5172 11,919 29 87 116 12,035 1970-71 7,195 2,521 - 1,365 11,081 405 - 4O 11,486 1971-72 7,892 2,105 - 1,039 11,036 - - - 11,036 1972-73 7,890 1,900 - 1,466 11,256 - 1,112 1,112 12,368 86,686 12,220 1 20,523 Including Central Government grant for increase in emoluments: 1/ Rs 549,000 S/ B,112,121e s e , / 1.1101.,003 Source: BMC Budget Estimates - 183 - grant is Central Government funds and allocations have been irregular in recent years. The bulk of current grants area allocated to the educa- tion sector, which had an average share of 82 percent of all current grants over the 1960-1972 period. Among educational grants, aid to primary schools is of significant importance since it amounted, on the average, to nearly 72 percent of all current aid dispensed over this period. Other grants are a grant allocated to Budget B of the Corporation, mainly slum improvement's activities, and various grants of lesser importance. These grants all tend to be subject to significant annual varia- tions which are not always justified by the nature of the grant. With the exception of the Improvement Schemes' grant, all grants are based "in theory" on municipal expenditures which are reasonably expected to increase every year. The Slum Improvement grant is a deficit grant and may therefore be expected to vary from year to year. On the other hand, Primary and Second- ary Education grants are supposed to bear a relationship with the needs of the educational system which has continuously expanded over the period under consideration. In spite of this, the amount of the grant allocated to the municipal primary schools, after reaching a peak in 1,967-68, tended to first decrease and then to level off. A similar pattern characterizes the grant provided to support secondary schools, which have expanded at a very fast rate during recent years. Finally, the category of grants called "Others" is a miscellaneous one and its components are subject to serious qualifications which do not, however, alter the previous general remarks on the grant system. The major grants included here are as follows: grant in aid in respect of fines for offenses against the law, grant in aid for the administration of Shops and Establishment Act, and grant in aid from Central Government on account of additional expenditures due to increase in emoluments for the employees of the Corporation. As explained above, this last grant is made on an ad hoc basis. The basis of allocation for the first two categories is, unfortunately, not known. They are usually paid on a regular basis to the Corporation, but again their absolute amounts vary greatly from year to year. Two minor items are also included here, grant in aid of the fees for land conveyance and licenses, and grant in aid in respect to excise duty for spirits. The basis of allocation of these grants is not known, but their amount tends to level off every year and is not significant. The irregularity of the financial assistance system could be easily remedied in the area of education, which represents the bulk of external aid. In addition to these relatively small formal flows from the State to the BMC, there is a less formal, but fiscally more important, relationship in the area of financing water supply. The state's program of multi-purpose river development provides storage capacity for the EMC. While in principle the BMC is responsible for total construction and operating costs associated with water supply, this storage provision is nevertheless a form of state assistance. Another example of this type can be found in the administration of hospitals and the financing of national highways within Greater Bombay. In the latter case, expenditures are divided equally between the BKC and the State Government. Most of the.hospitals are under municipal supervision; however, some are still administered by the State and most of their expenditures are supported by this level of government. 185 C. trastae Aie d Dist-ibution Unfortunately, it is not possible to compare here the grant system applying t- Bombay Municipal Corporation with that of the three other municipal corporations of the State of Maharashtra. It is, however, believed to be quite similar as a result of their legal foundations (see Table 67). A brief description on the grant system of financial assistance by governent to municipal councils was provided by State Government authorities. The.223 municipal councils presently in existence in the State represent approximately 15 percent of the state population. Municipal councils rely more heavily on external aid than the Corporations, while rEmaining far less dependent on.goverrnment funds than the rest of local authorities. The grant system applying to the councils is described in Appendix 1 to this chapter. There are several types of grants. Capital grants are provided for water supply and road construction schemes and for implementing development plans. Another category of grants is allocated to the construction of dispensary buildings and for the purchase of equipment. The current year budget allocates to the first three categories of grants amounts equaling 22.5 million Rupees, which are allocated as follows: 19.675 million rupees to water supply schemes; 1.736 million rupees for implementation of devalopment plans, and 1 million rupees for special road grants (excluding capital grants for normal road grants scheme). Current grants are designed largely to finance expenditures required in public health. These are: 1) a grant in aid to Municipal dispensaries, 2) a pay and allowance grant for the health staff of the Councils, 3) a grant for control cf epidemics, and 4) a grant for the National Malaria Eradication Program. Another grant is designed to finance a certain proportion of expenditures Table 67: .REVENUE STRUCTURE OF THE MUNICIPAL CORPORATIONS.OF THE STATE OF MAHARASHTRA 1/ 1967-1968 (Rs'000) Bombay Poona Nagpur Shalpur Municipal Municipal Muiicipal Municipal All Corporation Corporation Corporation Corporation Corporations IMunicipal Rates and Taxes. Octroi 97,575 23.1 17,017 42.13 11,859 42.72 6,758 40.73 133,209 26.65 -- Taxes on Houses and Lands 130,123 31.35 9,192 22.76 2,987 10.76 2,789 16.81 145,091 29.03 -- Other Taxes and Duties 120,088 28.93 3,631 8.99 7,617 27.44 1,672 10.08 133,008 26.61 Subtotal 347,786 83.79 29,840 73.88 22,h63 80.91 11,219 67.61 411,308 82.29 II. Other Resources -- Fees from Educational Institutions 2,253 0.54 - - - - - - 2,253 0.45 Receipts from Markets and Slaughterhouses 8,792 2.12 93 0.23 865 3.12 177 107 9,927 1.99, -- Miscellaneous 45,744 11.02 7,212 17.86 2,415 8.70 3,755 22.63 59,126 11.83 Subtotal - Total Self- Raised Revenues W04,575 97.47 37,145 91.97 25,743 92.73 15,151 91.30 482,614 96.56 -- Government Grants 10,509 2.53 3,245 8.03 2,019 7.27 1,1443 8.70 17,216 3.44 Total Revenues 415,084 100.00 40,390 100.00 27,762 100.00 16,994 100.00 499,830 100.00 Source: Statistical Abstract of Maharashtra State 1969-70. . 1/ Excludes income from extraordinary receipts and debt. on the payment of dearness allowances. The last two categories are to compensate the Councils for a loss in revenue due to abolition of the Entertaiment Tax and the Bombay Motor Vehicles Tax. The relative importance of these grants cannot be presented here since no data is directly available fra the State Government budget. On an aggregate basis, grants amounted to almost 68 million Rs in 1971-72 and a rough estimabion shows that the grant per capita was between 9 and 10 Rs in 1971-72.1 No information was collected regarding the financial assistance system applied to other local authorities in the State of Maharashtra. On the basis of information provided by the Finance Department of the State 2/ Government to the Fifth Finance Commission,- six major types of grants are allocated to the Zilla Parishads. The category of statutory grants include 70 percent of the land revenues collected in the district (the rest being assigned to the Village Panchayats), water rates levied on behalf of the Zilla Parishads, and a stamp duty. The major types of grants allocated to the Village Panchayats are described in Appendix 2 to this chapter. Both types of local authorities rely heavily on external aid. The aggregate aid estimates amounted to 1,071.3 million rupees in 1971-72 and a rough estimate indicates that the confirmed grant per capita was equal to about Rs 30. The data in Table 68 below sunimarizes the major findings of these ccmparaive sections. The grant per capita allocated to the local authorities varied from a minimum of Rs 1.85 in the case of the BMC to about Rs 30 in the case of 1/ The basis of a population estimate of about 7 million. 2/ Government of Maharashtra, Finance Department, "Information on Subsidiary Points Submitted to the Fifth Finance Commission." - 188 - Zilla Parishads and Village Panchayats, which entail almost the entire non-municipal population and most of the villages in the State of Maharashtra. Other municipal corporations receive nearly three times as much government aid as the BMC. Additional research would, however, be required to understand snd evaluate the reasons of such differential treatment of the financial assistance system among local authorities, and more specifically among the four municipal corporations. Table 68: GOVERNMENT GRANTS PER CAPITA BY CATEGORY OF LOCAL AUTHORITIES AND PERCENTAGE DIS- TRIBUTION OF GOVERNMENT GRANTS 1/ Grant Percent of Total Grant Per Capita Accounted for by ( Rs ) (1971-72) 1971-72 1967-68 Bombay Municipal Corporation 1.85 .94 1.18 Municipal Corporations (incl. BMC) 2.79 1.94 1.75 Municipal Corporations (excl. BMC) 5.43 .99 .56 Municipal Councils 10 1/ 5.86 h.3 Zilla Parishads and Village Panchayats 30.1/ 92.19 93.80 Total Maharahstra 23.o 100.00 100.00 1/ Based on rough population estimates. Source: Same as Table 67. .. .. .. . - 189 APPEND I GOVEMET FINANCIAL ASSISTANCE TO MUNICIPAL COUNCILS IN THE STATE OF MAHARASHTRA A. Current Grants 1. Dearness Allowance Grant (DA grant): Municipal Councils Rate rofrnt _ A Class 80 percent of the expenditure incurred in payment of DA at the revised rate B Class 85 percent of the expenditure incurred in payment of DA at the revised rate C Class 90 percent of the expenditure incurred in payment of DA at the revised rate The Municipal Councils, which have adopted the pay scales recommended by the Badkas Pay Commission, are receiving the DA grants at the above rates. Other councils, which have not adopted the pay scales recommended by this Commission, are paid DA grants at the rate of 50 percent of the expenditure incurred on payment of DA at non-revised rates to their employees. 2. Grant in Aid to Municipal Dispensaries: Municipal Councils are required to pay a fixed contribution to the state goverment on account of the services rendered by State Medical Officers employed in municipal dispensaries. However, these contributions are refunded in grant-in-adi if the expenditure incurred by the councils on medical relief is more than 4 percent of their income. Financial assistance is also pro-; vided to maternity houses attached to municipal hospitals to the extent of one-fourth of their approved expenditure or actual deficit, whichever is less. These types of grants are applicable to all the councils of Western Maharashtra. - 190 - In addition, sane dispensaries in Vidarbha receive a fixed annual grant of Rs 500 for medicines. This is due to the fac,t that in the old ME State they were getting free medicine from the Government Medical Stores Depot in Nagpur, which was closed after the Reorganization of States. 3. Pay and Allowance Grant for the Health Staff of the Councils: A grant equal to one-third of the expenditure incurred by the Councils in the pay and allowance of their health staff is being paid by the Government. 4. Grants for Center of Epidemics: A grant equal to 50 percent of the expenditures which are above the normal expenditures on health, and are incurred by the councils, is being paid to the Councils. In addition, 50 percent of the expenditure incurred by the councils in excess of the 1957-58 expenditure level are goverment supported with regard to the National Malaria Eradication Program. 5. Land Revenue and Non-Agricultural Assessment Grant: A grant equal to 75 percent of non-agricultural assessment and 15 percent of land revenue, excluding non-agricultural assessment realized within the area of the Councils, is being paid to the Councils. Actual grant amounts are based on revenue collection in the previous year. 6. Compensation in Lieu of Entertainment Tax: Some of the municipal councils in the Marathwada Region were levying Entertainment Tax prior to the enforcement of the Bombay Entertainment Duty (Extension and Amendment) Act of 1958. Subsequently, the government passed legislation stating that these councils were not allowed to recover this tax. - 191 - However, in order to compensate this loss in revenue, the government pays compensation in lieu of the tax. It.,is paid on the basis of net average annual income frm the tax during the three-year period ending March 31, 1958. 7. Compensation in Lieu of Boundary Motor Vehicles Tax: Some of the councils were levying a toll tax on motor vehicles prior to the enforcement of the Bombay Motor Vehlacefs Tax Act of 1935, which abolished this tax. The govement now pays compensation in lieu of this tax on the basis of annual income of the Council. from the toll tax minus the cost of collection plus 10 percent for the three-year period ending March 31, 1936. B. Capital Grants 1. Water Supply Scheme: Municipal Government Loan from Municipal Council Grant- CIC Councils Contribution in-Aid of India A Class 10% 23-1/3% 66-2/3% B Class 10% 40% 50% C Class Nil 50% 50% When a water supply scheme is taken over by the Goverment as Government Scheme, the entire expen~diture on construction of that scheme is borne by the Government. 2. Grant for IDplementing Development Plans of Municipal Councils: Municipal Councils Loan Grant-in-Aid A Class 66-2/3% 33-1/3% B Class 50% 50% C Class 50% 50% - 192 - Note: Financial assistance under this scheme is available for approved development plans of municipal councils. However, plans still to be approved are also considered if the plans are published in accordance with the Maharashtra Regional and Town Planning Act of 1966. 3. Special Road Grant Schemes: Under this scheme, financial assistance is given in the fo=n of grants only to councils which undertake the construction of new roads or extensive repairs (other than normal routine repairs) to existing roads. The grant is generally equal to 50 percent of the estimated cost of the works, subject to a municipal tontribution to the rest of the works. In addition to these grants, financial assistance is also provided to the municipal councils for routine types of works under the "normal road grant schemely. Under this scheme, the gra.nt is restricted to 50 percent of the expenditure incurred by the councils during a year. 4. Grants for Dispensaries: Non-recurring grants are also paid to the councils of Western Maharashtra for construction of dispensary buildings and 2or purchase of equipment. Building grants are equal to one-third of the estimated cost of the construction as certified by the Executive Engineer of the District. Grants for equipment are given on merits of each case. Generally, the allocation of these grants is subject to availability of funds. -193 - APPENDIX 2 GOVERNMENT FINANCIAL ASSISTANCE TO THE ZILLA PARISHADS AND THE VILLAGE PANCIYATS Zilla Parishads 1. Land Revenue Equalization Grant: This grant is allocated so that, together with the revenue from land assigned to the Zilla Parishads, the total revenue per capita based on the latest available census figures from these two sources amount to Rs 2.00. Land revenue and the land equalization grant together constitute the-basis revenues of the Zilla Parishads. Seventy percent of the land revenue collected in the district is assigned to the Zilla Parishads. 2. A Purponsive Grant: Some of the schemes which are considered important from the pont of view of State policy, entail large outlay, or require particular watching are classified as "purponsive schemes." The expenditure on these schemes is met by the Government to the extent of 90 percent at the present time, with a minimum of 75 percent being prescribed under the Act. 3. Establishment Grant: At present, the Zilla Parishads are paid grants equal to 75 percent of the expenditure incurred by them on establishment which is not attached to any scheme. Under the recent amendment of the Act, the Zilla Parishads are entitled to establishment grants equaling 8 percent of their total expenditures. 4. Deficit Adjustment Grants: The gap in the overall expenditure of the zilla Parishads resulting from the functions transferred to them, after taking into account the payment of land revenue, land Revenue Equalization, Pruponsive and Establishment grants, and certain liabilities arising out of the obligation accepted under the Act, is covered by a deficit grant which is provided for a specific period. This grant is to be reduced after the 194 - first five fiscal year so that by the ned of the tenth year, this souce of grants to the Zilla Parishads will be eliminated. As a point of interest, no reduction of this grant is yet envisaged because of insufficiently elastic tax revenues for these local authorities or growing expenditures on plan schemes. 5. Local Cess Matcbing Grant: This grant is not related to any scheme transferred to the Zilla Farishads, but is provided as an incentive to these local authorities to raise local cess on land revenue above the legal minimum of 20 paise per rupee of the land revenue. This grant is equal to about 90 percent of the additional cess collected in the district. In addition, a small amount of grants is disbursed to the Zilla Parishads according to the extent of development activities undertaken by the Zilla Parishads, and to encourage speedier execution of the schemes. Both types of grants are outside the financial arrangement contemplated in the case of transferred schemes. These local bodies are utilizing the grants for maintenance of specific earmarked shcemes taken up by the Zilla Parishads outside the State Plan. The revenues from additional cess above 20 paise and these grants, as well as the corresponding expenditures, are not taken into account while determining the deficit adjustment grants. The forecast of local cess matching grant is made on the basis of anticipated increases in the local cess by the Zilla Parishads. 6. Plan Grants: In regard to the expenditure on schemes included in the State Plan, the Government is giving 100 percent grants to the Zilla Parishads for meeting tthe Plan Expenditure. At the end of the plan period, the canmitted expenditure arising out of these development activities devolves on the Zilla Parishads for which purponsive and deficit adjustment grants, as the case may be, are given as stated above. Some of the activities - 195 - undertaken out-of the Plan grant, such as minor irrigation, road works, and buildings, are classifiable as capital expenditures on the Zilla Parishads. However, no grants are given to the Zilla Parishads for meeting expenditure of this nature outside the State Plan. Grants to the Village Panchayats: Grants specifically allocated to the Village Panchayats consist mainly of a land revenue equalization grant so that given the basic land revenue (also allocated by the Government) the total revenue of any Village Panchayat from these sources amounts to Rs 1.00 per capita. Village Panchayat in backward areas are given additional grants. - 196 - VIII. EDUCATION FINANCE A. Introduction The Corporation is involved in primary, secondary and medical education, with primary education a statutory duty and representing by far the most important responsibility. Secondary and medical education are primarily State and Central government functions but the Corporation entered these fields in response to what it considered to be increasingly unfulfilled needs. The BMC contribution to education finance above the primary level is limited, particularly with respect to medical education. Its involvement in the area of secondary education is recent and is'increasing rapidly. Total expenditures on secondary and medical education in 1971-72 accounted for only about 11 percent of total expenditures on education. B. Primary Education 1. Services Provided Under the provisions of the City of Bombay Primary Education Act of 1920, education is free and compulsory for children of the 6-11 age group. Free education services were first provided in 1925 in wards F and G of the City and were extended to the rest of the City by 1940. At present, free and compulsory education is in force in all areas of Greater Bombay. It is estimated that about 96 percent of the children in the 6-11 age group are enrolled in schools, in spite of the fact that no coercive measures are taken to enforce school attendance. About 66 percent of the children attending school are enrolled in the schools operated by the Corporation. Despite a - 197 - declining enrollment trend, the role of the private primary system remains substantial. Private schools are usually run by charitable institutions though most are supervised by the BMD Education Department and some even receive financial assistance from the City. In mare recent years, the municipal system of free education has been extended to children in the 11-14 age group. It is referred to usually as nupper primary" education and corresponds to standards V to VII in the level of education. The student enrollment in these classes represents about 28 percent of the total student attendance in Bombay primary schools (see Table69). The "upper primary" classes are usually attached to the primary school system. Since 1970, however, an increasing number of classes have been attached to the secondary schools operated by the .Corporation. This change, which was encouraged by the State Government, is designed to have these classes benefit from the State Governmeht grant-in-aid system which applies to secondary schools. The student population has increased at an average rate of 4.3 percent per year over the 1960-61/1971-72 period, an average annual increase of about 18,000 students. Such an increase requires continual adjustments in the number of cl&sses and staff. The number of school building/class facilities over the 1956-71 period has not increased proportionally to the nurber of children. Thus, the limited number of classes has led to the introduction of double sessions. The buildings are used in two sessions from 7:30 a.m. to 1:00 p.m. and from 1:00 p.m. to 5:45 p.m. with different teachers teaching the two sessions. The number of students per classroom is set by the BE at Table 69c PRimARY EDUCATION - BOMBAY MUNICIPAL CORPORAION 1956-57 1957-58 1958-59 1959-60 1960-61 1961-62 1962-63 1963-64 1964-65 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 1. Municipal System of Education Number of Municipal Schools 714 759 829 872 901 909 934 934 956 Nu:.ber of Classes 147 133 117 118 111 110 119 114 105 Total 605 618 649 679 696 741 819 861 892 946 990 1,012 1,038 1,03 1,048 1,051 Number of Students 243,522 275,984 294,632 316,105 333.066 349,454 376,109 409,460 434,535 450,114 474,468 481,211 491,332 495,286 503,047 528,802 -- Grades I to IV 187,442 211,836 224,780 237,873 251,130 261,686 280,454 302,452 315,905 326,066 341,037 340,183 343,154 344,972 357,527 379,517 -- Grades V, Vi, VII 56,080 64,148 69,852 78,232 81,9,36 87,768 95,655 107,008 118,630 124,048 133,431 141,028 148,178 150,314 145,520 149,285 iuaber of Trained Teachers 10,193 11,032 11,765 13,045 13,492 13.599 13,865 '14,305 14,817 Nu-er of Untrained Teachers . 697 655 503 446 401 401 281 217 172 Total Number of Teachers 6,603 7,316 8,001 8,503 8,403 9,127 10,204 10,890 11,687 12,268 13,491 13,893 13,900 14,146 14,525 1,S9 I1. Frivate System of Education Nulber of Recojnized Schools 1, 293 331 387 371 372 381 -91 Th:rber of Students in R.S. 88,083 103,629 120,536 120,376 124,513 126,957 127,337 (Grades I to IV) WN=ber of Aided Schools 215 254 223 170 181 291 207 218 mber of Students in A.S. 55,112 65,411 55,787 43.518 52,998 59,146 61,633 67,893 (Grades I to IV) Nucher of Teachers in A.S. 1,846 2,158 1,885 1,421 , 1,664 1,761 1,856 1, 0 -- Trained 1,076 1,293 1,087 89B 1,186 1,324 1,350 -- Untrained Teachers 770 865 798 523 478 437 506 Total Number of Private Schools 391 390 410 412 450 470 484 809 522 547 554 557 562 573 588 609 Total Number of Students in 94,205 99,142 107,799 112,675 121,023 128,503 140,972 141,927 156,244 153,434 159,416 164,054 173,374 183,659 188,590 '195,233 Private Schools (Grades I to IV) Total Nur.ber of Schools 996 1,028 1,059 1,091 1,146 1,211 1,303 1.370 1,414 1,494 1,544 . 1,570 1,577 1,611 1,636 1,670 Total Number of Students 337,727 375,126 402,431 428,780 454,089 477,957 817,081 551,387 580,779 603,608 633,884 645,265 664, 706 678,945 691,637 724,032 S:-rce: AdMinistration Reports of BMC lnfor-mation Provided by BMC - 199 - a maximum of 50. Almost 25 percent of the municipal schools are located in rented premises which were built for residential purposes and which are without adequate light, ventilation,and sanitary facilities. The number of municipal owned buildings (permanent construction) is now 218 as compared to 100 in 1956-57. The average size of a classroom in municipal owned school buildings is about 400 square fee. Approximately 6 to 8 feet space is allot- ted to each child. In rented buildings, this formula cannot be implemented. However, the Corporation is making vigorous efforts to overcome the shortage of adequate accommodation as can be seen in the increase in debt charges from 425,180 Rs. in 1956 to nearly 8.6 million Rs. in 1970-71. The quality of education offerred is always difficult to assess. A number of general observations may be made, Increasing efforts have been directed toward teachers' training; and the student/trained teachers ratio dropped from about h0 in 1964 to 36 in 1971. Furthermore, public schools compare favorably with private schools as regards student/teachers and stu- dent/trained teach ratios (see Table 70). Nearly 99 percent of the municipal school teachers are trained teachers. Two training institutes run by the BMC conduct courses for untrained teachers. With a view to attracting competent teachers, the Table 70: SELECTED STATISTICS ON PRIMARY EDUCATION - BMN 1 Teacher/Student Teacher/Student Percent % Grade up to IV Teacher/Student Ratio in Muni- Ratio in Teacher/Student Students in to Total Students Ratio cipal Schools Private Schools Ratio in Aided Municipal Schools (Municipal in Municipal based on (Aided Schools) Schools Grades I to IV Schools) Schools Trained Teachers (Total Schools) (Trained Teachers) 1956-57 55.5o 75.97 36.88 1957-58 56.47 76.76 37.72 1956-59 55.86 76.29 36.82 1959-6o 55.48 75.25 37.18 1960-61 55.30 75.40 39.64 1961-61 . 74.88 38.29 1962-63 5h.24 74.57 36.86 1963-64 5h.85 73.87 37.60 40.17 1964-65 54.39 72.70 37.18 39.39 29.8 51.22 1965-66 54.02 72.44 36.69 38.26 30.31 50.59 1966-67 53.80 71.88 35.17 36.37 29.59 51.32 1967-68 52.75 70.69 34.6h 35.67 30.62 48.46 1968-69 51.62 69.84 35.35 36.13 31.85 44.69 1969-70 50.81 69.65 35.01 35.72 33.59 44.67 1970-71 51.69 71.07 34.63 34.99 33.21 45.65 1971-72 52.42 71.77 35.28 35.69 36.11 1/ Based Dn Table 69 201 - Corporation has a fixed pay scale which compares favorably with teachers salaries in other states or with comparable private sector occupations. In order to keep the teachers abreast of the new trends in education, in- service training departments have been set up since 1961. A special feature of in-service training facilities is the Teaching Aid Center where teachers are trained to prepare aids necessary for the instructional program. The Teaching Aid Center is now functioning as a nucleus around which a Science Summer Institute is developing. This Institute, subsidized with Rs 325,000 from the National Council for Science Education organizes work- shops in leadership training in new mathematics and science for primary and secondary teachers. On completion of training, some of the teachers will supervise mathematics and science education in an few selected schools which will be used as demonstration centers in the follow-up of the swmmer institute. Finally, the Corporation operates three libraries which lend books to teachers on educational techniques. Finally, the Department of Education operates a research unit to study ways and means for improving the quality and effectiveness of instruction in arithmetic and composition and to publish pamphlets for the guidance of teachers. In 1955, the (brporation became the first statutory body in India to set up a research unit. It has recently carried out a reassessment of selected test papers from sample schools in different areas in order to study the learning gaps and suggest remedial measures to improve teaching in municipal schools. An interesting experiment conducted by the research unit is the "Ungraded Primary Unit", which has been introduced and extended --2j202 up to standard IV with the goal of reducing the number of failures. An Educational Guidance Centre,attached to the Research Unit, was opened in 1966. Similar developments have taken place at the student level. Schools teach up to ten languages to cater to the needs of children with different mother toungues, with Marathi, Gujurati, Urdu and Hindi being the four major language groups. Special summer sessions are organized for children scheduled to repeat classes. Free milk, free shacks and free medical treatment facilities are provided to students in municipal schools irrespective Lof the economic status of their parents. Playgrounds are also provided and 29 after-school play centers have been started in various parts of the city. Provision has also been made to teach art, craft, and other skills at the hobby centers and the Corporation has the largest single scout/guide unit in India with 20,000 scouts and guides. Children's magazines have been published since 1965 in the four major languages, in order to promote literary and artistic activities among children. A separate audio-visual section has been started to supplement the teaching program with audio-visual aids. The object of the Departmnt of Education is to show at least three educational films every year to every child in municipal schools. The corporation also provides vocational training in 22 vocational schools --33 vocational classes offering training in 6 crafts. Carpentry is taught in 16 classes, tailoring in 12 classes, clock repairing in 2 classes and there is one class for each of signboard painting, book- binding and printing. - 203 - Two very important steps in the field of primary education in Bcmbay were the opening of a new municipal school for physically handicapped children and a primary school for mentally retarded children. There are at present five schools for handicapped and mentally retarded children. The children in the municipal schools are medically examined twice--once in the first grade, and again in the third grade. Children requiring further care are referred to different school clini:s conducted in the municipal general hospitals. There has been increasing emphasis on health promotion. The Assistant Medical Officer (schools) as well as 'school nurses give guidance in forming health habits to children individually. 2. Expenditures Expenditures on primary education account for a relatively high share of BYC expenditures, around 10 percent over the past decade (see Table 71). Table 71: PRIMARY EDUCATION As a Percent Of: 1962-63 1969-70 1971-72 - Corporation Total Expenditures 9.10 9.59 9.39 - Corporation's total current expenditures 9.26 10.61 10.36 - Social ServicesV total expenditures 43.69 44.42 38.95 - Social Services- annual expenditures 49.45 45.97 43-71 1/ Include Health, Education, Housing, Slum Improvement and Clearance. Source: Table 12. - 20 - The distribution of spending among components of the education function sugg.ests that greater efforts were directed toward the operation of the existing educational system than toward the expansion of schools over the last decade (see Table 72 and 73 ). The relative share of capital expenditures in total expenditures has been declining over this period from around 20 percent in the early 60s to 3 and 8 percent respectively in 1970-71 and 1971-72. Current expenditures for education increased at an annual rate of 12.4 percent as compared to 10.9 percent for all expenditures including capital expenditures. This pattern reflects the expenditure consequences of using double shifts rather than constructing new buildings, as well as the increased reliance on (and subsidizing of) the private school system. There are presently 609 private primary schools in Greater Bombay of which 218 are "aided schools", i.e. receive a grant-in-aid, and 391 are "recognized", i.e. receive no financial assistance but are supervised by education officers paid by the Corporation. Aided schools may charge tuition fees up to Rs 8 per student per month and remain eligible to receive a grant. A new limit of Rs 12 which has been proposed by the BMC, was being considered by the State Government in 1973. Grants to private schools still represent a minor proportion of total current education expenditures of the BME. This is partly attributable to the absence of revisions in the grant formula over the years. Nevertheless, on a per student basis, this grant is generally still higher than that allocated by the State Government to the Corporation (Table 72). Table 72: EDUCATION - BMC PRIMARY EDUCATION CURRENT EXPENDITURES ('000 Ra) 62-63 63-64 64-65- 65-66 66-67 67-68 63-69 69-70 70-71 71-72 72-73 General Supervision & 617 807 782 971 1,276 1,500 1,677 1,798 1,949 2,238 2,416 Administration Municipal Primary 25,107 29,050 33,256 38,810 44,335 57,190 61,610 62,075 66,630 . 76,406 82,768 Schools Private Primary 671 671 687 701 763 1,520 1,200 1,408 1,646 2,046 2,738 Schools Medical inspection of 333 51 413 451 589 659 '676 818 1,115 1,010 1,159 School children Educational activities 174 291 397 614 648 761 989 879 905 1,010 1,235 Training facilities for 13 16 28 17 22 25 9 21 21 18 47 Municipal Teachers Pensions, Provident Fund / 2,882 -3,560 3,911 4,214 6,618 8,141 6,436 7,133 7,479 8,235 charges Debt charges 4,090 5,664 5,938 7,346 8,187 8,093 '8,089 8,246 8,544 8,644 8,820 Total Current 33,385 39,732 45,061 52,821 60,034 76,366 82,391 81,681 87,943 97,051 107,418 Expenditures New Works 27 66 130 210 242 311 206 274 251 590 300 1/ Municipal primary schools and enforcement of compulsion 2/ Educational activity and extra curricular activities. Sources BMC Annual Accounts 0 -206 - Table 73: GRANT PER STUDENT Grant per Student to BMC from State Grant per Student Government to Private Schools Primary from BMC Education Total-/ (Rs) (Rs) 1960-61 NA 15.95 1961-62 NA 13.81 1962-63 NA 14.09 1.13 1963-64 NA 15.26 15.29 1964-65 11.03 14.38 14.41 1965-66 9.45 13.89 13.90 1966-67 12.11 13.17 13.28 1967-68 32.61 16.73 16.80 1968-69 20.67 14.5 14.63 1969-70 21.79 14,73 14.86 1970-71 24.69 14.21 14.30 1.71 14.84 14.92 1971-72 1/ Includes grants for teachers' training colleges. Source: BMC Annual Accounts - 207- The relative share of the various educational activities in total education expenditures are presented in Table 74. No drastic change took place over the period as expenditures on primary municipal schools continued to be about three-fourths of the budget. Activities other than the operation of public schools, e.g. medical inspection of school children, have nearly doubled in their relative share over the decade, but remain minor components of the education budget. Excluding expenditures on these educational dctivities, expenditures on municipal primary schools increased at an annual rate of nearly 13 percent over the 1962-72 period; a more important statistic is that expenditures per student more than doubled, increasing from Rs 72 to Rs 1873, which corresponds to an average annual rate of growth of about 9 percent :(see Table 75). Per student expenditures as measured in real terms also increased since the price index shows an annual increase of 6 percent in Greater Bombay . The other components of current education costs remained approximately constant as a share of totateducation expenditures,with one notable exceprion being the : differential growth rate between the components of wages and salaries-- pay and allowances. Average monthly allowances increased nearly twice as fast as pay rates, i.e. 10 percent as against 5.4 percent. Average monthly salary, including both pay and allowances, improved substantially in real terms. (See Table 76). *Table 7h: PRIMARY EDUCATION-BMC. CURRENT 4XPENDITURES PERCENTAGE DISTRIBUTION 62-63 63-64 64-65 65-66 66-67 67-68 68-69 69-70 70-71 71-72 72-73 Total Current Expenditures (Rs 1000) 33,385 39,732 45,061 52,821 60,03L 76,366 82,391 81,391 87,943 97,051 107,418 Accounted for by: General Supervision Administration 1.85 2.03 - 1.74 1.84 2.13 1.96 2.04 2.20 2.22 2.31 2.25 Municipal Primary Schools 75.20 73.11 73.80 73.47 73.85 74.89 74.78 76.00 75.76 78.73 77.05 Private Primary Schools 2.01 1.69 1.52 1.33 1.27 1.99 1.46 1.72 1.87 0.25 2.55 Medical Inspection of School Children 1.00 0.88 0.92 0.85 0.98 0.86 0.82 1.00 1.27 1.oh .1.08 Educational Activity . 0.52 0.73 0.88 1.16 1.08 1.00 1.20 1.08 1.03 1.04 1.15 Training Facilities for Municipal 0.04 0.04 0.06 0.03 0.04 0.03 0.01 0.03 0.02 0.02 0.0)4 Teachers Pensions, Provident Fund Charges 7.13 7.25 7.9Y. 7.40 7.02 8.67 9.88 7.88 8.11 7.71 7.67 Debt Charges 12.25 14.26 13.18 13.91 13.64 10.60 9.82 10.10 9.72 8.91 8.21 Source: BMC Budget Estimates . OD - 209 - Table 75: COST PER STUDENT ENROLLED IN THE XUNICIPAL PRIMARY SCHOOLS - BMC (Rs) Total Total Current Total Cost per Current -Cost per Expenditures Student Expenditures Student 1960-61 NA 23,872,115 71.67 1961-62 NA 27,677,291 79.20 1962-63 40,716,893 108.26 32,704,223 86.95 1963-64 49,853,613 121.75 39,051,405 95.37 1964-65 53, 0h,169 122.07 h.,372,984 102.12 1965-66 58,270,616 129.L6 52,117,055 115.79 1966-67 62,970,877 132.72 59,267,510 124.91 1967-68 82,335,656 171.10 746,842,068 155.53 1968-69 91,004,576 185.22 81,188,649 165.28 1969-70 86,484.,831 174.62 80,270,587 16207 1970-71 89,077,753 177.08 86,293,824 171.54 1971-72 10,758,426 198.11 96,801,390 183.06 1972-73 NA 104,676,321 Source: BRO Annual Accounts -210- Table 76: AVERAGE PAY AND SALARIES FOR PRIMARY SCHOOL TEACHERS 1972-73 1968-69 1963-64 Pay (Monthly) --Total pay (Rs) --Trained Teachers 2,538,911 1,869,526 1,160,860 --Untrained Teachers 31,300 43,249 53,096 --Special Teachers 285,493 254,439 58,181 --All Teachers 2,855,704 2,167,214 1,272,137 --Number of Teachers --Trained Teachers 13,981 12,593 9,670 --Untrained Teachers 235 423 645 --Special Teachers 1,442 1,070 511 --Total Teachers 15,258 14,086 10,826 --Average Monthly Pay (Rs) --Trained Teachers 186.95 148.46 120.05 --Untrained Teachers 133.19 102.24 82.32 --Special Teachers 197.98 237.79 113.86 --All Teachers 187.16 153.86 117.51 --Salaries- (Rs) --Total Annual Pay 2/ 35,129,188 26,440,011 15,520,072 --Total Annual Alwances- 32,645,949 22,133,411 9,831,904 --Total Annual Salaries 67,775,137 48,573,h22 25,351,976 -,Average Monthly Pay 191.86 156.42 119.47 --Average Monthly Allowance 178.30 130.94 75.68 --Average Monthly Salary 370.16 287.36 19.15 --Salaries as % of Tot 64 Current Expenditures-75 9983 64.92 --Salaries per Student 121.72 98.86 61.92 --Salaries per Student adjusted for decline in teacher-student ratio 118.13 91.71 61.92 1/ Pay and Allowances. 2/ Include conveyance allowance, dearness allowance and provision for acting arrangement. 3/ Total current expenditures excluding expenditures on private school. Source: BMC Establishment Schedule - 211 - 3. Financing Methods The main sources of financing primary education expenditures are, by decreasing order of importance, transfers from the general revenue budget of the Corporation to Budget E, and tax revenues and grants from the State Govern- ment (Tables 77 and 78). Based on 1972-1973 budget estiTates, grants account for about 8 percent of total current expenditures. Education tax (cess) revenues, a property tax surcharge earmarked for education_1urposes, account for about 18 percent of expenditures. The balance is contributions from the general revenue budget of the BMC, i.e. transfers from budget A to budget E. These contributions account .for nearly three-fourths of total --- current expenditures. They are of two types: (1) general contribution which is determined by statute and is based on general property tax receipts, and (2) a "special contribution" which is not compulsory but is given to cover any deficit incurred during the current financial year. The relative shares of these contributions are 35 and 36 percent'respectively. a. Government Grants Education grants usually originate at the State Government level. In fact, since 1960 only one case of Central Government financial aid can be reported and it took place under circumstances reported as "exceptional", involving a need to cover an increase in emoluments. The grant system operated by the State Government is designed to cover current expenditures incurred in primary schools and colleges of education, with the latter representing a minor part of the grant. Actually, the grant is made on an ad-hoc basis and is related neither to the number of students-enrolled nor to overall needs of the educational system. In the Table 77; Education Budget - Revenues (Rs '000) 1960-61 - 1961-62 1962-63 1963-64 1964-65 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 1972-731 Tax Revenue - Education Cess 4,672 4,707 5,672 8,537 8,855 9,823 10,337 9,445 14,250 15,128 14,306 16,070 19,030 Rents and Other Proceeds of Properties 62 149 61 92 134 111 134 144 125 120 143 146 145 2/ Interests- 275 267 331 481 80& 981 655 815 342 283 530 1,666 1,009 Miscellaneous Receipts 66 251 95 114 152 157 148 202 146 184 600 17.0 150 TOTAL "OWN" REVENUES 5 5 61 9224 9 17 10 20,374 Tran6fer from Municipal Fund 5/ 1. Statutory Contribution- 14,692 17,303 17,800 18,829 18,759 20,204 21,057 23,988 24,974 30,446 30,530 33,367 40,268 ' 6/ 2. Special Contribution- 427 5,000 5,500 7,500 10,000 12,500 25,000 35,000 35,000 30,000 36,000 36,000 38,000 TOTAL TRANSFER 15,19 20 2 28 759 32,704 46,057 58,988 59,974 60,446 66530 69367 78,267 Grant from State Government For Primary Education ) ) 5,300 6,250 6,150 6,250 6,250 8,050 7,150 7,297 7,150 7,850 7,850 3/ ) 5,312 ) 4,827 For Colleges of Education- ) ) 14 10 11 7 50 32 36 64 45 42 40 Grant from central Government - - - - 549 - - - - - - - - TOTAL GRANTS 5 4,827 5 ,7 6 0 0 7 1M 7,892 7890 TOTAL REVENUES 25,506 31,504 34,773 41,813 45,518 50,033 63,631 77,676 82,023 83,522 89,304 95,311 106,531 1/ Budget Estimates. 2/ Interest on Endowments and Investmentst interest and profit on investments of surplus, loan and other balances. 3/ R. C. Urdu Teachers' Junior College of Education, Imamwada; Municipal Urdu Teachers' Jr. College of Education,:Mahim. 4/ For additional expenditures due to increase in Emoluments. 5/ Contribution under Section 126C(c) of BNC Act. 6/ Under clause 126C(c-1) of Schedule BBA of BMC. Source: B11 Annual AccountS Table 78: EDUCATION REVENUES - PERCENT DISTRIBUTION - BMC Est. 1960-61 1961-62 1962-63 1963-64 1964-65 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 1972-73 I. Tax Revenue: Education Cess 18.32 14.94 16.31 20.42 19.45 19.63 16.25 12.16 17.37 18.11 16.02 16.86 17.86 Rents and Other Proceeds 0.24 0.47 0.18 0.22 0.24 0.22 0.21 0.19 0.15 0.14 0.16 0.15 0.14 of Properties Interest 1.08 0.85 0.95 1.15 1.78 1.96 1.03 1.05 0.42 0.34 0.59 1.75 0.95 Miscellaneous Receipts 0.26 0.80 0.27 0.27 0.33 0.31 0.23 0.26 0.18 1.22 0.67 0.18 1.18 Total Own Revenue 19.90 17.06 17.71 22.06 21.86 22.13 17.72 13.65 18.12 18.81 17.44 18.94 19.12 II. Transfers from Municipal Fund: Statutory Contribution * 57.60 54.92 51.19 45.03 41.21 40.38 33.09 30.88 30.45 36.45 34.19 35.01 37.80 Special Contribution 1.67 12.70 15.82 17.94 21.97 24.98 39.29 45.06 42.67 35.92 40.31 37.77 35.67 Total Transfer 59.28 67.62 67.01 62.97 63.18 65.36 72.38 75.94 73.12 72.37 74.50 72.78 73.47 III. Grant from State Government: I For Primary Education ) 15.24 14.93 13.73 12.49 9.82 10.36 8.72 8.74 8.01 8.24 7.37 ) 20.83 15.32 For Colleges of Education ) . 0.04 0.02 0.02 0.01 0.08 0.24 0.04 0.08 0.05 0.04 0.04 Grants from Central Government .1.21 Total Grants 20.83 15.32 15.28 14.97 14.96 12.51 9.90 10.40 8.76 8.81 8.06 8.28 7.41 IV. Total Revenues 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Source: BMC Annual Accounts -214- early 60's grants contributed to about20 percent of the Corporation expenditures. The grant per student has remained nearly constant while the cost per student more than doubled. Whether .6r not this system discriminates against the Corporation is difficult to assess. It would be of interest to compare the grant per student allocated to the BM with the average grant per student allocated to the rest of the local authorities of the State of Maharashtra. Unfortunately, the number of students covered is not known for the whole State of Maharashtra. However, on the basis of the total grants allocated by the Government of Maharashtra to Primary Educaticn, it can be seen that, other things being equal, the postion of the.BM has deteriorated with a relative share of State Education Grants currently .1.5 percent as compared with 5.0 percent in 1963-64 (Table 79). It -would appear that relatively more Government aid flosto~heother local authorities in the State--ab6ut nine percent of total expenditures on education incurred by the local authorities are financed with government grants. However, the allocation of these grants among local authorities is being revised by the Government, with agreement already reached to eventually finance 20 percent of BWC expenditures. b. Tax Revenues The BIC levies an education cess, an earmarked tax on the net rateable value of real properties, with rates as shown in Table 80. The rate of this cess may not exceed 5 percent by law. The rate of 2-1/2 percent for properties valued Rs. 300 and above is, in fact, the ceiling for the BMC since the State Government has also levied and education cess (sihce October 1962. 1/) The rate of this cess was first fixed at 2 percent for all 1/ Maharashtra Education (Cess) Act, 1962. Table 79: STATE EDUCATION GRANTS TO TH LOCAL AUPHORITIES (Rs 000) Primary Education Secondary Education Total Education BombayFs Bombay's Bambay- s Relative Relative Relative Maha- Share Maha- Share Maha- Share Bombay rashtra % Bombay rashtra % Bombay rashtra,, % 1972-7 1 7,890 530,817 1.49 1,900 50,417 3.77 9,790 581,234 1.68 1971-72 7,892 468,313 1.69 2,105 45,091 4.67 9,997 513,404 1.95 1970-71 7,195 465,448 1.55 2,521 41,938 6.01 9,716 467,969 2.08 1969-70 7,361 344,528 2.14 3,002 10,478 28.65 10,363 347,530 2.98 1968-69 7,186 264,042 2.72 1,890 12,136 15.57 9,076 276,178 3.29 1967-68 8,082 229,249 3.53 802 8,756 9.16 8,884 238,005 3.73 1966-67 6,300 NA - - NA - NA - 1965-66 6,257 168,398 3M72 - 2,856 - 171,254 - 964-65 6,261 170,873 3.66 - 3,142 - 174,015 - 1963-64 6,26o 126,075 4.97 - 2,V461 - 128,536 - 1/ Revised estimates Source: Same as Table 67 Table 80: EDUCATION CESS RATES State Education Cess Net rateable value Municipal 1967 of property Rates 1962-67 Onward 0 - 74 Rs Exempt Exempt 75 - 299 Rs 2% 2% 2% Rs 300 and above 241 2% Source: BM Staff. -property values and extended to 2-1/2 percent for properties valued at Rs. 300 and above. The State Cess is levied throughout the State and like the municipal cess is based on the annual letting value of lands and buildings in the municipal areas. In rural areas, it is a special assess- ment on all agricultural lands growing specified commercial crops. The collection of the state education cess in the Greater Bombay area is assumed by the Corporation which receives a small fee for collection costs. The tax proceeds are credited to a separate State Educaton Fund. The State tax has been used in recent years to equalize education expenditures between rural and urban areas. It is not returned by the State on a basis of place of collection. In fact, for Greater Bombay, the government grant currently represents about 80 percent of the total amount collected in the State (Table 81). - 217 Table 81: C0CMPARISON OF STATE EDUCATION PROCEEDS WITHIN GREATER BCHBAY GRANT RECEIPTS (1) (2) Grant from Grant as a % State Education State of Cess Cess Allocation Gover=nent Collection (Rs '000) (Rs '000) (2) / (1) 1965 4,793 6,250 1.30 1966 5,219 6,300 1.21 1967 6,181 8,082 1.31 1968 7,604 7,186 0.94 1969 8,238 7,361 0.89 1970 8,817 7,195 0.82 1/ 1971-72- 10,050 7,892 0.79 1/ Include also "Additional State Education Cess" Source: BMC Annual Accounts -218 - In 1971-1972 the State Government introduced an "additional state education cess" to help the Central Government finance the Bangladesh -war. This tax has remained in existence and is currently earmarked to assist drought-plagued areas. 4. Municipal Fund Contributions There are two types of contributions, the first of which is a general (or statutory) contribution which is mandatory (section 126C (c) of the BM Act) and its maximum in any given financial year is equal to 5 times the amount of the estimated net general property tax demand (including arrears and payment in advance) divided by the rate fixed for general tax. The General tax for these purposes include the receipts of the property tax raised on the net rateable value of lands and property at a current rate of 24 percent. The BMC has tended to rely progressively less on this type of contribution, as is shown by a drop in its relative share in total-revenues from 58 percent in 1960 to 35 percent in 1971 (see Table 78). This is however, of little effect since what is not supported by this contribution is taken up ty increases in the special contribution, which is actually a "deficit" grant (transfer) from Budget A to E. Indeed, the relative share of this contribution increased from less than 2 percent in 1960 to about 38 percent in 1971-72. 0. Secondary Education The Corporation entered the filed of secondary education in 1966-67 and administers, at the present time, 27 schools with an enrollment of approximately 19,000 students. The sec:andary educAtion system, strictly defined, consists of four years of education covering grades 8 to 11. However, high schools may also include middle schools grades 5 to 7; and where these - 219 - grades are placed under the supervision of a seconda%ry school, they are regarded as part of the secondary sdhool system. The integration of these grades to high schools is becoming a more common phenomenon because of financial reasons. Where these grades are attached to a secondary school, they can benefit from the financial assistance programs dispensed by the State Government to secondary schools. Under this system, the m=icipal secondary school system currently has an enrollment of about 64,000 students. Table 8 gives statistics on the secondary education system as strictly defined--no statistics on the enlarged system are available for earlier years. After a period of rapid enrollment and staffing growth, a relatively constant level of activity has prevailed since 1969. The more recent pattern is attributable mainly to financial constraints. The Municipal Authority clearly intends to develop a secondary school system, but data problems make it difficult to assess the role occupied by the municpal government secondary schools. In 1971, there were 725 institutions with 498,000 students reported enrolled in secondary schools. 1/ All but a few, of these institutions are run by private institutions. The Government of India operates 3 high schools There is no direct state involvement in this area except for the supervision of 3 technical and commereial high schools 1/G overnment 0 Maharashtra, Hand Book of Basic Statistics of Maharashtra State, 1972. 'Table 82: SELECTED STATISTICS ON THE MUNICIPAL SECONZARY SCHOOL SYSTEM Nunber - Student/ Nmnber of Teaching Teacher of Students Staff Ratio Schools Grades 8-11 1965-66 17 4025 141 29 1966-67 22 10,161 348 29 1967-68 27 14,733 489 30 1968-69 27 17,939 608 30 1969-70 27 17,010 602 28 1970-71 27 17,214 6.0 28 1971-72 27 18,870 650 29 Seurce: Government of Maharashtra, op. cit. - 221 - 1. Grant-In-Aid System Schools which are elegible for government assistance l:may receive the following kinds of grants, which are paid at the discretion of the State government and are subject to availability of funds: --maintenance grant --equipment grant --buildings grant, and --such other grants as may be sanctioned by Government from time to time. a. Maintenance grant. This grant covers: (1) all anticipated expenditures incurred on scheduled salaries and allowances, and the contribution to the State Provident Fund Scheme at the sanctioned rate f o those non-teaching and teaching staff appointed before April 1, 1966 who have opted for Contributory Provident Fund Scheme at the-approved scale. The basis of the grant regajrding salaries and allowances is the schedule of salary rates fixed by the Government. The salaries actually paid by the Corporation are usually 50 percent higher than these rates; (2) All expenditures made during the preceding year on rentj (3) All actual expenditures made during the preceding year on admissible items other than staff and rent,or 12 percent of the total admissible expenditure of the preceding year, whichever is less; and (4) a grant of 1 rupee per student enrolled per year. In addition to these maintenance grants, the Government may sanction additional discretionary grants, not exceeding 5 percent of the admissible expenditure -222- of selected schools in urban and rural areas which deserve ___"secial consideration." Schools maintaining high standards of education and those undertaking educational experiments may also be considered for ad hoc discretionary grants. The basis of these grants is "net admissible expenditures," i.e. all admissible expenditures minus the total amount of sanctioned revenues. Such revenues are in the form of tuition, fees recoverable from fee-paying students during the preceding year, and the contribution payable by the management of the school calculated as 1 percent of the total admissible expenditure of the preceding year.fpr schools in rural areas and two and one half percent for schools in urban areas. Grants are paid only for classes with an average daily attendance of 30 students or more, although this rule may be relaxed under particular circumstances. Finally, schools charging tuitions at rates higher than 1.5 times the standard rates prescribed for their areas are not eligible for grants in aid of any kind. The standard rates of tuition fees as prescribed by the Government are as follows: City/Area Grades V VI VII VII IX X XI Greater Bombay (Rs) 5.oo 5o 6.oo 6.50 7.00 7.50 8.oo Cities of Poona, Nappur and Sholapur (Rs.) 4.00 4.50 5.00 5.50 6.00 6.50 7.00 Other Areas (Rs.) 3.00 3.50 4.00 4.50 5.oo 5.50 6.00 - 223 - In the case of schools situated in backward areas or attended.mainly by poor children, lower than prescribed rates can be charged. Unaided schools are allowed to charge tuition fees at rates higher than the standard rates with the prior approval of the State Pirector-, of Education. Schools are also allowed to charge admission fees equal to an amount which cannot exceed one monthts tuition fee for the standard to which the student is admitted. Finally, term fees up to the amount of the monthly tuition fee prescribed for standard V in the area can be charged to meet expenditures on medical inspection of students, and other educational activities. As a. general rule, night schools can charge only half the rates prescribed for other schools. b. Building Grant Building grants may be given,subject- to availability of funds, for erec-.ing, purchasing extending or reconstructing school buildings. A building grant may be paid at the rate of 1/3 of the total expenditure in the case of ordinary secondary schools or 1/2 of the total expenditures in the case of vocational high schools (including hostels and workshbps attached to them). The maximum grants are not fixed and each case is considered on merit, with consideration being given to funds available for that purpose. c. Equipment Grants Expenditures on equipment such as school furniture, library, laboratory, workshop, and teaching aids are admissible for maintenance grants provided that they do not exceed the limit of 12 percent of the total actual expenditure (exclusive of e7-penditure on -224 equipment). Expenditures on equipment exceeding this limit will be eligible for ad hoc grants up to 25 percent of such expenditure, with these grants being paid subject to fund availability,. d. Grants to Vocational and Technical Schools Recognized non- government technical high schools (including technical sections of secondary school and multi-purpose high schools) and vocational high schools which are under the control of the Directorate of Technical education..are, Fsubject to availability of funds, eligible for maintenance grants on their total admissible expenditure on the basis of five factors: (1) Anticipated expenditure on salaries and allowances at sanctioned. rates; and, the contribution of the management of the schools to the State Provident Fund Scheme on account of the non-teaching staff and those on the teaching staff appointed before April 1, 1966, who opted for the contributory Provident Fund Scheme at the approved scales. (2) All rent expenditure of the preceding year.. (3) All expenditures of the preceding year for admissible items other than staff and rent and covered under Item (4) below; or, 12 percent of the total admissible expenditure of the preceding year after excluding expenditures covered by Item (4) below, whichever is less. (4) A per capita workshop contingent grant at the rate of Rs 20 per student on the roll of the school during the preceding year, or th actual expenditure in the preceding year, whichever is less. (5) A per capita grant at the rate of 1 rupee per student per annum on the roll of the school during the preceding year. - 225 - Here again, net admissible expenditures are taken as the basis of these computations. They are determined by deducting from all admissible expenditures the total amount of the sanctioned tuition fees recoverable from the fee paying students during the preceding year and the contributions payable by the management of the school calculated as 1/2 percent of the total admissible expenditure of the preceding year. 2. Budgetary Position of Secondary Education Expenditures and incomes of secondary education are recorded in Budget A (IV) along with the accounts of the'Municipal libraries.- 'As a result of this presentaton, it is not possible to trace all expenditures incurred on secondary education; in particular, the amount of expenditures on debt service, provident fund, and premium cannot be determined. Expenditures on debt service are likely to be quite small since the policy of the Corporation has been to hold high school classes in already existing buildings. Little can be said on the magnitude of the remaining two expenditure categories. Table 83 presents the accounts of secondary schools. Current expenditures increased at an average compound rate of 45 percent over the 1968-1973 period. In spite of this rapid growth, expenditures on secondary schools rank quite low when compared with expenditures incurred on the primary education system. Currently, about 4 percent of the primary education budget is spent on high schools. There are three main sources of revenues: income from fees, government grant, and General Revenues. The latter source of revenue, contrary to the financing pattern of the primary Table 83: SECONDARY EDUCATION - RBVEUIES AND EXPENDITURES - BMC 1967-68 1968-69 1969-70 1970-71 1971-72 1972-731/ I. REVENUES 1) Fees a. Tuition fees 624,816 572,115 - 1,704,000 b. Admission fees 597,818 1,230,274 5,899 7,694 679,985 6,000 c. Term fees 107,591 123,466 - 190,000 Total fees 597,818 1,230,274 738,306 703,275 679,985 1,900,000 2) Miscellaneous receipts - - 4,207 5,305 3,026 2,000 Total own revenues 597,818 1,230,274 742,513 708,580 683,011 1,902,000 3) Transfer from general 631,815 - 547,054 1,362,303 632,800 revenue budget Total BMC revenues 1,229,633 1,230,274 742,513 1,255,634 2,04,314 2,534,800 4) Grant in aid from 802,009 1,890,000 3,002,379 2,521,514 2104,900 1,900,000 State GovT. TOTAL REVENUES 2,031,642 3,120,274 3,744,892 3,777,148 4,150,214 4,434,800 2/ II. Current Expenditures7 2.031,642 2,966,823 3,180,495 3,777,148 4,150,214 4,434,800 SURPLUS - 153,451 564,397 - 1/ Based on budget estimates 2/ Exclude debt charges and provident fund charges as no breakdown of Head IV of Budget A is available. The inclusion of these elements would not modify the direction of the results. Source: BMC Annual Accounts - 227 - education budget, is not statutorily determined; nor is its amount based on a formula. General revenues of the BN3 are used to finance current deficits. The reliance on this source of revenues has not been regular and it is not intended to become a regular source of income. Tuition, fees, and govern= ment grants are considered as the primary sources of revenues. Since 1969-70, fees have represented between 16 and 20 percent of all revenues, though there have been declines in recent years (See Table 84). This decline is not explained by a decrease in the student enrollment or in the level of current expenditures, nor by a strict implementation of the secondary school code. It seems more likely that during this period the Corporation did not exercise:!fully its rights to Government financial assistance. Indeed, the grant amount budgeted for 1972-73 and 1973-74 shows a sharp increase up to 5 million ruppes in 1973. Until last year no grant was paid to the Corporation on behalf of the middle school grades attached to the secondary school system. The grant receipts positions of the BI vis a vis the other local authorities of the State of Maharashtra is not easily determined because of a lack of information about the development of the public and private secondary school system in other areas of the state. However, the relative share of the secondary schools operated by the BDC in the financial assistance provided by the State was approximately 4 percent in 1972-1973, showing a decline from about 9 percent in 1967-1968 and 29 percent in 1969-1970. -228- -Table 84: REVENUE AND OURENT COST PE STUDENT ENROLLED IN SEC 0\DAR SCHOOLS (Rs) Revenues Current from Expendi- Fees Grant tures 1965-66 67.17-1/ 78.92 1966-67 54.1 - - 10h.00 1967-68 40.58 54.44 137.90 1968-69 68.58 105.36 165.38 1969-70 43.40 176.51 186.98 1970-71 40.85 146.48 219.42 1971-72 36.o4 111.55 219.94 1/ Based on own revenue Source: Tables 72 and 78 229 D. Medical Education The Corporation runs three medical colleges and one dental college attached to municipal hospitals. The medical colleges have been under municipal supervision for a number of years. The State Government also administers some medical colleges. Table 85 provides some information on the number of students enrolled in each institutions from 1964-1975 to 1970-1971. Altogether, about 3,000 students were enrolled in the medical and dental colleges in 1971-72. The data in Table 86 show the budgetary account of these institutions. The sources of revenue are not documented in detail, but all expenditures incurred in these institutions are borne by the BMC and no financial assistance is received from the State or the Central Government. Any current deficit is financed from general revenues. Table 85: MEDICAL EDUCATION - NUNBER OF STUDENTS AND COST PER STUDENT IN THE MEDICAL COLLEGES - BM0 196h-6 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 LTM Medical College -- Undergraduates 60 120 204 264 323 347 340 261 -- Postgraduates - - - - - 15 127 Total Number of Students 60 120 2011 264 323 347 355 388 Cost per Student (Rs) 1,367 3,035 2,210 3,107 2,491 3,270 3,57 3,788 G.S. Medical College -- Undergraduates NA NA 837 837 844 984 883 89 -- Postgraduates - 277 277 323 500 432 478 Total Number of Students NA NA 1,114 1,114 1,167 1,484 1,315 1,337 Cost per Student (Rs) 1,776 2,059 2,048 1,923 2,212 2,323 N.H. Dental College -- Undergraduates 2441 2721/ 1721/ 196! 1921 2201V 2281/ 250 --Graduate - - - - - 24 r> Total Number of Students 244 272 172 196 192 220 228 274 o Cost per Student (Rs) 2,603 2,214 3,534 4,595 4,375 4,153 5,916 5,565 TN Medical College -- Undergraduates 484 583 644 643 639 668 657 638 -- Graduate 161 90 160 192 198 219 300 331 Total Number of Students 645 673 804 835 837 887 957 969 Cost per Student (Rs) 1,554 2,001 1,717 2,201 2,352 2,698 2,706 2,70 Total Number.of Students - 2,294 2,409 :2,519 2,938 2,86 2,968 Average Cost per Student (Rs) - - 1,926 2,430 2,383 2,483 2,840 2,938 1/ Estimates based on number of degrees awarded. Source: BMC Annual Accounts Table 86: MEDICAL COLLEGES - STATEMENT OF ING00ME AND EXPENDITURES BY INSTITUTION (Rs 000) 1962-63 1963-64 1964-65 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 1972-73 Income (a) G.S.Medical College~ 183 248 278 310 1,438 409 389 383 419 430 (b) T.N.Medical College 138 222 228 261 843 292 301 323 334 344 350 e/ 300-' (c) N.H. Dental Collegi 188 176 217 208 182 209 ,320 307 318 288 (d) L.T.M. -Medical College - - - -55 78* 106 119 131 121 175 1 26/; Total 509 646 723 779 2,518 988 1,116 1,132 1,202 1,183 1,260 Current Expenditures (a) G.S.Medical College 1,008 1,113 1,239 1,580 1,979 2,294 2,390 2,854 2,909 3,105 4,103- (b) T.N.Medical College 728 890 1,003 1,347 1,380 1,838 1,968 2,393 2,590 2,622 3,573 (c) N.H.Dental College 528 516 635 . 602 608 901 840 914 1,348 1,525 1,732 (d) L.T.M.Medical College - 82 '. 364 451 820 805 1,135 1,259 1,170 1,700- 2/ Total 2,264 2,519 2,952 3,893 4,418 5,853 6,003 7,296 8,106 8,722 11,108- Current Deficit -1,755 -1,873 -.2,229 -3,114 -1,900 -4,865 -4,887 -6,164 -6,904 -7,539 -9,848: 1/ Based on revised budget estimates. 2/ Based on budget estimates a/ Gordhandas Sunderdas edical College b/ Topiwala National Medical College c/ Nair Hospital Dental College 1/ Lokmanya Tilak Municipal Medical College, Sion Source: die Annual Accounts -232 IX* HEALTH AND WELFARE EXPENDITURES A. Health 1. Scope of,Services The Corporation is involved in the delivery of three major types of activities in the field of Health: (1) general sanitation. (-2) prevention and control of infectious and cnnmunicable diseases, and (3) medical relief administered in hospitals, dispensaries, maternity houses, and famTily welfare planning centers. a. General Sanitation- Food sanitation activities consist of the control and supervision of the processing', preparing, and serivng o. food in premises where food products are manufaciared,_stored and exposed for sale. This control is exercised by requiring license under sections 394 and 1l2A of the BM Act and under the Maharashtra Prevention of Food Adulteration Rules of 1962. Food establishments are controlled and graded under the prevention of Food Adulteration Act of 1954 and subsequent Rules. In order to improve the standard food sanitation, eating houses are classfied as grades I, : and III on the basis of their compliance with the conditions of the license and other measures required to maintain an adequate state of cleanliness and sanitation. The grade allotted to an eating house must be exhibited in a conspicuous place at the entrance. Similar methods of grading for bakeries were introduced in September 1964. Special arrangements for the upgrading of bakeries are, inter alia, arrangements for cleansing and sterilizing all utensils and other appliances, and for improving the - 233 - personal hygiene of the staff. A special staff of insepctors is in charge of checking adulteration of food. Certain other trades, such as hair-dressing saloons, and laundries, are also regulated by the Health Department. Finally, the Health Department monitors the adequacy of city drinking water. While the City continues to receive chlorinated and filtered water supply, constant check on the quality of water supply and the dosage of chlorine is exercised through sampling and analysis of water at various points in the supply and distribution systems. l. Prevention and:Control of infectious Diseases The.- prnary measures used for preventing and checking the spread of infectious diseases are immunization and pest control. Patients with infectious diseases, with the exception of tuberculosis, veneraldiseases-- and leprosy, are isolated and treated at the Kasturba Hospital for Infectious Diseases, which has a capacity of 680 beds. Leprosy cases are treated at the Acworth Leprosy Hospital, which can accommodate 500 patients. The Hospital also operates nine clinics, of which five are located in the City and four in the Suburbs. The clinics are maintained under the Qreater Bombay Leprosy Control Scheme whose aims and objectives are to control leprosy in Greater B ombay through survey., educati on, and treatment. In addition, the Acworth Hospital conducts an out-patient clinic with education, case detection, and treatment facilities, including physiotherapy, chemoprophylaxis, and reconstructive and plastic surgery. Some idea of the level of activity at the clinics is shown below: Table 87: NUMBER OF PATIENTS AT THE ACWORTH LEPROSY CLINICS in 1971-72 AL Hospital GELC Scheme Clinic (9 clinics) New cases 4,-.37 2,e9( Old Cases 11,036 7,762 Average daily attendance 260.3 374.46 Source: BMC STAFF The Corporation bears the entire cost of the out-patient clinic attached to the Acworth Leprosy Hospital, one-third of the recurrent expenditures, and all of the capital expenditures incurred under the Leprosy Conttol Scheme. Cases of tuberculosisare treated at the Municipal Group of Hospitals of Sewri, which have an accommodation capacity of 830 in-patients, and at the Sarvodaya Hospital, Ghatkopar, where 500 beds are reserved by the Municipal Corporation. There is also an isolation center attached to Ramkunwar Daftary T. B. Clinic. Statistics on T. B. Hospitals, Sewri, 1/ are given in Table 88 below.- Finally, various eradication programs regarding small-pox, venereal diseases, filaria and malaria are administered on a regular basis. 1/ Includes: (1) Groups of T.B. Hospitals, (a) Medical, (b) Surgical; (2) Isolation Center attached to Ramkunwar Daftary T.B. Clinic; (3) Sarvodaya Hospital, Ghatkopar. Table 88: SELECTED STATISTICS ON THE MUNICIPAL GROUP OF TUBERCULOSIS HOSPITALS 19'1-72 1970-71 1969-70 1968-69 1967-68 1966-67 1965-66 196h-66 1963-64 No. of Beds 1,h18 1,418 1,318 1,288 1,288 1,288 1,188 1,0h8 1,0h8 No. of Patients 6,801 7,078 7,349 6,879 6,927 6,709 5,93h 5,768 5,999 Treated Av.Expenditures/ 18.74 15.95 14.59 13.69 13.22 12.33 9.79 9-91 9.11 Patient/Day Source: BMC Staff - 236 - c. Medical Institutions In addition to the institutions mentioned above the Corporation operates ten general hospitals, two special hospitals, 107 dispensaries, 24 maternity houses, and 52 family welfare planning centers. A statistical summary of the operation of these institutions is shown in Tables 89 to 91. The use of two sets of statistics on hospitals is .necessitated by data inconsistencies. This problem arises because responsibilities for the management:6f the municipal hospitals are shared between the Health Department of the BM on one hand and the Municipal Commissioner in charge of Personnel on the other. In the latter case, the hospitals are placed directly under the control of Deans since the medical and dental colleges are administered by the hospitals. Data for only three of four such hospitals are presented in Table 90 since data on the fourth, which deals with ear, nose, and throat diseases, werenot 4vailable. The Corporation has directed considerable efforts toward the. expansion of hospital accamodations and the treatment of outdoor patients. Three new general hospitals were opened during the 60ts. The number of patients treated in hbspitals increased from 3,214 in 1963 to 5,323 in 1972 and the number of beds per thousand inhabitants increased from 0.72 to 0.86. Still, it is reported that conditions in the hospitals have improved very little, particularly with respect to the overcrowding of in-patient Table 89: PUBLIC HEALTH EXPENDITURES - BMC * PERCENTAGE DISTRIBUTION 1962-63 1963-64 1964-65 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 1972-73 Total Expenditures (Rs) 33,088,739 38,723,012 39,851,186 55,753,134 60,214,281 77,h85,620 82,989,610 90,856,567 107,053,380 115,963,966 135,923,136 General Supervision 6.08 5.69 5.59 4.78 P1.73 3.56 3.91 4.47 3.54 '3.53 2.90 Epidemies . 2.15 1.72 2.14 2.64 2.81 2.22 2.66 3.56 2.87 2.95 2.59 Vaczination .93 .85 .83 .76 .95 .92 1.06 .93 68 .61 .99 Malaria and Insecticides 5.03 7.68 5:-64 5.145 5.62 4.71 5.00 5.38 5.18 5.05 4.77 Filaria - - - - - - - ogligible .19 .24 Hospitala 49.55 47.75 54.60 52.93 53.65 48.61 50.58 56.69 57.79 58.63 60.11 Maternity Homes 3.46 1.08 1.90 3.99 4.61 3.64 3.94 5.17 5.65 6.24 6.61 Maternity and Children Welfare 2ervices . .24 .22 .22 . .30 .20 .14 .15 .15 .13 .13 .18 Dispensaries 3.73 3.66 3.82 3.21 3.50 2.95 3.07 3.45 3.78 3.63 4.78 Mobile Dispensaries .56 .19 .53 .143 .52 .37 .48 .47 .49 .51 .50 Y=ily Welfare Planning Centers .08 .08 .07 . .03 .05 .04 - - - .01 Supply of Milk to School Children 6.04 2.65 1.9 8.79 7.25 16.A2 14.23 6.89 3.15 3.87 5.65 Statutory Contributions to Gov't Med. Instit. 4.57 5.61 5.22 4.58 5.08 3.28 3.47 3.48 6.55 5.70 3.73 Miscellaneous .63 .61 .62 .45 .147 .43 .44 .31 .37 .39 .43 Provident Fund Charges 1.24 1.23 1.31 1.03 1.01 .89 .93 .68 .48 .51 .54 Deot Charges 15.71 17.68 13.6 10.61 9.58 11.81 10.014 8.17 9.34 8.09 7.98 Source. BM Annual Accounta Table 90: SELECTED INDICATORS OF THE LEVEL OF PUBLIC HEALTH - SERVICES IN BMC 1962 1963 166 1967 168 1970 1971 1972 Current Expenditures per Capita (Rs) by EMC 7.68 8.67 8.61 11.61 12.09 15.00 15.49 19.97 18.58 19.42 21.95 Number of beds in Greater Bombay 10,1042:/ 13,5402/ Number of beds provided by EMC 3,21 3,327 3,490 3,588 3,762 3,921 4,136 4,729 5,019 5,323 Number of beds per '000 people 2.26 2.53 Number of beds par '000 people provided by BIC 0.72 0.72 0.73 0.72 0.73 70.73 0.80 0.82 0.84 0.86 Number of beds per in patients provided by W4S 0.0159 0.0108 Patient/Medical Staff * 1. Hospital rtal 536 1,138 Medical Staff 1,907 3,622 2. Maternity Homes Tot al 369 311 Medical Staff ** 1,334 1,073 3. Dispensary Total 16,674 24,433 Medical Staff 64,346 88,520 Source: Greater Bombay Development Plan 1964 2 Source: Maharashtra Statistica. Abstraut Excluding medical colleges Doctors and nurses Solirce: Bit; Staff -239- Table 91: PULIC HEALTH DEPARTMENT - SELECTED STATISTICS - BMC Type of Service 1963 1972 1. Hospitals A. General Hospitals Number 4 7 Number of Beds 196 88 Number of Patients -- indoor 75,358 294,07 -- outdoor 811,100 3,048,294 Total 886,458 3,342,368 B. Special Hospitals Number 4 4 4 Number of Beds 1,202 1,678 Number of Patients -- indoor 25,078 55,937 -- outdoor 70,803 201,916 Total 95,881 257;853 C. Staff (General and Special Hospitals) -- Doctors 141- 298 -- Nurses 374 696 -- Other 1,317 2,170 Total 1,832 3,164 2. Maternity Houses Number 13 24 Number of Patients -- indoor 32,027 65,935 -- outdoor 136,111 216,201 Total . 168,138 282,136 Staff -- Doctors 21 42 Nurses 105 221 -- Other 330 643 Total 456 906 3. Dispensaries Number Number of Patients Treated 621 107 New cases 1,486,722 2,908,102 Attendance 5,019,011 10,799,402 Staff -- Doctors 73 118 -- Nurses 5 4 -- Others 223 320 Total 301 442 . 4. Family Planning Centers Number 32 52 Patients Treated 4,001 - Staff ) Were conducted -- Doctors ) by the staff as at 105 -- Nurses ) Item No. 2 above -- Others ) until 1966 123 Total 228 1/ Including 7 mobile dispensaries. 2/ Including 15 mobile dispensaries. Source: BMC Staff - 240 - facilities. -The daily average number of in-patients has remained regularly above the number of scheduled beds (see Table 90.) and the average stay of in-patients has increased in all three hospitals. Furthermore, the patient/ staff ratio in these hospitals run by the Department of Health more than doubled between 1963 and 1972 and, based on the medical staff only, t increased from 1,907 in 1963 and 3,622 in 1972. The Corporation is not the sole supplier of hospital facilities in Greater Bombay. Four hospitals are administered directly by-the Government of Maharashtra. A number of hospitals are operated by other government and semi-government institutions, e.g. the Railways and the Bombay Port Trust. The role of the private sector is not negligible, 'toug .i ua] yseres Higher income groups. The share of in-patient medical care provided by the Municipal Corporation can be estimated for the years 1963-6 and 1969-70. A survey made for the Development Plan of Greater Bombay in 1964 on government and municipal establishments and large private institutions shows a hospital bed total of 10,104 in Greater Bombay, or 2.26 beds per thousand inhabitants. Of this total, about 30 percent were accounted for by municipal hospitals. This position does not seem to have changed. In 1969-1970,2/ medical facilities available through public and public aided institutions amounted to 125 general hospitals, ten tuberculosis hospitals, and clinics, with the total number of beds in all institutions being 13,540. 1/ Some are partially subsidized by the Corporation. 2/ Statistical Abstract of Maharashtra State 1969-1970. - 2b.1 - d. Dispensaries Dispensaries usually perform activities which differ from services provided in general hospitals. However, in order to relieve the general hospitals of heavy patient loads, 14 municipal general dispensaries were upgraded to provide facilities for screen-routine laboratory investigations. A standard dispensary consists of several rooms, is under the supervision of one doctor, and is organized to work either on a part-time or a full-time basis. The situation regarding dispensaries is very similar to that of hospitals. In spite of an increase in the number of dispensaries from 62 to 107 between 1963-1972 (of which 15 are mobile units), and a resulting decrease in the number of inhabitants per dispensary, the number of patients per dispensary increased from about 81,000 to 100,000 causing the patient/ staff ratio to deteriorate. e. Maternity Houses Maternity and child welfare services are rendered through 24 maternity houses and 34 maternity and child welfare centers. Hospitals are also equipped with maternity services. The total number of maternity beds was 895 in 1972. The .situation has since improved in that" the number of people served per maternity house, as well as the patient staff ratios, decreased during the period under consideration. f. Cemeteries In all, there are 177 cemeteries in Greater Bembay. Of these, 20 are municips; r,7naged and all expenditures related to them are borne. by the Corporation. The Corporation provides amenities at five other cemeteries, while the rest are managed by private trusts or bodies...An electric crematorium was - 2L2 - constructed in 1954 at Chandanwadi at a cost of Rs 450,000. This is used for cremation without any distinction of caste and creed. The charges for cremation are Rs. 25 per adult and Rs. 12.50 per child below 12 years of age. Current expenditures on cemeteries are shown in Table 92.. . . . . . g. Census Function The Department of Health is in charge of registering bizths and deaths occuring.. in.Greater.B.Rba. Thi. informati on. ia-collected at the ward level by the Ward Officers of Health. 2.: Budgetary Position of Public Health Services Expenditures and incomes on these activities are part of the General Revenue Budget (Budget A) and are shown under 2 budget heads: Head V, called "Public Health Department", deals with all activities other than those related to the medical institutions, and head VI, "Medical Relief and Education." No significant income was directly derived from the provision of these services since they are rendered free of charge. Current expenditures on health expenditures have increased at an annual compound rate of 15.2 percent, which is well above the average rate of growth of all BM expenditures (Table 93). Expenditures on health S-rvices represent a substantial proportion bfenditures, approximately 12 percent in 1971-72 when expenditures on transportation and electricity are excluded. As a result, if measured on a per capita basis, public health expenditures increased by over 2.5 times, which indicates a substantial increase in real terms and suggests an increase in services provided. A ~- 2b.3 - Table 92: CURRENT EXPENDITURES IN CMETERIES (Rs) Current E=nenditures 188,826 1963-64 204,494 1964-65 287,191 1965-66 360,653 1966-67 417,498 1967-68 527,380 1968-69 586,730 1969-70 64,848 1970-71 778,270 1971-72 885,880 1972-731/ 963,980 1/ Budget estimate Source: BE Annual Accounts Table 93: CURRENT EXPENDITURE ON PUBLIC HEALTH SERVICES 1962-1972 (Rs '000) 1962-63 1963-64 1964-65 1965-66 1966-67 1967-681/ 1968-691 1969-70 1970-71 1971-72 1972-73 General Supervision 2,013 2,203 2,226 2,664 2,848 2,760 3,243 .4,065 3,786 4,090 3,936 Epidemics 712 666 85Z 1,473 1,690 1,717 2,207 3,234 3,077 3,415 3,525 Vaccination 308 328 331 422 571 712 876 845 723 703 1,342 Malaria and Insecticides 1,663 2,974 2,249 3,038 3,385 3,654 4,151 4,892 5,541 5,855 6,485 Filonia Night Clinic - - - - - - - - 000 215 325 Hospitals 16,395 18,489 21,761 29,512 32,307 37,678 41,976 51,504 61,864 67,987 81,699 Maternity Houses 1,145 1,579 1,553 2,224 2,273 2,817 3,267 4,694 6,053 7,240 6,269 Maternity and Childrens' Welfare SeXvices 79 83 89 168 118 109 128 137 141 154 241 Dispensaries 1,236 1,419 1,522 1,792 2,108 2,283 2,545 3,135 4,048 4,204 6,495 Mobile Dispensaries 184 192 211 241 313 284 396 426 529 587 683 Family Welfare Planning Centers 27 31 27 24 18 36 36 000 000 000 12 Supply of Milk to School Children 2,000 1,026 759 4,899 1 4,365 12,723 11,810 6,259 3,368 4,482 7,686 Statutory Contribution to Government Medical Inst. 1,512 2,174 2,082 2,552 3,057 2,541 2,881 3,164 7,017 6,612 5,069 Miscellaneous 207 236 248 251 281 331 368 462 393 447 587 Provident Fund Charges 410 477 521 576 611 693 775 618 510 589 730 Debt Charges 5,196 6,847 5,420 5,916 5,769 9,150 8,332 7,422 10,003 9,382 10,842 Total 33,087 38,724 39,851 55,752 59,714 77,488 82,991 90,857 107,053 115,962 135,126 1/ Based on Budget Estimates. 2/ Actual was Cr. 242. 3/ 000 means less than 1,000 Rs. Source: BMC Annual Accounts Expenditures on hospitals represent by far the single largest component of the public health budget with a relative sahare of 60 percent in 1972-73 (Table 93), and with a very rapid annual growth rate of 18 percebt. A comparison between the municipal,expenditures on public health and hospitals, and the expenditures incurred by the State Government' on the same items in Greater Bombay, shows the level of municipal spending to be five times higher. The relative share held by Government expenditures on hospitals is substantially higher although it has declined from 43 percent in 1969-1970 to 34 percent in 1972-73. B. Welfare The responsibilities for welfare are vested primarily in the State Government which runs 40 welfare centers in Greater Bombay. The involvement of the Corporation is limited in scope as well as in terms of expenditure. Current expenditures on welfare account in 1971-72 for 0.1 percent of total current expenditures incurred by the Corporation. These activities are directed toward two specific categories of people: municipal employees and, to a minor extent, poeple located in the slum areas which have been taken up for improvement by the Corporation. This latter type of relief accounts for less than 2 percent of the total relief dispensed in 1971-1972. The kind of relief provided to the municipal employees includes the operation of welfare centers, medical help, scholarship schemes for municipal employeest children attending primary and secondary schools, and special workers? teacher's course for municipal employees themselves. In slum areas, it consists exclusively of the operation of welfare centers and nurseries. 1. Welfare Centers and Nursery Schools Forty-three welfare centers and two nurseries are operated by the BM. Of these 43 centers, 41 are part-time while the others are operated on a full time schedule. The part time centers and the nurseries are conducted for the benefit of the municipal employees and their family members, and all but ten are conducted for conservancy staff. Of the remainder, seven are for water works employees and one for work shop employees. The welfare centers are scattered all over the city, suburbs, and extended suburbs. The two full-time welfare centers are conducted for the public of the Kamathipura and Sewri areas. Their activities consist of indoor and outdoor games, radio listening, sewing and handicraft work for women and girls, film shows, fabrication work (petticoats and arm-bands) and various group activities (excursions, band classes, scouting and guiding, for example). Forty children attend each nursery schoold Snacks are supplied free of charge and no fees are charged. 2. Scholarships There exists a scheme for granting scholarships to children of municipal employees under which Rs. 120/- and Rs. 00/- are awarded to the scholars obtaining 50 percent marks in secondary education and second class in college education respectively. Any nimber of children of a municipal employee, irrespective of his pay, are eligible for these scholarships. During the year 1971-72, the Corporation spent Rs. 776,000 on this scheme. Another program is directed toward the children who are not covered under the above plan. Under this scheme, only one child of the mu7icipal employee whose pay is at most Rs 150/- is awarded a scholarship of Rs. 60/- per annum for secondary education and only one child of the employee whose grades are at least 50 percent is awarded a scholarship of Rs. 150 per annum for college education. Under this scheme, 293 scholarships for secondary education and 186 scholarships for college educatLon were awarded at a total cost of Rs. 45,480 during the year 1971-72. 3. Health and Housing Employpes suffering fran tuberculosis, cancer and other major ailments are given financial assistance for purchasing medicines for expenses associated with special diets, and for hospitalization costs. Special counters are opened at various hospitals for municipal employees for getting quick medical help. Also, 12 dispensaries are kept-open in the evening exclusively for municipal employees and their family members. The employees of the essential service departments such as conservancy and water are provided with free quarter. Nearly 60 percent of conservancy labour staff are housed in municipal tenements. 4. Budgetary Operations Expenditures on welfare are difficult to extract from the budget document. Current expenditures on activities involving benefits to municipal employees are financed from two special funds which are attached to budget A and those relating to slum dwellers are met fran budget B (see Table 94). The special funds are the Welfare Fund and the Fines Fund. The charges to be met out of Welfare Fund are: (1) Expenditure to be incurred for municipal departmnts. (2) Expenditure to be incurred on scholarships for the children of municipal employees. Table 9: CURRENT EXPENDITURES ON WELFARE BY BUDGETS AND BY MAJOR ALLOCATIONS - BMG 1961-62 1962-63 1963-64 1964-65 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 1972-731 1. Budget A Charges to be Met out of Welfare Fund (1) For Municipal Departenta 3,486 5,018 4,008 5,641. 9,268 10,043- 15,245 5,818 6,882 14,105 15,800 24,550 (2) For Scholarships Scheme 17,655 14,087 17,941 11,691 20,037 8,172 16,948 14,360 12,876 15,98? 12,060 40,000 (3) For Medical Help 19,830 19,967 19,995 19,990 18,450 19,968 17,890 16,754 9,160 16,160 23,340 40,000 (4) For Special Worker's Teacher's Course - - - - 107 962 4,544 6,476 7,747 1,772 4,512 10,000 (5) For Scholarships to Children in Secondary Schools - - - - - - 311,174 285,376 359,759 403,895 500,000 (6) For Scholarships to Children in College - - - - - - * 270,678 276i,820 346,903 372,601 (7) Others - 15,000 - - - 12,000 - 1,800 - - 50,000 - Total 40,971 54,072 42,941 37,272 47,862 51,145 54,627 627,060 598,861 754,686 882,208 1,014,550 Charges to be Met out of Fines Fund 129,383 122,106 147,370 179,582 192,406 218,057 233,898 248,603 228,769 274,212 298,396 388,71C IT. Budget B Community Welfare Centers and Nursery Schools - - . . . . ' 9a89 7.803 7 ?7 11,900 SchemL for Urban Counmunity Development - 474 3,323 11,375 11,432 1.0,915 10,925 12,169 12,801 14,856 12,246 16,000 Grand Total 170,354 176,652 193,634 228,22? 251,700 280,119 867,220 899,,150 849,620 1,051557 1,21,977 1,431,160 1/ Based on Rudget Estimates Source: BIC Annual Accounts (3) Expenditures to be incurred for medical help to the municipal employees. (4) Special Worker's Teacher's course for municipal employees. (5) Expenditure to be incurred for scholarships to the children .of municipal employees in secondary schools. (6) Expenditure to be incurred on scholarships to the children of municipal employees studying in colleges. (7) Ad hoc grant to BM Sports Club. (8) Grant in aid to BM Staff Cooperative canteen. Charges to be met out of Fines Fund are mostly maintenance and incidental charges of the labour staff at various 8ocial welfare centers. All expenditures regarding slum dwellers, with the exception of capital expenditures, are recorded in Budget B, General Account of the Slum Improvement Account and the Slum Clearance (City). In the first account, this is recorded under budget head "Community Welfare Centers and Nursery Schools," and in the second one under tSchemes for Urban Community Develop- ment (Staff and Contingencies)." The rationale of recording current expenditures in special funds can only be exp"lained in terms of statutory requirements. The Corporation is required to maintain special funds whose resources are to be allocated to welfare activities regarding municipal employees. In addition,to their own resources, these funds are financed by contributions from the general revenue budget. The welfare fund receives contributions from the Municipal and the BEST budgets, while the Fines Fund receives contributions from the municipal budget. These contributions constitute the main source of revenues for the special funds (see Table 95). Capital expenditures are recorded in Budget A on the basis .of employment of the municipal employees, i.e. capital expenditures on staff quarters and welfare centers open to municipal employees are allocated to the departments employing the beneficiaries. For example, expenditures on staff quarters for conservancy staff will be-recorded under budget heading VII, IStreet Cleansing, Conservancy and Halakhore Service", of-the loan works budget attached to budget A. Capital expenditures on welfare centers located in the slum areas are recorded both in the capital accounts of the Slum Improvement budget (first of the three accounts constituting budget B) and in the slum clearance budget (City, Suburbs and Extended Suburbs). Since the loan works budgets and the capital accounts are presented on a project basis, these items must be separated from other projects. Expenditures on welfare centers are small because of the relatively minor involvement of the Corporation in this field, and thus computation was not attempted here. On the other hand, expenditures on staff quarters are not negligible, and are presented below. 5. Welfare BEST The BEST administers sane programs in its welfare department, but only for its employees. The major activities are the operation of canteens, the provision of staff quarters, and various scholarships and monetary Table 95: WELFARE ACTIVITIES - FINANOING OF CURRENT EXPENDIfURES - BMC 1963-64 196h-65 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 1972-73 Total Current Expenditures -- Budget A 190,311 216,854 240,268 269,202 288,525 875,663 827,630 1,028,898 1,180,604 1,403,260 -- Budget B 3,323 11,375 11,432 10,915 10,925 12,169 21,?90 22,659 20,373 27,900 TOTAL 193,634 228,229 251,700 280,117 299,450 887,832 819,620 1,01,557 1,200,977 1,431,160 Financed by: -- Contribution from B 'A' 198,388 207,824 24,j49 262,944 283,889 869,496 816,212 1,021,102 1,176,527 1,403,260 -- Contribution from BEST - - - - - - - - - - Current Deficit/Surplus +4,754 -20,405 -6,241 -17,173 -15,561 -18,336 -33,408 -30,655 -24,450 -27,900 Source: .BIC Annual Accounts *1 i assistance to.the children of the employees. This department supervises 16 canteens and 9 kiosks, most of which are entrusted to private contractors. The undertaking provides furniture and heavy equipment for all the canteens run by contractors and bears 50 percent of water and electricity charges. The BEST awards scholarships to employees' children. The yearly assistance earmarked for this purpose was Rs 80,000 beginning in 1970-71. The maximuim amount paid to each student was Rs. 25 per month for post-secondary studies and Rs 10 per month for secoridary education. Monetary asistance, in addition to scholarships, is also provided. The maximum amount of monetary assistance paid to each-student per month is Rs. 12.50 for post-secondary studies and Rs. 5 for- secondary education. Finally, the BEST provides houses at subsidized rent to about 2500 employees and 120 dormitory-type accommodations for bachelors at various places. Altogether the BEST spent an amount of over Rs. 220 thousand on its various welfare activities during the year 1971-72. X* HOUSIM The Municipal Corporation operates two housing programs. The first is designed to provide housing quarters to municipal staff employed in special activities, e.g. medical staff, firemen, street cleaners, and, to a lesser extent to general staff. The second is a slum dweller and squatter program consisting of rehousing after slum clearance"and the prcvision of basic infrastructure in slum areas. There are also two smaller programs which provide accommodation for persons ovacuated from their houses because of municipal works or because of maintenance of Bombay Improvement Trust properties. In the latter case, the program is essentially provision of sites and services. In addition,the BEST Undertaking provides employee housing accommodations. The most important of these activities is the slum clearance program, and primary attention here is focused on that program. A. Present Housing Conditions Prior to World War II, housing shortages in Bombay were not serious with the exception of a short period following World War I. By the beginning of World War II there was an oversupply of dwelling units for middle class residents. The situation changed after the beginning of World War II, primarily because of rapid population growth and little increase in the housing supply. The latter was in large due to scarcity of building materials ad . restrictions on building activity imposed by the State Government. The overcr'owding continued to grow even after the exid of the war, and was worsened considerably by the influx of refugees in 1947-48. Rents were then frozen to pre-war levels under the Rent Control Act. Rent control, coupled with high prices of materials made it prohibitive for most landlords to carry out normal repairs to thbir buildings and maintain them in satisfactory condition. The situation gradually worsened since many buildings had by then outlived their useful life and were beyond economical repairs. However, their continued use was necessitated by the acute housing shortage. Until recent years, the private sec_t6i remained the major supplier of housing. However, high prices of land and building materials, shortages of construction materials, a rising wage spiral, and unattractive eturns on housing investments have had adverse effects on participation by tte private sector. The result is that the gap between the demand for, and supply of, new housing is widening, and private investment is now primarily for high income housing. Conversely, the public sector and cooperative and employee housing programs are playing an increasingly important role in the provision of housing. The State Government operates through a semi-autonomous public agency, the Maharashtra Housing Board (M), to provide industrial housing and subsidized low-incame housing. the MEB also administers several other schemes covering both the high and low-income groups on a tenant-ownership basis, using surpluses from the high income scheme to finance lower income programs. Cooperative housing societies, with the encouragement of the Government, are growing in importance and may eventually replace the private sector as the major supplier of housing. Present residential construction activity is not suf±icient even to accommodate the natural increase in population. Overcrowding in the existing buildings, slum areas, and continuing physical deterioration of the housing stock is a fair description of the present situation. The BMD Act (section 379A) lays down a standard ;or 11crowding'?--a minimum occupancy rate of 25 square feet per person. Using this standard, the Corppration carried out in 1956 a survey of old buildings in the City to determine the extent of overcrowding in slum areas. The results show that about 25 percent of one and two roan tenaments in these areas are "overcrowded" (see Table 96 ). However, the low occupancy rate assumed and the limited coverage of the survey probably work to vastly understate the actual extent of overcrowding. Some BM and State officials felt that an occupancy rate of 45 square feet per person would be more realistic for purposed of determining over-crowding. Using this standard, the estimated number of existing tenements, an c:cupancy rate of the number of family units to be provided for, and sane rough assumptions, an estimate of the housing defeat was made in conjunction with the preparation of the Development Plan for Greater Bcmbay in 1964. The results in terms of tenements required to eliminate over crowding and substandard (hutments) dwellings are summarized in Table 97. Slum areas are substantial,-are scattered throughout Bombay, and appear to be growing in number and in population concentration. A general pre-war survey of the blighted areas in the City was made wherein 85 localities measuring 330 acres were designated as slums. A similar survey carried out in the year 1956-57 revealed that the City had 144 slums - 256 - Table 96: CONDITIONS OF OVERCROWDIG IN TENEMENTS (CITY) No. of Total No. of No. of over- No. of 2- over- Ward one-room crowded Percentage room crowded Percentage Tenements tenements tenements tenements A .,.482 1,077 24.03 1,132 77 6.80 B 10,478 1,702 16.24 1,894 '44 2.37 C 26,655 4,301 16.15 7,345 242 3.29 D 21,013 5,559 26.35 6,579 - 343 5.21 E 30,649 9,799 32.04 2,999 322 10.74 F 8,250 3,527 42.75 534 42 - 7.87 G 30,045 12,14 40.58 3,746 469 12.52 Total 131,662 38,149 28.97 24,229 1,539 6.35 Source: BMC Staff Table 97: REQUIR NTS OF ADDITIONAL TENEMENTS TO ELIMINATE OVERCROWDING Tenements Tenements existing required as on Deficit in 1961 31 Mar. 1961 City 553,800 438,491 115,309 Suburbs 207,200 193,013 14,127 Extended Suburbs 68,800 67,646 _1,156 Greater Bombay 829,800 699,148 130,652 Source: BMC Staff spread over a total area of 877 acres in different wards with a total number of 83,451 families and a population of 415,875, (see Table 98). At present, the number of slum areas is estimated to be approximately 200, and estimates of the slum population range up to one million. A recent survey on the age and conditions of the city-buildings, indicated that of the 36,000 residential buildings in the City, nearly half had been built prior to 1905. The balance of 18,150 buildings were in comparatively good physical condition. Excluding 2,797*temporary sheds, it was found that_ 90 percent of the buildings had timber frames, of which more than one half had external load bearing walls. The survey then listed 43 percent of-the buildings as being-.in "poor condition*-1fnaMrng- 764 recommended for immediate demolition. Of these 12,000 buildings, about 60 percent were estimated as having a future life of less than 25 years. Under these circumstances, house collapses are not an uncommon phenomenon in Bombay (see Table 99). In summary, the total housing requirements of Greater Bombay projected from the 1964 Development Plan estimates amount to nearly one million tenements by 1981 (see Table 100). B. BMD Programs 1. Employee Housing Little information is available on the number of employees who are provided with housing accommodations by the BIC. It is claimed that all firemen, (about 600 employees),'43 percent of conservancy staff, and a smaller proportion of the employees of the Public Health and Water.Supply Departments are provided with housing quarters. Unfortunately, it is not - 258 - Table 98: THE PRE-WAR AND SLUM AREAS CF THE CITY IN 1956-57 Area of Area No. of pre-war No. of of slums Ward.' pre-war slums of slums in acres slums in acres 1956-57 1956-67 A 2 5.8 7 20.60 B 10 11.8 20 22.80 C 33 29.0 24 90.50.. D 24 40.6 27 77.00 E 3 32.0 24 125.70 F 9 60.0 18 91.80 G 4 158.3 2 448.60 Total 85 329.5 144 877.00 Source: Development Plan for Greater Bombay, 1964. - 259 - Table 99: HOUSE COLLAPSES IN BOMBAY FOR THE PERIOD 1960-1971 No. of Persons Accom- modated in No. of Maharashtra Persons Housing Board Directed for Tenements No. of Houses Accommodation Taken Collapsed No. of No. of in Maharashtra Over or in (Partly or Persons Persons Housing Board Municipal Year Flly) Injured Killed Colonies Colonies 1960-61 115 69 21 - - 1961-62 131 54 8 - 210 1962-63 99 70 12 - 1,024 1963-64 136 63 26 - 658 1964-65 117 68 6 283 - 1965-66 130 26 18 350 - 1966-67 97 68 11 251 - 1967-68 98 82 37 410 - 1968-69 143 54 11 309 - 1969-70 130 65 18 1h7 - 1970-71 169 86 25 Source: Bombay Building Repairs and Reconstruction Board. Annual Report 1970-71. -260- Table'100: REQUIMENTS OF TENMENTS TO MEET THE HOUSING SHORTAGE . Additional Tenements Required Cause 1961 1971 1981 (1) Natural increase 310,200 582,200 (2) Over-crowding 130,652 130,652 130,62 (3) Sim Clearance and House Collapse 75,000 150,000 (4) Development Plan Proposal 1,091 28,182 (5) Zoning and acquisition of set backs 10,000 20,000 Total 130,652 539,943 911,03 Source: Same as Table 99 261- possible to present an overall picture at the present time. About 470 tenements -ere completed during the year 1971-72, The BEST provides housing to about 2,500 employees or about 12 percent of its labor force. It is difficult, if not impossible, to trace'the expenditures incurred by the BMC for employee housing directly from the budget. There is no separate record of expenditures on this type of program; rather, the various departments of the BIC which provide housing quarters_for. their employees are simply billed. Furthermore, the basis of this billing procedure is not clear, since it seems that land costs are not included in the allocations of expenses among the departments. Land acquisitions are made on a centralized basis and are usually recorded under one Budget Head 'Budget Head 10, "Building Acquisition and Management." On the revenue side, the same procedure applies with the various beneficiary departments being credited with the income from rents; but, the budgetary accounts do not facilita-anianalysis of these revenues. Given all these restrictions, it was not possible to estimate to al resources allocated-to--mpdyee housing. Expenditures incurred by the BMD, excluding the BEST, were tentatively estixated for the year 1971-72 at about Rs 250,000 which represents a small fraction of the loan works budget of the BIV. This amount certainly under- states the role of the DED in this area, but it is not expected to present a significantly distorted overall picture of the housing programs carried out by the BMC in favor of its employees. The BEST reported in 1971-72, expenditures on training including expenditures on buildings used for administrative purposes of Rs. 1.8 millions, or 4.8 percent of its total loan - 262 - works budget. Altogether, this program of the BM does not contribute significantly to an easing of the housing shortage in Greater Bombay, as recommended by the City Coordination Council in 1964. Specifically, its recommendations were that every statutory authority in Bombay should provide, annually, housing for 2 percent of its total employees. 2. Slum Housing Housing activities in slum areas consist of a rehabilitation program of already existing slums, a slum eradication program, the provision of housing accommodations to people displaced by municipal works, and the maintenance of the properties formerly owned by the BIT, which comprise mainly sheds. The last program has been in existence since 1933 when the BIT was taken over by the Manicipal Corporation. The first was devised in ".956 with the assistance of the Governmeit of India. Due to financial constraints, the implementation of this program did not bring the expected results and as a consequence, the BMC developed a Slum Improvement Program,in te late 1960s. At the present time, both programs are carried out by the BM, with the emphasis being placed on the latter All programs pertaining to slum areas are recorded in one major budgetary account. Budget B was established when the BIT was taken over by the BIC, and was expanded to include the Slum Clearance and the Slum Improvement programs. This budget is divided into 3 sub-accounts, which in turn each consist of a current and capital account. This can be represented as follows- - 263 - Components of Budget "B" 1. - Imppovements Scheme (a) General Account. Revenue and expenditure related to the BIT properties and the Slum Improvement Program. (b) Capital Account. Revenues and expenditures related to the BIT properties and the housing of squatters and dishoused people. 2. Slum Improvement Scheme. Slum Clearance (City) (a) General Account (b) Capital Account 3. Slum Improvements Scheme. Slum Clearance (Suburbs and Extended Suburbs). (a) General Account (b) Capital Account The BIT was originally an autonomous agency operating within the City for the construction and maintenance of tenements for low and middle income workers. These tenements are mostly chawls and more than 5,ooo are currently administered by the BMC. No information on the number of dis- placed people provided with housing accommodations is available,but it is claimed to be relatively insignificant. These inprovement schemes have never been developed as a major activity of the Corporation. Expenditures account for an insignificant share of all expenditures incurred by the BI in 1971-72. The largest proportion of these expenditures is now accounted for by current expenditures and the relative share of the capital works in all expenditures has declined from about 35 percent in 1962-3 to 9 percent in 1972-73. -264~ Current expenditures are financed by rents and other proceeds from properties, by transfer from the general revenue budget (Budget A), and by a grant fram the State Government. The grant allocated by the Government to Budget B is a deficit grant designed to cover ar deficit incurred in this account, up to a limit of 1 million rupees.1/ This grant was given in 1964-65 and from 1966 to 1969. It has never represented a substantial source of revenue; 'The largest contribution was in 1964-65 _at ab6ut 6 percent of total revenues. Until 1967-68, the revenues generated by the program operations were sufficient to cover about half of current expendituree-- the remainder being financed form general revenues. Revenues fram the properties have not kept pace with the increase in expenditures, however, and now represent about 38 percent of total revenues. Revenues frm rents are especially low since the current rents are based on rents which were paid in the past to the former owners. Also, the properties usually consist of very old buildings. The rents were established at 6 percent of the value of the land, which is considerably lower than the current value. The contribution from the general revenue budget is statutorily 2/ fixed -it- (an estimate of) three times the amount of the net demand (including arrears and payments in advance) of the general rate of the property tax in the current fiscal year divided by the rate of the tax. The amount of this contribution is thus directly proportional to the property tax base but varies inversely with the rate of the tax. Whether the amount of this contribution 1/ Up to 1937-3d, the BMX was paid a grant equal to the net proceeds from the Tobacco duty realized under the Tobacco Duty (Town of Bombay) Amendment Act, 1932. The Government has since decided to change this batIs and to pay in lump-sum a fixed amount irrespective of the gross receipts realized from the tobacco duty and the arrears of the last years. 2/ Section 125(2)(d) of the BITC Act. -265 is actually based on this f=rmula is not easily determined since information on the net demand of the general property tax is not readily available. However, the contribution increased by 264 percent between 1964-61 and 1971-72 while the rateable value of Greater Bombay increased by only 61. percent--which is an indication that transfers have taken place on a larger scale than is required in the statute. In fact, reliance on general revenues has increased since revenues generated by this program have became insufficient to finance the increase in current expenditures. Another possible source of revenue is transfers from the Capital Account of this scheme, but such transfers from the capital account took place during only three years of the period under study. Capital expenditures on the Slum Improvement Scheme show a marked decline from about Rs. -7 million in 1962 to less than Rs. 3 million in 1971, indicating that the Corporation is moving away from this type of program in favor of slum rehabilitation. Capital expenditures are financed from proceeds from sale of lands and buildings, transfer from the General Account maintar-Ined above, and borrowing. Investments are thus in part financed from current revenues; this is a noticeable exception to the strategy adopted by the BMC with regard to the financing of its capital projects. As a rule, all municipal capital works, with the exception of .some of the BEST's works, are financed from borrowing. However, since this scheme is treated as a 1/ The choice of these years is attributable to the fact that rate of the general property tax was increased in 1963-64. - 266 - separate entity in the Municipal Budget, transfers between the two types of accounts are used to meet deficit in either account whenever the necessity arises. Until 1969, the majority of capital expenditures were met from loans. Since then the policy has been revised so as to increase the relative share of the general revenue budget. Sale proceeds fran lands and buildings have never represented an important source of capital revenues. 3. Slum Clearance Program -- -. This program was established in 19IM and consists of demolishing properties in certain slum areas and constructing new tenements at the same site. For that purpose, the BMD Act was amended in 1954 to incorporate special provisions relating to slum clearance. Clearance under the amended provisions is achieved by either one of the following methods: (1) Declaration of the area as a clearance area: Such areas are selected where the only effective remedy for improving the conditions is the demolition of all buildings which--are unfit for human habitation. Clearance of the area is secured either by: (a) ordering the demolotion of the buildings in the area by the owners themselves; or (b) the acquisition of the entire area by the Corporatinn. The latter procedure is preferred by the Corporation since it usually requires land to rehabilitate the displaced persons. (2) Declaration of an area as a Redevelopmenb Area: The basic - conditions laid down for the application of this scheme to an area are the following: (a) the declared area must presently contain 50 or more dwellings of poorer class cities of Mhich one=third must be overcrowded or unfit for hbbn-haitation and notbe aenaffble-to economic renovati6n; (b) the -267- redevelopment of the area as a whole is necessary in order to provide housing accanmodation.for the poorer classes. The clearance and redevelopment of the area must necessarily follow a redevelopment scheme which is prepared by the Corporation and then sanctioned by the Government. By 1972, 572 residential tenements and 142 shops and godowns were constructed under this program. Of this total, 669 were built under a Municipal Scheme and the teiinder under various government-aided schemes. The Municipal scheme came into existence in 1956 and was used until 1963. From 1959 onward, government aided schemes were used. The construction activity under this program has leveled off substantially since 1965. The program is now being abandoned due to various technical difficulties in its implementation, and to financial constraints. The procedure through which hethesalearance schemes- are -processed is very lengthy and time-consuming. Also, the implementation of these schemes requires the availability of open spaces near the sites which are being cleared in order to provide housing accommodations to displaced people, and to install transient camps while the work is under progress. The City has very few if any open spaces left and there is considerable reluctance of the slum dwellers to shift to the surburbs even on a temporary basis. Furthermore, any major new program would necessarily have to be confined to the suburban areas. Experience has also shown that very often transit arrangements were not coordinated (or not provided) with the clearance of the slum. Axother major problem is the inability of slum dwellers to pay -he subsidized rents. The monthly rent per unit with an average floor area of 240 square feet is fixed at Rs.26-27, but the economic rents are much higher. -268- .'The cost of this program is quite high. A rough approximation based on the expenditures incurred and the number of tenements constructed in the 1962-1971 period, shows a cost of about Rs. 14,500 per tenement-- which is much higher than the expected costs of a tenement designed for very low-incane people. As a result, the differential between subsidized and standard rent is wide--well over 40 percent in the majority of cases. The actual cost is also much higher than the base adopted by the government for the grant allocated to this scheme. Indeed, the government's subsidy is based ona cost per tenement of Rs.8,750, including land. The grant corresponds to 80 percent of this amount, of which 37.5 percent is con- tributed by the Central and 12-1/2 percent by the State Government, with the remainder being loan 'inance provided by the Government to the extent of 37.5 percent of the basic cost. The data in Table 101 show capital works carried out with various resources, and show about 42 percent of these capital works to have been carried out from the Municipal Fund over the 1962- 1971 period. The Government aid, as presented in Table 101, includes both grant and loan finance provided by the Government to the BMD. Unfortunately, no information is available about the terms of the loans; and, it is possible that an elennt of subsidy may be introduced by the availability of government loans. It is interesting to note from Table 101 that the ald formula has not been rigorously applied--grants account for about 42 percent of all governmental aid as canpared to 58 percent on the basis of the formula. Also contributing to the decline of the program is the partial discontinuation of government financial assistance. No grant has been allocated for this program by the State or Central Government since 1970. -269- Table 101: SLUM CLEARANCE PROGRAM CAPITAL WORKS (1) (2) (3) (4) Works Works Carried Carried Ratio out from out with Grants M:unicipal Government Total Funds Aid 1/ Grants Govern- (Rs) (Rs) _ _ment Aid 1962-63 1,017,723 7,385,068 3,90,625 47.26 1963-64 967,737 3,925,658 1,605,600 40.90 1964-65 1,772,905 2,058,953 1,425,586 69.23 1965-66 4,O75,550 2,718,845 686,571 25.25 1966-67 4,917,720 2,312,207 1,986,839 68.62 1967-68 3,865,946 1,586,i46 1,062,6h7 66.98 1968-69 1,617,317 7739204 618,719 80.02 1969-70 355,277 990,323 115,808 11.69 1970-71 308,95 620,992 40,023 65.22 1971-72 123,530 3,589,027 - - Period 1962-1971 19,022,300 25,960,723 10,997,418 42.36 1/ Includes grant and loan finance Source: Information provided by the Chief .Accountant - BMC - 270 - Financial aid from the Central Government was budgeted in 1972-73, but it is not clear that this grant was actually received by the BMC. Summarizing the means of financing capital expenditures incurred under this program, loan money is by far the largest source of revenue. Two elements in the financing of these programs are of particular interest (see Tables 102 and 103). First, revenues generated by the program have been quite large since 1970. Second, general municipal revenues have been used in the past to finance from 14 percent to 35 percent of,the .capital works. Tables 104 and 105 describe the means of expenditure financing. An explanation of Table_10 jay.clear the picture. It_can be seen.that the revenues from borrowing indicated in this table are greater than those shown in Table 102,which describes the means of financing capital expenditures. The implication is that current expenditures are in part financed by loans. However, this is not strictly so, since transfers are made from the capital accounts to the general accountsY2/ These transfers were not recorded in Table 162 since they do not represent exenditures on capital Wnrks. The difference therefore represents the transfers between these accounts. Since "Revenues from Borrowing" are computed as the difference between total expenditures incurred and revenues received from all other sources, they are recorded in this residual account. In other words, part of current expenditures are financed from the capital account. 3/ 1/ Table 102 refers to "Revenue Surpluses," i.e. to transfers from the General Account (or Current Account) to the Capital Account. During these years, current expenditures were nearly in their totality financed by transfers from the General Revenue Budget. 2/' The transfers are made from the Capital Account of Slum Clearance (City) to the General Account of the same program and from Capital Account-Slum Clcarance (Suburbs and Extended Suburbs) to the General Account of that Account. There is no transfer between the Accounts of the two areas. 3/ Appropriation from the capital to the general account from 1962 onward: 342,949; 575,385; 349,848; 956,867; 1,314,037; 4,835,982; 1,734,347; 1,916,06; 2,383,433; 2,347,278. Table 102: SLIM CLEARkACÈ PROCRM - EANS OF FINANCING CAPITAL EXPENDITURES -e 1962-63 1963-64 1964-65 1965-66 1966-67 . 1967-68 1968-69 1969-70 1970-71 1971-72 Total MC Expenditures 8,402,791 4,893,395 3,831,858 6,794,395 7,229,927 5,452,392 2,390,521 1,345,600 929,587 3,712,557 own evenue - - - 2,200 61,711 46,595 75,449 176,426 1,008,868 1,037,969 Ravenuc Surplus to 1,174,648 1,325,576 1,345,978 - - - - - Exterr.i Aid Cen.ral Goverrment 2,617,969 1,204,200 1069,189 439,928 1,190,129 801,985 464,339 86,856 - - Sta.e Government 872,656 401,400 346,397' 246,663 396,710 260,662 154,380 28,952 405,023 - T3tal External 3,490,625 1,605,600 1)425,586 686,571 1,586,839 1,062,647 618,719 115,808 405,023 Revenues fr=m Borrouling 3,737,518 1,962,219 1,06o,294 6,107,824 5,6143,088 4,389,745 1,771,802 1,229,792 524,564 3,712,557 Source: BW, Annual Accounts 8\ -F신楡∼1--‘윅―--&[ -& 卜 휑 t 흩 ·‘덟 & ·． & ……－…，…－■■－…■－■；■－----－·－-._____ _ Table 104; SLUM CLEARANCE PROGRAM HEMS OF FINANCING TOTAL EXPENDITURES BMC n(,2-63 1963-64 1964-65 2%5-60' 1966-67 1967-68 1968-69 1969-70 1WO-71 1971-72 Tot:,l Expenditures 9,705,517 6,830,312 5,850,026 9,257,718 9,917,914 9,176,295 6,i2o,o62 5,4o8,346 5,786,9% 8,98,355 Rents and other proceeds of propert:ies 844,950 9311,616 1,133,567 1,214,469 1,31&6,og& i,h64,45i 1,621,423 1,717.040 l,o8i,i86 2,370.L94 Sales proceeds of Inaid a id buildirgs - - - 2,200 61,711, 46,595 75,449 176,426 i,oo8,868 1,037,969 Interest and profits on investments 252,643 332,193 291,547 27,932 h23,47o 373o771 429,66o 392,701 428,026 Own revenue 84h,95O 1,18?,259 -1,465,760 1,508,216 1,435,741 1,934,516 2,070.643 2.323,126 2,482,755 3,836,489 Contribution from general revenue budget 1,289,h75 1,499,850 1,548,538 Total T14C revenues 2,134,425 2,687,log 3.01h,298 1,508,216 1,435,7111 1,934.516 2,070,643 2,323,126 '2M2,755 3,836,L89 External aid - grant from government 2,617,969 i,2o4,200 1,069,189 1.1-90,129 h64.339 86, Central Government 439,928 801,985 856 State C3oveyruaent 8-12;656 401,400 356.397 246,643 396,710 26o,662 154,380 28,952 1105,023 Total External Aid 3,490,625 1,605,600 1,1125,586 686,571 1,586,839 i,o62,647 62.8,719 115,808 h05,023 Revenues from borrowing 4,080,467 2,537,603 i,hio,142 7,o62,94i 6,895,334 6,179,132 3,430,700 2,969,422 2i899,218 5,031,866 Source: B !C Annual Accounts ―…… 〃 & & & …■－-,．■－---－■－■－■－■‘■－■－&－…．」－--__ _ 275 Expenditures on the Slum Clearance Program ave varie quite widely from year to year, but have never accounted for allarge part of expenditures urrently less thanone percent of total expenditures). The largest source of revenue after loan finance., is revenues generated by the program. Since !964-65, grants provided by the Goverment b-ave represented a relatively low fraction. In summary, the program substantially benefited from the government aid and contributions frcm the general reveriue budget d ring the early stage of its implementation. In more eceit years, however, the revenues from theprogram itself have played a major role. 4. Slum Improvement Program l/ The Slum improvement Program was initiated In 1969 when it became clear that the program of slum clearance could not deal either with the problem of existing slums in Greater Bombay or with the raplid rate of increase of the slum areas. The Improvement Program was thus designed, in light of these problems, to improve ;.living conditions of hutment dwellers on municipal lands by providing basic amenities. A similar program is currently carried out by the Maharashtra Housing Boatd on behalf of the State Government in the cities of Bombay, Poona, Nagpur, and Aurangabad. Thus far, municipal goirern- men,t programs have been restricted to slums located on their own 1 Lnds. However, the extension of the programs to slums located on private lands is under serious consideration; legislation passed in 1971 -ives the Government authorization to improve slums situated on private lands. As preliminary actions, the BM-0 and the Housing Board have carried out. jointly a survey of slums and private lands in the city of Bombay; the BMC has also prepared This part largely dr7w-sfrom a B C paper, "Civic Slum Improvement Program," May 1973. - 276 - plans for providing civic amenities in.slums on private J.1ands located in Wards A to K and.cost estimates amounting to Rs. 31.7 million have been submitted to the Government of India. In addition, the Government is contemplating the establishment of a Slum Improvement Board. 5. Amenities Provided Under the Slum Improvement Program Two kinds of activities are carried out in this program: (1) Improvement of existing slums by providing essential civic amenities like water, sanitation, electric lights, passages and street lights. (2) Creation of new colonies with similar, or better, amenities by shifting existing hutments to serviced areas. Vnder both schemes, every hutment dweller who is relocated is allotted a plot of 15, x 10' on which he may erect his own hut. The standards which have been adopted regarding the amenities are the following: (1) One 10 seated sanitary block per 100 huts. (2) One covered washing place with 4 taps per 100 huts. (3) Four electric street-lights per 100 huts. (4) Asphalting or concreting of passages. (5) Drains wherever necessary. In the case of existing colonies, it is generally not possible to maintain the prescribed standards, especially in the case of sanitary blocks. Also in some colonies where the passages are very narrow, the electric companies are unwilling to provide lights because they find it difficult to maintain them. - 277 - The cost of the various amenities per hut is estimated as follows: (i) sanitary block Rs. 250.00 (ii) washing place 35.00 (iii) electric lights 30.00 (iv) roads/pathways and drains 375.00 (v) watermain 60.00 The tbtal cost is further increased by about Rs. 50 to 60 per hut in the case of the colonies with more than 1,000 huts where a welfare center with a family planning clinic is constructed. There are currently about 80 slums situated on the municipal lands (ex&luding those situated in footpaths and roads) accommodating about 38,000 huts, which corresponds approximately to a population of 200,000. Out of these! 56 colonies each having more than 100 huts have been involved in this program. During the first three years of the implementation of the program, 28 colonies comprising about 24,000 huts were upgraded; in 1972-73 the program was ,extended to the remaining settlements as a result of additional resources "made available by the Government of India. Up to now, 20 million rupees have been spent on this program. In addition, the Corporation has already established eight new colonies in the suburbs at cost of Rs 6 millionThese are intended as alternative accommodation for hutment dwellers displaced by the clearance of sites 'required for urgent development. The administration of this program was assumed by a new department formed in 1969 under the charge of a ward officer. The works are executed by the Road Construction Department. However in order to expedite the - 278 - execution of-the works, this Department was placed under the responsibility of an Executive Engineer, who prepares the plans, estimates and supervises the works. The major difficulty in a rapid implementation of this program is that in most of the colonies suitable vacant sites for locating washing places, sanitary blocks and other amenities are not readily available. Thus shifting of some of the hutments became imperative; though as far as possible, these hutment dwellers are given alternative accommodation in the same colony. 6. Budgetary Account of the Slum Improvement Program Expenditures and incomes concerning this program are recorded in the General Account of the Slum Improvement Account in Budget B. There are no expenditures or receipts recorded in the Capital Account of this budget. This practice is explained by the fact that these works are regarded as temporary and the slums are expected to be cleared in some undetermined future. Expenditures are shown under the budget head "Creating new hutment colonies,! and income from rents come under the heading of "hutment colonies." It is not possible, from the budgetary accounts, to determine other sources of financing expenditures since the account of this program is integrated into the accounts of the BIT's properties. However, from the revenue structure of this account it seems that expenditures which are not covered by rental income are financed by a contribution from the General Revenue Budget. In 1972, an additional source of revenue, which is not included in the budget, was made available by the Central Government in the form of a grant of Rs. 15.7 million. The accounts of the slum improvement program including the governimnt grant are presented in Table 106. -279- Table 106: ACCOUNTS OF THE SLUM IMPROVMENT DEPARTINT Revenues2/ fra Hutment Deficit/ Expenditures- Colonies Surplus (Rs) (Rs) (Rs) 1969-70 51,063 64,570 13,507 1970-71 847,537 186,886 - 660,851 1971-72 1,647,584 293,600 - 1,353,984 1972-73 17,338,694 1,300,000 -16,038,694 Sources: * 1/ BM Staff 2/ From Budget B, Slum Improvements Budget, General Account, BW Annual Accounts. - 280 - The-revenues generated by this program consist of reats which are fixed as follows: For old colonies, a "compensation" is recovered in the amount of Rs. 5.00 per 9.29 square' meters area of the hut subject to a minimum of Rs. 8.00 per month for huts used for commercial purposes. In the case of new colonies, the rentals are fixed at Rs. 15.00 per month for a plot of 4.57 meters x 3.04 meters used for residential purposes and Rs. 30.00 for those used for comermial puzrposes. Transfer of properties is allowed after payment of a transfer fee of Rs 50.00 in the case of old colonies and Rs 200.00 in the case of new colonies. The compensation is collected only if at least 50 percent of the amenities are provided. The standard returns expected of every hut wadld work out to Rs 15.00 per month. It is well known that the compensation bears no relationship with the amenities provided; but, the Corporation follows the example set by the Government, which initiated the policy of collecting rents on its own programs. . 7. Sumary: 'BMC Slum Programs The Corporation administers two basic types of programs. The slum eradication program had not produced the kind of relief expected for a large number of slum dwellers. This was due to the fact.that, as a result of high construction costs and limited financial resources, the rate of construction of new tenements was too low compared to the scope of the problem. The second type, which is a slum improvement program, received the largest financial share in the total expenditures,incurred by the Corporation on slur; programs. However, the majority of the funds within this program are used for the maintenance of old properties built in the early 1900's. -281- Expenditures and revenues from the slum programs are aggregated in Table 107. Total expendit-ares have increased at an annual compound rate of 3.4 percent over the 1962-1971 period, well below the rate of growth of the municipal budget; and, they represent, at the present time about 4 percent of all municipal expenditures. At least from a financial viewpoint, these programs have remained quite low in the priority ordering of the BMC. The financing of these programs has been shared by incomes generated by the programs and by transfers from the General Revenue Budget (Table 108). Grants from higher level governments have not been substantial and even - negligible in more recent years. Table 108: SLUM PROGRAM - MEANS OF FINANCING TOTAL EXPENDITURES - PERCENT DISTRIBUTION -BMC 1963-64 196l-65 1965-66 1966-67 1967-68 1968-69 1 1970-71 1971-72 Total Expenditures (YU) * 30,667,856 27,120,901 28,391,592 34,044,369 31,791,049 38,086,723 32,426,383 32,102,330 3,689,833 41,550,639 Financing by (N) Own Revenues 32.72 4o.12 39.54 37.33 36.68 32,64 40.93 48.59 .51.7 h4.36 Contribution from General Revenue Budget 22.08 26.31 24.77 23.54 23.53 25.19 31.17 37.914 52.80 h8.18 RIC Revenues . 54.81 66.h3 6.31 60.87 60.21 1 57.83 72.10 86.53 101.67 9254 External Aid 11.38 5.92 8.514 2.02 7.44 3.70 1.87 .48 1.16 - Revenues from Borrowing 33.80 27.64 17.13 37.10 31.8 38.h5 23.02 12.98 5.84 7.45 Source: BW Annual Accounts Table 107: SLUM PROGRAM 1/ - MEANS OF FINANCING TOTAL EXPENDITURES - BMC 1962-63 1961-61 l964-65 l965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 Total Expenditures 30,667,856 27,120,901 28,391,592 314,014,369 34,791,049 38,086,723 32,126,383 32,102,330 3,689,833 41,550,639 Own Revenues 10,035,711 10,882,490 11,227,726 12,711,611 12,76h,142 . 12,434,265 13,273,671 15,60i,hh4 17,99,184 18,432,051 Contribution from General Revenue Budget (A) 6,7714,421 7,135,5145 7,033,453 8,014,100 8,185,950 9,595,111 10,108,008 12,178,1420 18,317,964 20,020,172 BMC Revenues 16,810,132 18,018,035 18,261,179 20,725,711; 20,950,092 22,029,376 23,381,679 27,779,86 36,312,148 38,452,223 External Aid 3,490,625 1,605,600 2,1425,586 686,571 2,586,839 1,410,269 1,579,719 154,808 405,023 - Revenues from Borrowing 10,367, 099 7,497,266 7,701,827 12,632,0811 10,954,118 14,6147,078 7,466,985 14,167,658 - 2,027,338 3,098,116 1/ Slum Improvements and Slum Clearance Programs. Source: BMC Annual Accounts co) - 283 - C. Bombay Building Repairs and Reconstruction Board This Board was formed in November 1969 by the State Government to facilitate the rehabiliation of core city housing. It is a statutory unincorporated, state Board where all parties concerned are represented (BMC, tenants, landlords, and engineers), and which functions under the supervision of the Deputy Minister for Housing. The Board has been chartered for a period of ten years, which is renewable, in order to provide for the repair or reconstruction of dangerous buildings, i.e. buildings which are 7ikely to collpase, and to provide for the relocation of the displaced occupiers. The creation of this board is a result of the Corporation's inability to deal with repair or demolition of dangerous buildings in"tHe framework of the BM Act. More specifically, this failure was the result - of a lack of finance for this particular purpose. The fines imposed on land- lords who do not make the repairs required by law are very low as compared to the cost or repairs. In 1960, a request was made by the BMC to the State Government for an increase in the fines, but the matter is still pending in court. The landlords, therefore, have no incentive to maintain their buildings. In 1965, a Commaission was set up to study this problem noted that the combined effects of rent control, which has been in existence since 1947 in Bombay, and soaring land values in BombayLCity made it profitable to the landlords to allow buildings to collapse. The Development Plan finalized in 1964, also took note of the deteriorating condition of the old buildings, in Bombay and stated that 18,000 buildings,containing 161,000 tenements, would either require expensive repairs or replacement in the next 15 years. - 281 - Since the problem ot house collapses, with resulting displaced-families, was continuing unabated, the State Government set up the Bedekar Commision in 1965 to recommend the necessary policy actions which should be taken in order to minimize such collapses in the future. The Commission recommended that any solution to the problem-should take into account- the necessity of providing sufficient funds for carry.ing out repairs or rebuilding work, and the setting up of transit camps in which occupants of housing being repaired or demolished can be housed until they are returned to the repaired residences or relocated. 1. Functims of the Bard The duties of the Board in order of priority include structural repairs to dangerous buildings, demolition of irreparable buildings, and construction of transit camps. For -this--purposeT- the board is empowered to have the premises forcibly vacated and buildings demolished if necessary. In the case of repairs or demolition the board is obliged to provide temporary or permanent accommodation for displaced people. The board deals primarily with private residential units, however, repairs are also made on small commercial units as long as there is same residential use. Any building of the type just described and located in the city are under the Board!s jurisdiction. The Board also has the right to propose the reconstruction of a building on which the cess is levied and which is situated in an area declared as a slum area under the BMC Act. However, the initial emphasis of the board is on repairs. The redevelopment of the - 285 - slum areas via reconstruction will be undertaken later. Nevertheless, the board, as a matter of policy, has decided that any slum area which is quite small and in which most of the buildings are in very bad condition may be considered for reconstruction. Accordingly, one slum in each ward has been selected for such reconstruction. The criterion adopted in the definition of structural repairs is as follows: if the repair is equal to or less than Rs 75*per square meter the board undertakes the repair of the building; if this unit cost is over Rs75 the buildings are vacated and demolished while new buildings are assigned to the tenants. However, the Rs 75 rule may be waived. At the discretion of the Board, repairs may be made if the private party (owner and/or tenant) agrees to pay the excess amount when the repairs charges are up to Rs 90 per square meter, these cases are inspected by a Technical Committee, which--after a detailed probe - recomends to the Board whether they should be takan up for repairs or otherwise. Indeed this figure of Rs 90 per square meter was arrived at via the notion that a building, after structural repairs, should have its useful life extended by a period equal to one-third of the anticipated life of a new building. Thus it would not be worthwhile to spend more than one-third the cost of a new building on the structural repairs to an old building. The cost of construction of a new building at the time of formulation of the Act was estimated to be Rs 22 per square.feet of plinth area. However, in the course of consideration of the reconstruction scheme, the Board found that the estimated cost of construction of a new building in the city would be approximately Rs 35/ square feet of plinth area. It therefore decided to adopt one-third of -286- this or Rs 25 square meter as an indicator of irreparability under theAct. The system of voluntarily contribution for excess, repair cost has worked out fairly well. During the first year of the Board's operation nearly 70 percent of occupiers have came forth to contribute this excess so that repairs could be undertaken. The Board is to make the repairs on the basis of specifications provided by the BM . The owners and occupiers are allowed to make repairs to their bld buildings with their expenditures being reimbursed to them by the Board after the Board has inspected and approved the final results. The Board sets apart about 20 percent of its proposed expenditure on repairs for construction of buildings under such reimbursement schemes. Permission is given in such cases even if the buildings are not on the priority list, under the condition that the repairs are urgent. In other cases, the Board is reponsible for the repairs; however, due to a limited staff, which amounts at the present time to approximately 12 senior technical officers, 30 assistat technical officers, and 1 chief technical officer, the Board subcontracts the work to private contractors. This procedure has proved to be an important impediment in the Board's work since private contractors are usually not interested in these types of union works. The Board has decided to allow the Chief Executive Officer to negotiate with unregistered contractors or to allow grouping of works that could be entrusted to particular contractor. In addition, the Board decided that contracts of works costing less than Rs 5,000 may be fixed by negotiation with contractors of the Board in consultation with the Chief Excecutive Officer of the Board. The exception is that cae Contractor cannot be awarded more than two such works at a time. . 287 2. Means of-Financing The Board has three main source of finances: (1) Building Repair Cess, (2) statutory contribution by the State Government and the BMC in a yearly amount of Rs 10 millions each, and (3) revenues derived from rents, interests, and compensation. The State Government may increase its contribution at its own discretion. In addition to this regular contribution, both the State Government and the BMC contributed an intial amount of Rs 25 million each, for meeting the expenditures of the Board. A detailed presentation of the other two types of revenues will be presented in the following two sections. a. The Building Repair Cess The Cess is a surcharge on the property tax levied by the BMC, which acts as the Board collection agent. All residential properties in the city area are subject to the Cess, with the main exemptions being government-owned properties, owner-occupier buildings, and certain newer properties. For purpose of assessing the tax liabilities, buildings are classified according to date of construction, with rates higher for older buildings which have undergone repair under the Act (See Tale 109). In each case the onwerst share of the tax is 10 percent of rateable value with the remainder being paid by the tenant in the form of a higher controlled rent. The tenants rates are doubled after the structural repairs are made. It may also be seen from Table 109 that the greatest portion of this Cess is collected from the oldest class of property and that total collections from the Cess are equivalent in amount to approximately 10 percent of total property tax collections of the BMC (see Tables 110 and 111). Table 109: REPAIRS AND RECONSTRUCTION BOARD PROPERTY TAX RATES* Rateable Yearly Rate of Number value of Demand of, Class of Date Normal Structurally of buildings cess (1971- PL erty Coastructed rate repaired buildings (Ra '000) 72) (Ra '000) A Before 1940 25 o 17,642 91,909 22,879 B 1940-1950 20 30 2,433 16,219 2,853 0 1950-1969 15 20 2,183 35,034 5,244 Total 22,258 141,162 30,976 Sourcel Bombay Building Repairs and Reconstruction Board - 289 - Table 110: Bombay Building Repairs and Reconstruction Bo ad Reconstruction Works (Period ending May 1973) Number of draft schemes approved by the Board 138 Number of schemes finally approved by the government 14 Number of schemes started 5 Number of works where physical progress is -- up to 50% 3 -- up to 90% to 95% 2 -- all completed 0 Number of tenements rehoused in the reconstructed buildings 98 Source: Same as Table 109 - 290 - Table 111: Number of Properties Exempted Category Wise from the Building Repair Cess A B C Other a. Central Goverment 8- - 48 b. State Government - - 665 c. BMC 1,363 401 322 d. Maharashtra Housing Board - - 400 e. Bombay Port Trust Authorities - - - 806 f. Public Trust Properties/ 649 163 152 g. Cooperative Housing Societies 4h 578 662 - h. Buildings Exclusively in Occupation of the Owner 713 232 192 - i. Buildings Exclusively Used for Non-residential Purposes 10,770 2,017 2,225 - j. Residential Buildings Occupied on Leave and License Basis 597 191 219 - k. Properties Partly used for (h), (i) and (j) mentioned above 343 18c 61 - procided not used for any other purpose 1. Open Lands - - 769 m. Buildings Erected after 1969 -- 78 - 1/ Registered under the Bombay Public Trusts Act 1950 Source: Bombay Building Repairs and Reconstruction Board, Annual Report 1970-71. - 291 - b. Revenues from Rents When the buildings are reconstructed at the Boar's expense, rents are charge to the occupiers. Itis generally though that the rents for residential tenants should be between 25 to 30 paise per square foot or 50 to 5 rupees per month; and the rent for non-residential tenant-shops or offices on ground and first floors should be.between 5 to 75 paise per square feet. -292 - XI. ROAD TRANSPORT A. Road Network in Greater Bombay The road system in Greater Bombay can be divided into two parts: (a) roads and streets to serve local needs of access and circulation, and (b) routes used for cross-city traveling. The latter comprises approximately one-third of the total road mileage and most of the traffic. The arrangements of arterials on Bombay Island has been guided by several factors. The geographical features of the island have resulted in a north-south orientaion of roads with limited road connections with the suburbs. A second major determinant of the system is 1and use. It accouts for both the convergence of several routes at the center of commerical and government activity in the Fort area, and the relatively sparse road development in the vacinity of the Mahalaxmi area. Some substantial parts of industrial areas, such as the industrial zones in the heart of F and G wards, are not served adequately by good arterial roads. The development of arterial roads over the last decade was mainly the result of a 1962 Bombay Transportation and Traffic study sponsored jointly by the Central Government, State Government, and the BMC, and conducted by the US based consulting firm of Wilbur Smith and Associates. The objectives of this study were to recommend ways for improving the efficiency of traffic operations on existing streets and to provide a plan for new road construction. The traffic study was patterned after the studies being carried on for US cities at that time. The emphasis was almost entirely on automobile and truck traffic, although reference was made to the need for other studies of mass transit services. The final report for this -293- study was presented in December 1963 and contained recommendations for building a system of freeways, expressways, and major streets. The recommended network would encircle the Island with freeways (the West Island and East Island freeways, and the Mahim and Cross Island Connectors) and would bisect the Island longitudinally with a central Island Expressway. The report pointed out that with the proposed system all portions of the Island would be within one mile of a freeway or expressway. The plan also called for upgrading portions of the Eastern and Western Express Highways in the suburbs to freeway standards, the construction of the Sewri Expressway leading to the Thana Greek Bridge, and construction of a Tardea Expressway. In all, 28 miles of freeway, 14 in17s of expressway, and 75 miles of major route improvements were proposed at a 1963 estimated cost of Rs 960 million. The West and East Island Freeways account for Rs. 570 million of this total. Details of constructicrn and improvement of existing roads were not collected during the mission. However, on the basis of information provided by BMO officials, actual progress in the implementation o:? these recommendations has been slow. The merit of this road development plan has been discussed in great detail in the IBRD Report on Bombay of April 30, 1971 (1) and will only be summarized here. "The road system proposals for Bombay were not supported by convincing evidence that they were the 'best' in terms of overall urban transport and development needs at the time they were pre- sented in 1963. Developnents during the intervening years, in- cluding the proposal of substantially different concepts for future urban growth, make it highly questionable whether the originally proposed road system is now a valid basis for a transport investment system..... However, some recommendations made by the consultants are even more appropriate now than in 1963; nanely those relating to the need for improved traffic regulations and controls. Par- ticularly given the difficulty in obtaining sufficient funds to finance large new road construction projects, more attention should - 294 - be given to measures which would permit more efficient use of existing streets. It is unfortunate that the top priority assigned to these measures by the consultants was not adopted.... Compared to possible mass transit improvements, the justification for costly freeways (which as now being planned, are not even intended to carry commuter buses and which would mainly benefit the small percentage of car owners) is very doubtful." Tables 112 and 113 give some indication of the scope and the quality of the road network. Intensive rains during the..monqoon season place the road network under heavy stress and the quality of the pavement is, on average, quite low. Roads are often very narrow and, in same areas of the City, are generally inadequate to deal with the rapidly increasing number of vehicles. The number of vehicles was estimated at 136,000 in 1969-70, which represents nearly a 100 percent increase since 1962. Of this total, 65 percent are cars, 15 percent motorcycles and the rest are mainly trucks. B. Responsibilities of the Corporation The Corporation is responsible for the construction and maintenance of most roads in Greater Bombay. The exception are two freeways, the Western and Eastern freeways, connecting Greater Bombay to other Darts of the state of Maharashtra, and 5 small linking roads in the suburbs. In the case of the exceptions listed above, the BM bears all maintenance costs and 50 percent of the constructions costs, the remainder being supported by the State Government. The allocation formula of the construction costs of the two freeways was, in the past, one-third of the cost borne., by the Central Government, one-third by the State Government, and one-third by the S29 - Table 112: TYPES OF ROADS IN GREATER BCMAY AS OF MARCH 31 1972 ... . ........ Kilometers...... .......... Extended Greater Type of Roads 0it Suburbs Suburbs Bambay Water Boiud Metalled Macadam - 12.87 7.32 20.19 Black Topped 395.99 361.95 166.19 92h.13 Cement Concrete 78.66 48.18 11.05 137.89 Sett Paved 6.92 1.65 21.60 30.17 Total 481.57 424.65 206.16 1,112.38 Source: BMC Staff. Table 113: RELATION BETWEEN POPULATION AND ROAD LENTH (March 31, 1972) I II III IV V Road Km Popula- Road Mileage per Area tion Mileage per sq. 100,000 (So M) (loo) Km Km Inhabitants city 67.78 3,067 481.57 7.10 15.702 Suburbs 175 2,168 424.65 2.43 19.59 Extended Suburbs 194 733 206.16 1.06 28.13 Greater Bombay 436.78 5,968 1,112.38 2.55 18.64 Source: BMC Staff - 296 - Corporation.- .This formula was changed to the present one when the Central Government deciddd to drop its participation. The Corporation also bears all costs for the maintenance and construction 'of bridges, except for those connected with the construction of the freeways. Finally, all traffic regulations are under the responsibility of the BMD. C. Budgetary Account Expenditures and ±ncomes on account of roads and bridges are recorded in Budget A under head VIII "Roads, Storm Water Drains and Public Lighting." As a result of this presentation, it is rmt possible to trace all expenditures which are exclusively incurred on roads. The problem faced here is especially important with regard to debt charges and expenditure on capital works. As noted several times before, the loan works budget is presented by project and not by functional item within each major head. A number of projects involve joint works on roads as well as on storm water (SW) drains and it is not feasible to separate expenditures on roads from expenditures on SW drains. An attempt was made to trace capital expenditures.from the loan works budget by activity over a period of several years, i.e. roads only, SW drains, and SW drains and roads. i The main source of financing expenditures consists of tax revenues. The wheel tax is imposed on vehicles on a weight basis. However, the tax receipts represent quite a small proportion of total expenditures. Documents not available for other years. -297- XII. WATER SUPPLY, SEWERAGE AND REFUSE COLLECTION A. Water Supply 1. Nature of the System The water supply system operated by the Corporation serves the whole of Greater Bombay. There are few private suppliers. Some areas outside the municipal limits are also served by the BMC system--bulk water supplied to the municipalities of Bhiwandi and Thana accounted for 4% of the total BMC water supply in 1971-72. Greater Bombay derives its water mainly from artificial lakes impounding the rainwater falling in their catchments during the monsoon each year. The largest of these, located on the mainland, are formed by dams built across the Vaitarna and Tansa Rivers which rise in the Western Ghats and flow into the Arabian Sea. The smaller, the Vehar, Tulsi, and Powai Lakes are located within the limits of Greater Bombay itself, on the island of Salsette. All these sources are at such elevations that water can be transported from them by gravity to the various focal points of distribution in the Greater Bombay area. All water supplies to Bombay roughly follow a north-south route from the source lying to the north and northeast of the island to the center of the city. The oldest parts of the present water supply system were constructed in the mid-19th century to serve the commercial and residential areas which had been developed on the southern part of Bombay Island, principally in the area of the Fort and the Harbour. Vehar Lake was first developed in 1860, followed by the development of the Tulsi Lake in 1878. Then, as water requirements increased, water had to be brought from the mainland - 298 - over longer distances and across the intervening Thana Creek. The first stage of the Tansa Scheme was completed in 1892 and all works connected with this scheme were completed by 1927. These developments provided sufficient water to the area; but with the rapid post war population growth, shortages developed which led to the implementation of the Vaitarna-cum-Tansa scheme in 1948. The Powai Lake, which was developed in 1889, has never been used as part of the system because of the inferior water quality. In recent years its water has been used for the stables in the Aarey Colony and for growing paragrass in the surrounding areas. Since the Vaitarna scheme, no new source has been explored by the BMC; instead, the Corporation has been buying bulk water from the Government of Maharashtra (GOM), which draws the supply from the Ulhas River. The Ulhas Scheme, commissioned in 1967 by the BMC and GOM, was conceived as an emergency scheme and makes use of the residual flows in the Ulhas River after the demands of other users have been met. The BMC has not been granted a permanent permit to this source of water and can only extract up to 1.1 m 3/sec. In 1973-74, a new source of water was made available to BMC by the GOM when the construction of two dams across the Alwandi and Vaitarna Rivers forming the Upper Vaitarna Reservoir was completed. Approximately 1.8m3 /sec is currently available and when fully utilized, it is estimated that 6.2m 3/sec will be available. Finally, the State has commissioned the construction of the Bhatsai Dam, which will release -,* --_299 33 some 5.3m I sec f or use by BMC by 1976-77. All sources used at present by the Corporation provide, in total, about 18.4m /sec. (See Table 114). Mainland water is conveyed to Bombay by a gravity system of trunk lines up to 77 km long, and sized from 600 mm to 3,000 mm in diameter. Water is conveyed from Tansa and Vaitarna by 3 transmission mains and Ulhas water is pumped to the Tansa mains. Vehar and Tulsi water is gravity fed to city reservice reservoirs. The total lengths of mains-recorded in 1971 was 1,896 km., but the distribution system .i! generally of poor quality and out of date. The distribution pipes consist mainly of cast iron with lead or rubber joints. Some of the larger mains. are steel pipes protected with concrete mortar and have been subject to severe corrosion. Some asbestos cement mains exist in the suburbs. . - The water distribution system is complex and does not effect an equitable distribution of the limited supplies. Some areas are supplied by direct feeds from the trunk mains, some by service reservoirs, and others by a combination of the two. Considerable manpower is required - 300 - Table 114: WATER SOURCES AT PRESENT USED BY OR UNDER DEVELOPED FOR BMD m3/sec m3/sec Sources at present used by BMC (a) Vehar (EMC) 0.6 (b) Tulsi (BMC) 0.2 (c) Tansa (BMC) 4.9 (d) Vaitarna (BMC) 5.4 (e) Ulhas (GOM) 1..1 12.2 Source to be fully used by BMC 1973/74 (f) Upper Vaitarna (GOM) 6.21/ 6.2 Source projected to be used by BMC 1976/77 (g) Bhatsai Stage I (GOM) 5.3 5.3 TOTAL 23.7 Principal Characteristics of MC Sources Date constructed Nominal Name (extended) Dam length live storage Million n-) Vehar 1856-(1899) (3 dams) - longest 225 in 31 Tulsi 1876-(1894) 559 in 8 Tansa 1892-(1927) 2,750 m 145 Vaitarna 1955 555 m 162 1/ Approximate 1.8 m3/sec currently available, giving a total current yield of 14 m3/sec. Source: BEM Staff - 301 - to constantly operate the large number of valves necessary to regulate the intermittent supply to the various zones. Incoming mains to the reservoirs are connected to the distribution grid, resulting in most reservoirs not being filled. Low pressures and water shortage allow only four of five city reservoirs, and one of nine reservoirs in the suburbs, to be in normal use. BMC has been carrying out network analyses for some years in order to convert areas directly supplied from incoming mains to a system dependent on service reservoirs and to determine network extensions and reinforcements. Two-thirds of the City and one-third of the suburban zones have now been analyzed. The number of proposed zones is 76, with several zones supplied by one service reservoir, and each zone having a separate feeder main. As a result of the poor quality of the water distribution system, the water losses are important. Several sample experiments were conducted and revealed that leakage under equivalent 24-hours supply conditions is 40-45% of the inflow and that corrective measures could reduce this to less than 12%. Finally, important deficiencies in the water supply system can be noticed at the treatment stage. All water receives chlorination, but only 6 percent receives full treatment. Water distributed through service reservoirs is rechlorinated, but quality varies and is dependent on previous treatment, pressures, and distance from reservoirs. Raw water extracted from Tulsi reservoir and from Ulhas river require rapid - 302 - sand filtration. Chlorination is carried out" at Powai for the City, at the entrance to the east-west tunnel for the western suburbs, and at Bhandup and Mulund for the eastern suburbs. Prechlorination takes place at the inlet side of all service reservoirs. Statistics available on production and consumption of the water supply by major geographical divisions and user's categories for the last decade are given in Tablel15. The supply of water has been relatively constant over the period 1962-71. Annual variation in the quantity of water available are not --insignificant since the water supply system is heavilydependent on the monsoon starting each year in early June. In 1966, for example, monsoon failure and resultant drought caused many industries to close and population evacuation in some areas was seriously considered. In 1972, the monsoon again failed over part of Maharashtra, leaving the BMC with approximately 10-15% less water than forecast for 1972-73. (See Table 116). The metering system in Bombay is still at a relatively early stage of development. All industrial supplies with the exception of some construction works, are metered. About 95% of domestic supplies (excluding losses) in the suburbs are metered, but the corresponding figure is only 20% in the city. Altogether, approximately half of all supplies are not metered (Table 117). The unmetered properties are mainly the older types of property where metering would be extremely difficult since in the old, congested part of the city consumer pipes are frequently laid out in such a manner that there is virtually no , � , ! ' ! i ,�! ' . , ` , , . � . . ,. ь , . , . � , • • 1 г • • • • �� � - здз- � _ 1 � . r� ТяЫе 115а S;SAT2STIC5 CN WATER 5UE'PLY-E2� � г t!б?.64 , t9ь4.ы 196s.бь 19ьь•Ь7 1967.г,8 19г,е-б! 1969-7о 197л-Т1 [l7t.тz Е ' ' . i " 1. Suenly о[ Чвtаг Ъv Мв1ог Сговтвоhtсвl А. гва� -. ,' � . г -_ . , . � Сгввiiт еавЬву ![[. цб,762 77a,9S2 736.725 337.Оц ]47.12f 34],270 377,6Т3 , з32.l07 123,93б t •С[.у n, z6,t17 ' 24ь,иsг 2s9,г�31 zii,ь4! г18,9оЬ 2хо,ь47 гоз,еsб 21s,76a xsz,sa8 i . аи'.,иеь. ю. w,41з 7е,l7s ei дьб 03.е1о 1a,1os , 94,9э8 1о0,ьо0 , 1об,тб8 ' 1з4,э9г ' ; � ' . Сг�+пдьд иiЬитЬв ю. 14,276 15.92i 15,729 21,576 20,ц0 27,ЬВ3 2l,219 ]0,666 7а,Я77 ! , а?k�1в. г.[.и. е! Сгввеrг к.ь.у ю. б,tss ь,ао2 '•7,ц4 tt,789 ц,1sо 17д.о 12,7а1 16,4а4 , lедп ,, 2. Аwгве• Daltr Supplv о[ ув"г.вт 6r !М}от Сеавгвеhlев( Агев Gеввеае ео!оЬry !47 92! !76 916 9бS ,940 !14 ' •96! 1,164 �� - Ct[y юi� • 719 b69 711 бц б41 603 3S9 391 690 ' � sиьитЬ. ю. 18я 21ь . 22з :4s г4! ' або z7ь ' z92 7ь7 . ` ет;t:вдм. виьи.Ь. ю. з9 а7 . 47 • 49 sт , 76 •• а0 - 84 1ав ' �. 9вввапJt увгlвгlспs (п Sаерlт оf,Ча� �ег , ' . . н.:s.и. s�PP1y рвт o.r , ю. • 1,о7й 99s 1,о14 '• 927 • 92я 9ео аоь 9s2 1,о7з ' мl.1.�. suPP1y р.г �.у , ю. � ебя 810 8ц пб т4а 7ео аоо ь9ь 757 • . 4j 5иол1У о1 Ча[ат Ьт tlalor C:eeiюrlas ef Vfaeв алд Nв1or Ceoyrnohfeal Акив � • , А. Doneв[tc Ритроее■ , ' Севвевт ВотЬву ю. 161,791 20й,330 21l,067 ТОб,114 186,774 211.180 202,а96 217,774 267,106 � �� , Сlс7 NL 116,520 147,742 1Ы,б13 142,573 112,244 1.39,6В9 . 126,15{; 175,242 160,217 ' lrЪитЬв �Ю. ]а,о24 д7,оеt _ вS 3и` sо,07з бЪ,ьsе s4,9oi s9,ы1 ы,4аs а1,ь19 � • tе[вад.д SиЬидв ю. i,z4a 9,721 9,lto 17,so7 1z,в» 16,se! »,г72 1в,оы 24,641 '� • . е. т.див[тsл ела тгвдв л,гров.+ . • . • Сгввсет еаль.у га. 137д4е еs,ь3ь а2,я19 7в,2ц го4,9о1 7l,7es т9,е1а е2,й1ь s4,2a8 �. Ctq ю. 106,513 59,057 S6,Z02 50,823 77,594 47,821 47,Оа9 47,Ь74 54,019 ' SиЬитЬв ИL 20,102 22,052 2Ъ,892 ' 22,576 , t6,527 S5,O7D Т5,196 26,766 ]1,813 � '' Еаеаг.��ад Sи4итЬв П[. Ь,537 ' 6,Sri 4,826 й,е22 4;780 6,926 7,3]4 7,97й 6,_454 � С. Oehee Чоn-доатв[1е Pucooees , • . . , Сгевеег Domбay ю. 2,й27 7,544 а5а ' 442 ]79 815 916 777 1,297 , �� ' Сlсу ю. Ы7 630 116 144 S9 • 60 74 483 467 �,+' . ' SиЬиеЬв ML ) 2,686 139 290 707 73Р а45 267 � 799 � � ) 2,567 ' , - ЕаСепдад 8иЪиеЬв NL ) 209 2 В 17 1В 70 "ь7 э5 , D. Laeaes ' Аsвиаед Uпвссат[ед Lаим ' • � . Еог Сгевсаг ВотЬву КL 49,467 45,223 S3,й81 50,254 51,474 31,490 50,051 32,976 61,89э � - 5. Оа{1у Аvетаде рсе Сао[[в bv МаУnт Сеоетгтhiсвl Acees апд Ъv На1ас Caceeociea о[ Оееге . �, А. епг л1г Purnnsnx , ,� Стгасег 8ииЬву L 209 226 • 2tд.i 187 170 169 160 1b6 194 ' , С1су L 246 226 276 20й 167 164 L85 ' 197 22Ь �� • � SиЬисЬв L 156 17Ъ 169 ., 179 , 21э 168 147 175 167 . , , Ехсепдед 3иЬитбв • L 96 103 �94 102 125 166 4В 115 ц2 � 8. Оа.пе5сlе Ригроен . , . Сгсвиr poc6ay ' L ` 97 120 125 113 95 105 97 99 121 "� . с[[у L 107 137' 149 128 85 104 115 121 142 � SиЬитЬв L 80 101 95 100 126 109 87 80 101 ' - л Ексепдед SиЬитЬа L 49 6] 59 77 77 � 99 58 ЬВ 90 � Sг•г ге; 8.w^ 5tз££ , , ` . 3o4 - Table 116: SUMARZ OF WATER SUPPLY STATISTICS 1963-64 1971-72 Quantity of water supply to 346,762 425,956 Greater Bombay (ML) Average daily supply to 947 164 Greater Bombay (M) 29712,, 362,063 Consumption of water., average daily 209 193 supply for all purposes per head in GB (R) ',, Average daily supply for domestic 97 121 purposes per head-in GB (R) Average daily supply for domestic 107 142 purposes per head in City (e) Average daily supply for domestic 80 101 purposes per head in suburbs (e) ,Average daily supply for domestic 49 go purposes per head in extended suburbs (e) Source: BMC 5,taff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 305 - TabJe 17: METERED AND UNNETERED SUPPLIES Metered Unmetered Total % Metered Domestic Supply to GB (ML) City 42,915 117,302 160,217 26.8 Suburbs 61,387 20,232 81,619 75.2 Extended suburbs 21,521 3,120 24,641 87.3 TOTAL 125,823 140,654 294,477 42.7 Total Supply to GB (ML) City 95,330 157,258 252,588 37.7 Suburbs 91,760 h2,632 134,392 68.3 Extended suburbs 29,382 9,595 38,977 75.4 TOTAL 216,472 209,485 425,975 50.8 Source: BMC Staff - 306 - position in which a meter can be installed and kept free from theft or interference. Metering of chawls, where communal taps are provided to serve groups of tenements, has not been undertaken in the city. As of March 1972, communal taps and standpipes totaled 3,171 while the total number of connections was 144,000 (100,000 in the city and 44,000 in the suburbs), of which 82,000 were unmetered. Of these 62,000 meters, 53% were BMC property (Tables 118 and 119). Daily water availability per.capita is very low and has gradually declined during the last decade. These numbers refer to the quantity of water supplied for all purposes, industrial and commercial uses included. For domestic purposes, however, water avail- ability per capita, 'though still low in Greater Bombay, has increased during the same period. The quantity of water made available is also dependent on the location of the consumers within the area. People living in the extended suburbs receive about 63% of the quantity of water made available to city dwellers, which is a significant improvement when compared to the similar figure of 46% in 1963. The increase in the supply of water for domestic purposes has been achieved at the expense of industrial and commercial users. Table 120 concerning the distribution of water supply by major categories of users, shows that the relative share of water allocated to industrial and trade uses declined from about 38% in 1963 to 22% in 1972. The consumption of water is rationed for all types of consumers. Hours of supply are limited for consumer purposes with less than five hours supply per day currently available for 60% of - 307 Table 118: DETAILS OF STANUPIPES IN CITY, SUBURBS AND EXTENDED SUBURBS AS OF MARCH 31, 1972 City 349 Suburbs 2,276 Extended Suburbs 546 Greater Bombay 3171 Table 119: STATEMENT SHOWI DETAILS OF METERS IN CITY SUBURBS AND EXTENDED SUBURBS, AS CF MARCH 31, 197 city 17,972 Municipal 12,689 Private 5,283 Suburbs 32,200 Municipal 15,282 Private 16,911 Extended Suburbs 12,183 Municipal 5,126 Private 7,057 Greater Bombay 62,355 Municipal 33,097 Frivate 29,258 Source: BMC Staff - 308 - Table 120: DISTRIBUTICK OF WATER SUPPLY BY MAJOR TERRITORIAL DIVISION AND MAJOR USES - BM) 1968 - 1972 (%) Water Supply Accounted 1963-64 1964-65 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 for by: City 74.55 70.70 72.16 65.63 61.73 61.91 58.85 58.41 56.88 Suburbs 19.68 22.87 22.57 24.75 29.40 26.63 29.O 28.82 30.25 Extended Suburbs 4.03 4.61 4.37 6.22 5.73 7.76 8.43 8.30 8.77 Outside Bombay limits 1.74 1.82 .90 3.40 3.14 3.70 3.69 4.47 4.10 Greater Bombay - 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Tomestic purposes 46.65 60.34 61.49 61.52 54.31 61.51 60.80 61.42 62.61 Industrial & trade 38.39 25.26 23.27 23.35 30.58 23.26 23.92 23.36 22.10 purposes Other non-domestic .70 1.06 .2h .13 .11 .23 28 .22 .30 purposes Unaccounted for 14.26 13.34 15.00 15.00 15.00 15.00 15.00 15.co 14.99 City - 100.00 100.00 100.00 100100 100.00 100.00 100.00 100.00 100.00 Domestic purposes L4.28 60.53 63.06 62.61 51*.32 63.30 61.88 62.67 63.h3 Industrial & trade 40.48 24.19 21.66 22.32 33.64 21.67 23.09 22.09 21.38 purposes Other ton-domestic .23 .26 .27 .06 .02 .01 .01 .22 .18 purposes Unaccounted for 15.01 15.02 15.01 15.01 15.02 15.02 15.02 15.02 15.01 Suburbs - 100.00 100.00 100.00 100.00 100 00 100.00 100.00 100.00 100.00 Domestic purposes 54.77 59.62 56.12 58.35 59.22 57.82 59.11 59.60 60.73 Industrial & trade 28.95 27.92 26.97 26.30 25.48 26.37 25.04 25.14 23.67 purposes Other non-domestic 3.72 3.41 .17 .33 .29 .79 .84 .25 .59 purposes Unaccounted for 12.56 9.05 16.74 15.02 15.01 15.02 15.01 15.01 15.01 Extended Suburbs - 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Domestic purposes 50.90 61.03 63.00 62.60 61.38 59.91 59.11 58.91 63.21 Industrial & trade 45.89 28.45 30.68 22.35 23.52 25.01 25.78 26.00 21.69 purposes Other non-domestic 1.33 .01 .03 .08 .06 .10 .08 .08 purposes Unaccounted for 9.19 6.31 15.02 15.02 15,02 15.01 15.01 15.02 Source: BMC Staff - 309 - the population. Such hours are often inconvenient, e.g. between 3 and 6 a.m., in spite of many efforts made to stagger supply hours to the various areas. A large number of valves are operated daily and this pattern is continually being amended, taking account of new works brought into use, meeting seasonal demand fluctuations, allowing for redistribution or growth of domestic and industrial demands, and meeting day to day contingencies. The 1971-72 hours of supply is illustrated in Table 121. Currently, it is estimated that only 71L of the domestic Table 121: Breakdown of Supply Hours Hours of Supply 2 or less 2-3 3-5 5-8 8-12 12-8 Total Population 1.3 0.9 1.4 1.0 0.7 0.6 5.9 (millions) Percentage of Population 21 16 23 17 13 10 100 Source: BMC Staff demand is being satisfied. Quota restrictions have been imposed on primary industries with high water consumption such as the post, dairy, and railroad. But even in these cases, the BMC has been unable to meet its quotas for the past four years. 2. Expenditure Structure and Growth Expenditures incurred by the Corporation on water works have increased at a compounded annual growth rate of 7.4%, and 33%, respectively for current and capital expenditures (Tablel22). On a per capita basis, total expenditures have increased from 15.8 Rs. to 24.6 Rs. The budgetary provisions for waterworks are taking an increasing share of the Corporation's resources and in particular of its investment program. The BMC is currently - 310 - Table 122: EXPENDITURES ON WTER WORKS - BMC (Rs'000) II III iv v vi viI Capital Total Expendi- Capital Expendi- tures as Ecpendi- Expendi- Total tures % of Current tures on tures on Capital Total per Total BC Expendi- Iand and Plant and Ecpendi- Expendi- Capita Investnent tures Buildings Machineryl/ tures tures (Rs) Program 1962-63 53,889 13,353 829 14,182 68,071 15.8 28.8 1963-64. 59,101 27,111 701 27,812 86;913 19.4 43.3 1964-65 53,356 23,461 968 2h,439 77,795 16.8 37.8 1965-66 60,394 60,876 261 61,137 121,531 25.3 58.8 1966-67 63,050 79,557 36 79,593 142,643 28.6 6h.5 1967-68 65,532 90,303 143 90,h46 155,978 30.2 56.8 1968-69 78,103 45,936 169 46,105 124,208 23.1 41.6 1969-70 93,294 h1,829 394 42,223 135,517 24.h 6.9 1970-71 102,280 50,264 547 52,811 155,091 26.9 53.9 1971-72 95,318 50,961 790 51,751 1h7,069 24.6 48.2 1/ As given by the Corporation, i.e., including rolling stock and other expenditures which would be classified under current but insignificant. Source: BMC Annual Accounts - 311 - allocating 48% of its investment funds to waterworks as compared to 29% in 1962. This situation can be. attributed to two major factors: lack of water, and low quality in the existing water supply system, i.e. an out of date distribution system resulting in high leakage and encouraging wastage. BMC's strategy has been to look for new sources of water and to add sources of water supply without corresponding improvements and extensions to the old distribution system. A programme of leak detection and waste prevention could significantly improve the quantity and quality of water made available to the consumers. Also, the water supply system operated by BMC is heavily dependent on water sources located on the mainland, which are placed under the jurisdiction of the Government of Maharashtra (GOM), and state-owned agencies. 3. Planning and Administrative Organization The inter-relation of Bombay with the mainland areas was never really seriously considered in watei supply planning until the mid 1960's, when major industrial development accelerated on the mainland. Various public and local authorities have developed, or are seeking, water resources in the region. There are at present four major water supply systems contributing to capacity and the GOM has no overriding body to coordinate their activities. In 1962 the Maharashtra Industrial Develop- ment Corporation (MIDC), a state-owned agency, was created. The MIDC was set up basically to be a tool for the industrial dispersal policy of the State Government. It manages various industrial areas where it creates the infrastructure in the form of roads, water distribution system, sewerage, and drainage, and leases plots and/or buildings to various industries. The MIDC operates three of the four large systems of water - 312 - supply in the metropolitan region: the Kalyan-Ulhasnagar complex, which is- the largest zone in the region outside Greater Bombay, is served from the Badlapur waterworks and also by the Shadad system operated by MIDC. The source in both cases is the Ulhas River and the capacities of the two systems are 7.8 IMgd and 10 IMgd, respectively. There is also the HOC/Trans-Thana system, which is based on.extraction from the Patalganga river in the south of the region, and which serves (besides the Hindustan Organic Chemicals plant on the river) the industrial areas in Trans-Thana. The capacity of this system is about 12 IMgd. The MIDC's plans for industrial development in the Bombay Metropolitan area have resulted in forecasted demands far higher than the yield of local water extraction schemes. Therefore, it was obliged to construct the Ransai and Barve dams. Additional pressures are likely to build up with the development of the Bombay twin city undertaken by CIDCO, a state-owned agency. CIDCO forecasts a population of 2 million in the Trans-Thana region across the harbour from Bombay by 1991, and is undertaking water source studies in addition to considering taking supplies from the MIDC sources. Overall, it has been estimated, on the basis of population and demand projections for the Bombay Metro- politan Region (BMR) through 1991, that in 20 years Greater Bombay's share of water resource requirements, although rising by 50%, will fall from 82% to 60% of the regional demand.In a report to GOM in 1968, the British consultants Binnie and Partners concluded: a) that water resources of the islands of Bombay and Salsette are extremely small and all future supplies to Bombay will have to be drawn from mainland sources; 313 - b) that it is unrealistic to consider Bombay's water supply problems in isolation from those in the other built-up developing areas on the mainland which are part of BMR; and c) in the next 20 years water demands will approximately double in BMR. They further propose the creation of a permanent Water Resources Board for the Bombay region. This Board should have authority over a region larger than-the BMF and comprise the catchments of at least twelve rivers. The GOM has agreed to the creation of such authority by April 1, 1975. These considerations, in addition to those regarding the existing system of distribution, form the basis of a 10-year Development Program (1972-1981) prepared in 1971 by the Corporation with the assist- ance of British Consultants. This program is the first major attempt to improve water supply (and sewerage services) of Greater Bombay. Its objectives are: to effect major changes in water 4istribution, leak detection and waste prevention systems, to relieve the present water shortage by taking supplies from new sources being develped by the GOM, and to provide adequate treatment for all water supplies. It is expected that at least 7-8 hours of water supply per day for the entire population will be provided by 1981. This program is to be executed by the Corporation and is estimated to cost the equivalent of US$ 457 million for both water supply and sewerage works. The water supply component represents about 35% of the whole program. The execution of this programme has been divided into 3 overlapping pases: a) ongoing works, i.e. contracts let by BMC from 1968 to 1972; b) the first major phase, called the first Bombay Water Supply and Sewerage Project, which covers the -314- period 1972-78, and c) a second major phase scheduled to commence in 1975 and extending through 1981. The IBRD agreed in March 1973 to participate in the financing of the first major phase of this programme to the extent of US$50 million, which is equivalent to 35% of total project cost of US$158 million,.and represents approximately 22% of the Development Program to 1978. Details of the project can be seen in IBRD, Appraisal Report of the Bombay Water Supply and Sewerage Project of April 30, 1973. An additional problem was, until recently, the administrative organization of the waterworks operation within BMC. The provision of water in Greater Bombay is now administered by the Water Supply and Sewerage Department. This department was established in 1971 on the recommendation of Binnie and Partners. It is under the direct super- vision of a Deputy Municipal commissioner, who is himself directly responsible to the Municipal Commissioner. This Department took over the fragmented multidepartmental organization then in operation. Indeed, before the reorganization the administrative organization consisted of 3 separate departments (Water Projects, Hydraulic Engineer's and City Engineer's) with 4 other departments dealing with administration and accounting services. These services reported to 3 deputy Municipal Commissioners and 7 chief officers. There was no coordination of development between these services. The new department will function as a self contained agency within the BMC and will have a separate budget starting April 1, 1973 (Budget G for Water and Sewerage), a separate fund whose balances will be used only for the services, an - 315 = Table 123: WATER SUPPLY: CURENT INOMES AND EXPENDITURES 1961-1972 (RSOO0) II I IV V VI VII Current Expendi- Total tures Admin- Current I Surplus' Current Excluding Debt istrative Expendi- Minus Deficit Year Revenues Debt Changes Overhead ture (II+III) I - V 1961-61 47,854 13,544 34,164 1,630 49,228 146 .-1,8 1962-63 59,441 18,669 33,638 1,582 53,889 7,134 5,552 1963-64 65,639 19,582 37,848 1,671 59,101 8,209 1964-65 64,473 18,611 32,949 1,796 53,356 12,913 11,117 1965-66 70,374 20,670 37,000 2,724 60,394 12,7041 9,980 1966-67 72,701 23,565 36,958 2,527 63,050 12,178 9,651 1967-68 75,014 28,371 34.,144 3,017 65,532 12,499 9,482 1968-69 78,929 27,867 47,012 3,224 78,103 4,050 826 1969-70 83,803 35,308 54,038 3,948 93,294 -5,543 -9,491 1970-71 99,132 35,149 63,233 3,898 102,280 750 -3,148 1971-72 92,411 27,098 63,286 4,934 95,318 2,027 -2,907 1972-73 112,793 29,319 73,234 5,341 107,894 10,20 4,899 Depreciation in Rs 1961-62 = 174,459 1965-66 = 145,716 1969-70 = 259,140 1962-63 = 2)42,88 1966-67 = 259,713 1970-71 = 174,527 1963-64 = 217,411 1967-68 = 301,732 1971-72 = 212,351 1964-65 = 217,613 1968-69 = 278,421 1972-73 = 253,590 Source: BMC Annual Accounts - 316 - accrual, accounting system, and appropriate methods of introducing and varying tariffs and charges. Support ftinctions of legal, accounting, internal audit, personnel, and contracting will be provided by an additional chief accountant. Similarly, a common Services Engineer will be responsible for. transport workshops, electrical and mechanical operations, purchasing, and laboratory facilities. 4. Financial Position Until 1973 the water supply accounts were part of the M:unicipal Budget. All revenues and expenditures were recorded under (Head 11) Water Works. Examination of these accounts reveal that this service generated on a current account a deficit during 8 of the 12 years under consideration. The existence of such deficits was not intended by the Corporation. BMC's policy is to administer the water operation as a self-financed entity and to generate enough revenues to finance current expenditures. There are a number of explanations for this deficit performance. Primarily, increases in the quantity of water produced could not be relied upon to increase consumption and sometimes even decreases were recorded. The tariff structure is composed of three basic elements: 1) a once-only connection charge assessed according to size and length of connection, 2) an annual meter rental assessed by meter size, and 3) a charge for water supplied, assessed either by: a) meter measurement at various user rates; b) by a tax on property value in unmetered properties, or c) by agreement in advance on a sum to cover water supply -317- for a specific period (this is called a "compounded charge" and applies to temporary connections or certain commercial uses). Ani additional tax, a water benefit tax, was introduced in 1973. It will be imposed on the property values of all premises in Greater Bombay in order to recover the costs of a surplus capacity of installed assets, which do not yield immediate or direct benefit to those covered by metered charges. This tax has not yet been levied by the corporation. Tables 124 and 125 give revenues from the various parts of the tariffs and describes their relative share. It caxn be seen that the water rates, excluding fees for water connections and rentals of water meters, account for more than 95% of total revenues. The change based on water consumption represents by far the largest single source of revenue for the Corporation, with a relative share of between 71% and 80% during the past decade. This proportion is surprising since it is levied on only about 43% of all connections. However, this results from under- charging unmetered properties when compared to metered water provided for similar uses, and from charging industrial and commercial users at rates much higher than those applied to domestic purposes. Unmetered properties have been charged at a rate of 4.5% on the rateable value of property, which corresponds approximately to 70% and 50% of the rate imposed on water used for domestic purposes in 1571 and 1972 (Table 126). In addition, the collection rate for this tax has been lower than for other types of charges (Table 127). BIC's policy concerning water rates structure has been to finance increases in current expenditures by increasing industrial rates and maintaining the domestic rates unchanged for as long as possible, .I - Table 121h: WATER WORKS - REVENUES (1000 Rs.) 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 Water Rate On property value . 6,886 7,119 7,000 7,052 7,391 7,892 8,148 8,687 8,685 8,929 9,038 9,060 15,000 By metered consump. 33,747 36,629 46,931 52,370 50,545 54,482 53,637 55,224 57,631 60,842 75,207 66,558 79,848 - Compounded Charge 2,942 2,604 3,907 4,491 4,746 5,668 7,629 7,883 9,111 10,562 11,465 13,127 12,800 Total Rates 43,575 46,352 57,838 63,913 62,683 68,045 69,415 71,794 75,427 80,343 95,711 88,746 107,648 Rent of watermeters 589 553 620 697 731 830 1,069 1,106 1,082 1,022 1,154 1,364 1,525 Fees for water 471 ,73 505 553 524 1 856 1,364 1,161 1,289 1,124 1,020 1,086 1,600 connections Rent of buildings & 43 83 63 58 82 92 97 94 101 106 96 113 147 Land Miscellaneous Receipts 297 393 415 417 453 551 756 859 1,030 1,208 1,128 1,102 1,872 Total Revenues 44,996 47,854 59,441 65,639 64,473 70,374 12,701 75,014 * 78,929 83,803 99,132 92,411 112,793 Source: BMC Annual Accounts Tablå 125. WATER WORKS - REVENUES % DISTRIBUTION 60 61 2 63 64 5 66 67 68 69 70 71 72 Water Rate on property value , 15.30 14.88 11.78 10.74 11.46 11.21 11.21 -11.58 11,00 10.65 9.12 9.80 13.30 - By metered consumption' 75.00 76.54 78.97 79.78 78.40 77.42 73.78 73.62 73.02 72.61 75.87 72.02 70.79 Compounded charge 6.54 5.44 6.57 6.84 7.36 8.05 10.49 10.51 11.54 12.60 11.57 14.21 . 11.35 Total Rates 96.84 96.86 97.30 97.37 97.22 96.69 95.48 95.71 95.56 95.87 96.55 96.03 95.44 Rent of watermeters 1.31 1.16 1.04 1.06 1.13 1.18 1.47 1.47 1.37 1.22 1.16 1.48 1.35 Fees for water connections 1.05 0.99 0.85 0.84 0.41 1.22 1.88 1.55 1.63 1.34 1.03 1.18 1.42 Rents on Buildings and Land 0.10 0.17 0.11 0.09 0.1% 0.13 0.13 0.13 0.13 0.13 0.10 0.12 0.13 Miscellaneous Receipts 0.66 0.82 0.70 0.64 0.70 0.78 1.04 1.15 1.30 1.44 114 1.19 1.66 Total Revenies 44,996 47,854 59,441 65,639 64,473 70,374 72,701 75,014 78,929 83,803 99,132 92,411 112,793 (10,000) Source: BMC Annual Accounts 7--. - 320 - Table 126: Revenue from Water Charges in Rs / m3 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 Current Revenue per m3 Supplied-' 1.93 2.10 2.12 2.23 2.44 2.74 2.11 Tax Revenues per m3 Supplied 1.91 2.07 2.09 2.20 2.41 2.71 2.08 Tax Revenues per m3 Consumed 2.25 2.44 2.46 2.59 2.83 3.19 2.45 Tax Revenues per mi3 Consumed in Unmetered .59 .77 1.15 .82 1.02 .95 .64 Properties Tax Revenues per m3 Supplied AIJ/ 1.03 1.22 1.48 1.26 1.41 1.37 1.28 Domestic Users= Tax Revenues per m3 Supplied to Non- 5.43 5.62 4.20 6.07 6.42 7.94 5.70 domestic Users 1/ Sum of water tax and rent of water meters. 2/ Based on water charge per m3 for metered domestic properties. Source: BIMC Accounts Table 127: WATER TAX ASSESSED AND COLLECTED FOR THE CITY (o000 Rs) 1965/66 66-67 67-68 68-69 69-70 70-71 71-72 Water Tax Value Collection 6,325 6,597 6,992 7,327 7,544 7,805 8,297 Net Demand 8,334 8,605 9,110 9,546 9,746 10,234 10,530 % Collected 75.89 76.66 76.75 76.75 77.41 76.27 78.79 Compounded Water Tax Collection 21 20 16 13 15 16 15 Net Demand 27 23 19 19 18 18 18 % Collected 77.78 89.96 84.21 68.42 83.33 88.89 83.33 Water by Meter Collection 31,274 28,833 20,142 27,569 32,205 37,171 27,219 Net Demand 34,753 30,757 31,107 29,543 36,507 41,733 31,963 % Collected 89.99 93.74 64,75 93.32 88.22 89.07 85.16 TOTAL Collection 37,620 35,450 27,150 34,909 39,764 44,992 35,531 Net Demand 43,114 39,385 40,236 39,108 46,271 51,985 42,511 % Collected 87.26 90.01 67.48 89.26 85.94 86.55 83.58 Source: Office of Assessor and Collector - 322 - resulting in artificially low domestic rates. Metered domestic-water charges remained unchanged at Rs. 0.17 per cubic meter from 1959 until 1971 (Table 128). Industrial and commercial properties, which are mostly metered, had their charges increased in 1965, 1969 and 1971 fr-m an average rate of Rs. 0.40 per cubic meter to a current rate of Rs. 0.74 per cubic meter. In 1972, these categories of-consumers were, on the average, charged 190% more than domestic consumers. This pricing policy, however, reflects neither economic considerations of ability to pay among domestic consumers, nor cost considerations since costs of providing larger supplies o: water are if anything lower than for domestic purposes. Rather, it is the result of haphazard developments over the years. The full effects of such policy are difficult to evaluate under existing conditions of restricted supplies and unfulfilled industrial water quotas. Revenues derived from water charges have been low. The average current rate is low--and the rate structure for unmetered properties encourages wastage. Increases in water taxes were required by IBRD as one of the conditions for the loan-, as shown in Table. 128. Further revisions in the water charge structure are expected to take place in the near future so that operating revenues from water and sewerage charges will be more nearly sufficient to cover operating expenses, depreciation, interest, debt repayment, and about one-third of capital expenditures for the 1974-1976 period. Table 128: STATEMENT SHOWING WATER CHARGES ASSESSED ON WATER CONSUMPTION PREVAILED FOR MAJOR CATEGORIES OF CONSUMERS Categories of Users 65-66 66-67 67-68 68-69 69-70 70-71 71-72 72-73 73-74 Domestic and Residential Purposes 1.70 1.70 1.70 1.70 1.70 1.70 2.00 2.00 2.50 Textile Mills, Industries, 4.00 4.00 4.00 4.00 5.50 5.50 6.00 6.00 8.00 Lodging and Boarding- houses, Hotels Railways 1.65 1.70 1.70 1.70 1.70 1.70 2.00 2.00 NA Bombay Port Trust --Department Works 4.00 4.00 4.00 4.00 5.50 5.50 5.0 5.50 8.00 --Non Department Works 1.70 1.70 1.70 1.70 1.70 1.70 2.00 2.00 2.50 Construction Works 5.50 5.50 5.50 5.50 7.50 7.50 7.50 7.50 NA Oil Installations 4.00 4.00 4.00 4.00 4.00 7.50 7.50 9.00 11..00 Race Course 5.5o 5.50 o .0 5.0 5o.5o 7.50 7.50 9.00 11.00 Bakeries, Private Hospitals, BEST 2.70 2.70 2.70 2.70 2.70 3.50 3.50 3.50 5.00 Properties Source: Office of Collector and Assessor -324~ B. Sewerage and Refuse Collection 1. Level of Service- The Corporation is responsible for the collection, treat- ment and disposal of sewerage, septic tank wastes, night soil, and solid wastes throughout Greater Bombay. At present, only the Bombay district is served by a sewerage system, but the Development Program proposes that the removal and treatment of effluent should become BMC's responsibility. The sewerage system as presently constituted serves approximately 54% of the total population of Greater Bombay. Estimates of population served by sewers and those in unsewered areas as of March 31, 1971, were as follows: (In Millions) City Suburbs Total Sewered areas 2.9 0.3 3.2 Partly sewered - 1.7 1.7 Unsewered 0.1 0.9 1.0 Total 3.0 2.9 5.9 The sewerage system serves about 95% of the population living in the city with the exception of low-lying areas where septic tanks are provided. However, this system does not benefit the population equally. Only about 45% of housing units have individual .lavatories; 1/ In this section we draw heavily from IBRD's 'Appraisal Report of Bombay Water Supply and Sewerage Project" April 30, 1973. -_325 52% have common facilities which, because of over-use and shared maintenance responsibility often do not function. Particularly hutment dwellers live in unsanitary conditions. It is estimated that 280,000 hutment dwellers have access to only 217 public sanitary conveniences (many of them being only urinals). Sewerage facilities are still very scarce in the suburbs and there are no satisfactory alternative facilities. Before the 1951 boundary extension, sewerage facilities existed only in parts of the suburbs of Bandra and Khar. In the Eastern suburbs, Kurla had some sewers, but there was a lack of suitable outfall. The remainder of the suburbs taken over in 1958 by BMC had no sewerage facilities and there has been little subsequent improvement of the situation. Designs have been prepared for the extension of the sewerage system, but had not been implemented by 1973. An estimatid 67 percent of the housing units in the suburbs have individual lavatories, 26% have shared facilities, and 7% representing an estimated 440,000 persons, have none. Of the suburban latrines, some 1.7,000 do not have flushing arrangements. The systems are overloaded because the installed capacity of pumping and ejector stations is insufficient to deal with the average dry weather flow. Sewage is brought by gravity or pumping to eight treatment plants, which in aggregate have insufficient capacity. Effluents from the works and raw sewage which has by-passed the works are discharged into the sea through adjacent (creek or storm water drains. Most of the sewerage from the city is conveyed to the Lovegrove Sewerage Works where, after primary treatment, it is pumped to sea through an out-fall, - 326 - completed in 1880, .which terminates at about low water level. The city is at present served by eleven ejector stations and fourteen pumping stations on the sewers routes, and by five treatment works. The ejector stations were constructed between 1893 and 1905 and still house the original equipment. Three of these stations, however, are currently being replaced by new pumping stations. The suburbs are covered by three treatment plants built at Versova, Khar, and Ghatkopar. Provision has also been made for pumping the flow from Bandra to a sewer in the Dharovi district, but, the link is not-yet operational. Of the existing eight treatment works, only three are constructed for biological (secondary) treatment, the remaining works provide primary treatment only. None of the treatment works has sufficient capacity to handle the incoming flow, even during dry weather, and excess flows are by-passed and discharged untreated. The outfalls from Colaba, Banganga and Lovegrove are directly into the sea, while the flows from Dharavi and Khar, and Dadar discharge. into Mahim Creek and the drainage channel leading to the Worli Sluices respectively. The discharge from the Versova works drains into a grassed, marshy area, and, at the GhatKopar works settled sewage is sometimes pumped to Deonar for irrigating reclaimed land near the Corporation's main refuse dumping ground. Otherwise, it is discharged with excess flows of raw sewage into a nearby open storm water drain, fanning under roads and through housing development before discharging into Thana Creek. The condition of many of the treatment units, especially their mechanical components, is poor and many units are out of action for long periods of time or never used. The effective treatment capacity is therefore -327- well below the nominal capacity. Water scarcity and irregularity often poses major problems. Currently 1 million m3 of water and industrial effluents have to be removed daily. In order to alleviate overflows, sewers have been connected to storm water drains, but during the monsoon the surface water completely blocks the sewers and forces mixed sewage and storm water flows onto the streets,. Improvement and extension of the sewerage system have been taken up in the BMC 10-year Development Programme. No definite scheme has been adopted yet, but as it stands now the costs of -the sewerage and sewage disposal works are estimated at US$166, i.e. 65% of the total Development Program. Major works in this area will take place in the later years of the program since priority was given to the improvement of the water supply system. However, during the first major phase of the program the sewerage component will include urgent works for improving pumping stations, construction of new sewage stations and construction of branch sewer extensions. In the unsewered areas, the only facilities for sewerage collection and disposal are either septic tanks (used in conjunction with flush toilets or aqua privies) or basket privies: 7,000 aqua privies, 11,500 basket privies and 8,700 septic tanks are estimated to exist in these areas. Ground conditions in the area are unsuitable for seepage pits or disposal trenches thus causing effluent to collect in low-lying areas. Furthermore, the BMC tank e4ptying service is inadequate; the available resources are used in efforts to relieve the more objectionable instances of local flooding, but elsewhere tanks are allowed to fill up and overflow. The contents of septic tanks and basket -328 - privies are dumped into the nearest tidal creek or into suction wells of the sewage pumping stations. Night soil is frequently tipped over bridges into the nearest water course and industrial wastes are, in many instances, discharged directly into open streams or channels. Since 1957, the Corporation has required all new permanent properties to have water closets, which may be of the flushing or non- flushing type, used in conjunction with an approved type of septic tank where no public sewer is available. The BMC has, however, found it difficult to ensure that property drainage systems-and septic tank installations are designed and constructed to required standards. 2. Financial Situation Until this current fiscal year, when Budget G for water supply and sewerage works came into existence, the sewerage operations of the BMC were an integral part of the municipal services and the accounts were recorded in the Municipal Budget (under head VII "Street Cleansing and Conservancy, Road Watering and Halakhore Service"). The Halalkhore service includes all operations which are directly concerned with removal, treatment and disposal of human excrements and other wastes. All operating expenses on Halalkhore are recorded under this head, section C "Halalkhore service, section D and E, Provident Funds" charges and Pension Fund. Expenditures incurred on debt service are more difficult to trace since there is only one common debt charges account for halalkhore and refuse collection. However, a careful look at the loan works budget, head VII, shows that capital expenditures incurred in the area of refuse collection are often nil and always insignificant whenever they exist. -329- Thus, expenditures on debt service recorded in head VII can be reasonably allocated to sewerage exclusively. Table 90 showing the budgetary account of sewerage, is based on this assumption. It should be noted that the storm water drain system, which was originally developed as a separate system, is used at certain times to alleviate -- surcharging of the sewerage system. Therefore, part of the operating expenses incurred by this system should be allocated to the sewerage system. Expenditures as the SW drain system are recorded in a different budget head (h-ad VIII with expenditures on roads"and 'public lighting) and it is impossible to allocate such expenses to the sewerage system. A more serious problem concerns the computation of debt service. Some projects inclu'ding both sewerage and drainage works, are recorded under head VIII with debt service being allocated to this head. A breakdown between the various components of the works is unavailable. Data presented in Table 129 (which include only operating expenditures and debt service recorded in head VII) thus understate current expenditures incurred on the sewerage system. Looking now at the financial situation of the sewerage operations, it can be seen from Table 129 that the BMC has continously incurred deficits on its operating and current accounts. These deficits have been increasing since 1968-69 and in 1972-73, only 65% of current expenditures were financed by revenues derived from sewerage operations. The remainder was financed by general revenues. The composition of the current expenditures account indicates, ceteris paribus, that the invest- ment program of the Corporation regarding sewerage works remained constant - 330 - Table 129: BUDGETARY ACCOUNT OF SEERAGE WORKS -BM (Rs '000) I. II III IV V VI Current Operating Debt Current Operating Current Revenues Expenditures Charges Expenditures Deficit Deficit 1963-64 13,727 13,533 7,219 20,752 194 - 7,025 1964-65 14,687 14,563 8,546 23,109 124 - 8,422 1965-66 16,903 19,927 7,531 27,458 - 3,024 -10,555 1966-67 17,872 22,676 7,266 29,942 - 4,804 -12,070 1967-68 19,252 24,507 7,875 32,382 - 5,255 -13,130 1968-69 20,358 22,304 7,776 30,080 - 1,946 - 9,722 1969-70 22,297 25,780 7,976 33,756 - 3,483 -11,459 1970-71 24,558 30,678 8,842 39,520 - 6,120 -14,.962 1971-72 26,946 33,831 9,813 43,64 - 6,885 -16,698 1972-73- 36,975 44,409 12,635 57,044 - 7,434 -20,069 1/ Budget estimate 8ource: BYTC Annual Accounts - 331 - with the relative share of debt service decreasing from 35% in 1963-64 to 22% in 1971-72. Table 130 shows the relative importance of current and capital expenditures since 1963-64. There is no direct charge levied in connection with sewerage, and the only attributable income is the Halalkhore tax, which is levied at a rate of 3.5% on all property values with the exception of a few properties where fixed collection charges arc levied. The fixed charge, called "halalkhore tax for special services", accounts for approximately five percent of total revenue (Table 131). This tax is intended to cover the costs of removing all wastes from privies, cesspools and septic tanks; however, in practice, it has been used to finance all expenses incurred on sewerage (Table 132). The Corporation plans to institute a new sewerage tariff on April 1, 1974, whereby a tax based on water consumption will be introduced in addition to the existing tax based on properties values. The tariff is likely to be based on the following: i) The Halalkhore tax, which will produce a dimin.ishing revenue, will be directly charged on those premises which are not sewered and for which the service is necessary to empty their various disposal systems. This tax will probably be replaced after several years by a fixed service charge, but the projections demonstrate only the probable recovery necessary through 1980-81 using a tax base to recover costs. ii) Premises which are not metered for water supplies, i.e. those which pay a water tax, will pay a sewerage tax as a percentage of property value to meet their share of sewerage cost. 1/ IBRD, Appraisal of Bombay Water Supply and Sewerage Project, April 30, 1973. - 332 - Table 130: CURRNT AND CAPITAL EXPENDITURES . -ON SEWERAGE WORKS .s ( 0oo) Capital Ex- penditures Current Capital Total as Total IMC Expendi- Expendi- Expendi- Expenditures Capital Ex- tures turesi tures per capita penditures (Rs).. (%) 1963-64 20,750 6,1h1 26,893 6.0 9.8 1964-65 23,109 7,h25 30,534 6.6 12.0 1965-66 27,458 5,208 32,666 6.8 5.0 1966-67 29,942 5,410 35,352 7.1 4.4 1967-68 32,382 7,421 39,806 7.7 4.7 1968-69 30,080 6,992 37,072 6.9 6.3 1969-70 33,756 6,584 4o,340 7.3 7.4 1970-71 39,520 5,871 45,391 7.9 6.1 1971-72 43,644 12,260 55,904 9.4 11.6 1/ Approximated--as expenditures recorded under Head VII of the Budget Account exclude expenditures on plant and machinery (negligible). Source: BMC Annual Accounts - 333 - Table 131: REVENUES FROM HALALKHORE TAX (Rs'oo) Halalkhore Tax Halalkhore Tax Relative Share on Rateable Value for Special Service of .Tax on Rateable Value (%) 1960-61 11,532 8o5 93.4 1961-62 11,554 682 94.4 1962-63 11,606 831 93.3 1963-64 12,978 749 94.5 1964-65 13,813 875 94.0 1965-66 15,201 1,701 89.9 1966-67 16,L41 1,431 91.9 1967-68 18,087 1,165 93.9 1968-69 19,240 1,118 94.5 1969-70 20,881 1,)17 93.6 1970-71 23,531 1,027 95.8 1971-72 25,149 1,797 93.3 1972-73 35,000 1,975 94.6 Source: BMIC Annual Accounts - 334 - Table 132: STATEMENT OF HAALKHORE TAX COLLECTED . AND EXPENDITURES INCURRED ON SEWERAGE SERVICES (Rs'OO0) 1967-68 1968-69 1969-70 1970-71 1971-72 Income Sewered Area 13,781 14,113 14,711 1,184 17,221 Unsewered Area 5,471 6,2415 7,586 9,373 9,726 Total 19,252 20,358 22,297 24,557 26,947 Expenditures Sewered Area 14,982 13,798 15,666 18,064 18,221 Unsewered Area 7,149 6,479 7,686 9,902 11,921 Total 22,131 20,277 23,352 27,966 30,142 Source: BMC Annual Accounts. - 335 - iii) Premises which are subject to metered water supply will incur asewerage charge based on the metered water consumption. iv) A sewerage benefit tax based on property values to be charged on all premises in Greater Bombay to recover the costs of: a) surplus capacity of installed assets which do not yield immediate or direct benefit to those charged by metered charges or sewerage tax; and b) facilities to be provided, e.g. latrines. It is expected that the BMC will collect the new sewerage taxes and charges with the water taxes and charges, but the actual collection system has yet to be determined. 336_- XIII. BCIBAY ELECTRIC SUPPLY AND TRANSPORTATION UNDERTAKIM A. Electric Supply 1. Services Provided The BEST. within the city limits up to Mahim and Sion, covering an area of 57 square kilometers. Most residents of the Corporation are supplied electricity by BEST, with the balance supplied by two private entepries~, ibay_Suburban Electric Supply, Ltd. and Thana Electric. This allocation of responsibility between the three has been challenged by the BEST which proposes to take over Bombay Suburban when the license granted by the Maharashtra State Electricity Board (MSEB) to this enterprise expires. The BEST's move is due largely to the profitable state of the electricity business. The surplus generated by these additional activities would contribute to the financing of increasing deficits incurred in its transportation branch. The BEST buys bulk supply from the Tata Electric Companies, which operate both generation and transmission facilities and historically have been the sole power suppliers in the Bombay area. Tatas generate most of the energy that they sell in their ownmpower stations; however, increasing shortages have occurred in recent years and have been met by purchases from the MSEB. MESB is responsible for the generation, transmission, and distribution of electric energy in the State of Maharashtra. The Board has no direct responsibility in the Greater Bombay area where it only provides energy to Tatas when the need arises. Tables 133 to 135 present selected statistics on the electricity distribution system operated by the BEST. Little will be said about the 337 Table 133: SUMARY OF STATISTICS IN THE ELECTRICITY DISTRIBUTION SYSTEM - BM AS CF MARCH 31, 1972 Total number of receiving stations 15 Total installed power transformer capacity 374 MVA Maximum demand recording during 1971-72 2 51 .46 MA Total number of substations 934 Total distribution transformer capacity 585.7 M7A Total energy purchased fram Tatas 1,151.59 Million units Total number of consumers 435,082 Total number of house service meters 482,903 Source: BEST Staff 338- Table 134: COINCIDENT AXIMUM DIEAND, POWER TRANSFRM CAPACITY, DISTRIBUTION TRANSFORKER CAPACITY - AND NUMBER OF TRANSFORMIM SUBSTATIONS IN THE SYSTEM (1947-48 to 1971-72) Total Total Coincident Capacity of Capacity of Nunber Maximn Receiving Distribution of Year Demand Stations Transformers Transforning MW MVA MVA Substations 1947-48 52.7 56 99.2 247 1950-51 66.1 92 124.6 282 1955-56 82.2 108 154.5 313 1960-61 121.9 216 252.9 405 1961-62 134.6 264 276.7 435 1962-63 145.3 274 304.5 455 1963-64 150.3 274 328.0 488 1964-65 155.5 274 348.5 529 1965-66 163.6 274 378.7 570 1966-67 168.9 274 418.9 616 1967-68 171.8 304 468.5 689 1968-69 179.4 344 505.0 780 1969-70 184.5 364 568.2 814 1970-71 200.7 374 579.7 890 1971-72 213.5 374 585*7 934 Source: BEST Staff - 339 - Table 135: STATISTICS ON RECEIVING STATIONS Capacity as on Individual Maximum Energy Received 31-3-72 Demand MVA Million Units Receiving Station MVA 1970-71 1971-72 1970-71 1971-72 Colaba, 30 10.8 12.0 ) Apollo 32 30.8 28.8 ) Oval 20 16.8 18.96 ) Ballard Estate 20 15.8 19.68 ) 614.0 650.5 Esplanade 30 23.0 28.08 Grant Road 32 30.0 30.0 ) Malabar Hill 30 21.6 24.84 ) Kussara 30 18.7 21.96 ) Mahalaxmi 30 23.8 26.64 ) Worli 30 25.2 25.92 ) 25. 273.1 Parel 20 15.9 18.0 ) Kingsway 20 15.4 13.6 ) Mahim 20 20.0 18.2 ) 215.7 228.0 Dharavi 20 17.4 17.4 ) Wadala 10 6.5 9.36 ) Whole System 374 *232.6 *251.46 1085.2 1151.6 * These figures are coincident demand ,,cie System. Source: BEST Staff - 340 - generation and transmission sides of the electric supply system here, since the municipal finance concerns of this study are related more closely to the distributinn side There is no permanent program of rationing the supplc However, maj or disturbances have usually resulted from failure at the.gezratiozn. level: Rationing was iintroduced in the regioii during parts of 1968 and 1969.. due to inadequate monsoon.- A state-wide power cut was introduced in 1971-72 due to the failure of the monsoon and breakdowns in the generation sets. In the latter case, power was cut by 8 percent for non-essential installations and 2 percent for essential consumers. According BEST sources 1/ the power supply position in the Western Maharashtra region improved considerably in 1970-71 with the commencement of full-scale comercial production of electric power at the Tarapore Atomic Power Station and the commissioning of theN ik Thermal Station. However, an urban survey mission on Bombay carried out by the IBRD in 1970 Jindicates that the asuDOly situation is in very delicate balance and projections show that over the next years it will become increasingly strained and that available reserves at maximum demand will get smaller and smaller with an increasing risk of acute shortages in the event of plant outages." The BEST operates under conditions of a rather small growth in demand, which is due to the fact that since Bombay City is highly developed there is little substantial new development in the area. The number of total units sold increased at an annual rate of 6.2 percent from 1960-61 to 1971-72 (Table 136). This increase is due in part to an increase in the number of 1/ BEST, Report of the General Manager, 1971-72. i/ IBRD, Report on Bombay, Annex II, the Public Utilities, April 15, 1971. Table 136: UNITS SCLD UNDER DIFFEREN CATEGORIES FOR LAST TEN YEARS (000 UNITS) Categories Under Which 63-6 '64-65 65-66 66-67 67-68 68-69 69-70 70-71 71-72 72-73 Electricity Is Sold Commercial Lighting 116,416 131,877 137,656 "147,175 150,012 156,945 135,182 149,220 159,751 149,472 and Fans Commercial Heating, etc. 33,690 57,274 80,180 98,279 96,429 106,056 135,089 152,155 174,295 172,473 Residential Lighting 127,413 138,790 146,124 158,309 241,703 and Fans 267,807 278,-744 305,623 316,768 299,076 Residential Heating 94,788 100,187 108,760 116,492 31,2381 Lighting for Religious ---- ----- ----- ----- 11,636 and Charitable Insti- tutions j 19,104 16,269 19,067 31,518 41,175 lifts ad Pumps Used for ---4-- -- -- 77- geligious and Charitable Institutions Large and Motive Power 161,994 162,351 179,032 196,764 215,219 225,406 235,620 255,196 269,204 263,671 Consumers General lUrpose Motive 181,34 164,382 144,451 122,976 94,802 97,523 98,721 100,552 103,853 110,4l5 Power Consumers Traction, Trolley, Buses 2,612 711 884 1,049 935 W43 1,072 664 ----- ----- Street Lighting 5,305 5,723 6,132 9,661 12,730 15,741 17,429 19,342 21,178 22,220 Temporary Supply ----- ----- ----- ----- ----- 1,246 2,408 2,740 2,655 TOTAL SUPPLY 723,561 761,296 803,220 850,7064 855,181 889,026 919,371 1,004,228 1,079,306 1,061,188 Source: BEST Staff F 342 consumers and in part to an increase in average elect-ricity consumed. The number of consumers increased by 3.9 percent per year during this period (Table 137). For all types of consumers, the consumption of electricity per capita increased from 1.95 to 2.68 units, or 2.2 percent per year. Exact data on the population served are not available, but a rough estimate based,on the city population shows that per capita consumption for residential purposes increased markedly. Residential, commercial, and industrial consumption take approximately equal shares of total units sold ( Tables 136 and 138). However, the revenues derived from the major categories of consumers show that in 1971-72 industrial and commercial consumers accounted for 29.2 percent and 44.4 percent of total revenues respectively as compared to only 24.2 percent for residential users (Tables 139 and 140).. Actual figures are not yet available for recent years. The increases in tariff which took place in October 1972 may introduce some changes in these relative shares since tariffs were not increased uniformly for all types of consumers. Residential tariffs (R, 3) were increased by 20 percent; commercial rates by 8 percent; premises with commercial and/or residential and/or industrial loads (RC(LV)) by 12.5 percent, and most industrial tariffs by over 20 percent. (See Table 141). The major change is expected to take place in revenues derived from commercial users. Low tension tariffs are based on consumption subject to a minimum monthly charge. High tension tariffs are in two parts, with one demand charge and one energy charge and, in addition, a few other charges imposed in specific instances. None of the existing tariffs contain any price differential between peak and off-peak power demand. Table 137: NUlh3ER OF CONSUMERS, SERVICE LINES, CONNECTED LOAD AND METERS IN THE SYSTEM (1947-49 to 1971-72) Services (Excluding Street Connected Year Lighting Consumers Meters Load (In thousands) (in MW) 1947-48 28.4 108.2 123.3 230.3 1950-51 31.2 134.9 160.0 268.6 1955-56 34.8 201.4 234.8 312.9 1960-61 38.5 286.8 351.0 478.5 1961-62 39.4 302.4 375.2 514.6 1962-63 40.0 316.4 396.7 564.6 1963-64 40.8 330.3 415.7 60.2 1964-65 41.5 343.7 433.7 647.9 1965-66 42.2 356.5 451.9 686.8 1966-67 43.0 369.6 470.6 731.2 1967-68 43.7 382.7 469.7 766.6 1968-69 4.3 399.0 467.6 817.9 1969-70 44.8 412.4 464.5 861.2 1970-71 45,6 425.1 474.1 910.1 1971-72 46.3 435.1 482.9 951.4 Source: BEST STAFF Table 138: UNITS SCLD UNDER DIFFERENT CATEGORIES FOR LAST TEN YEARS - % DISTRIBUTION Categories Under Which 1963 1961, 1965 1966 1967 1968 1969 1970 1971 1972 Electricity is Sold TOTAL SUPPLY (100%) 723,561 '761,296 803,220 850,704 855,181 889,026 919,371 1,004,228 1,079,306 1,061,188 Commercial Lighting 16.09 17.32 17.14 17.30 17.54 17.65 1h.70 14.86 14.80 14.09 and Fans Commercial Heating, etc. h.66 7.52 9.98 11-5 11.28 11.93 14.69 15.15 16.15 16.25 Residential Lighting 17.61 18.23 18.19 18.61 28.26 and Fans I 30.12 30.32 30.43 29.35 28.18 Residential Heating 13.10 13.16 13.54 13.69 3.65 Lighting for Religious 1.36 and Charitable Insti- tutions j 2.15 1.77 1.90 2.92 3.88 Lifts and Pumps used for ----- ----- ----- 0.06 1 Religious and Charitable Institutions Large Motives and Power 22.39 21.33 22.29 23.13 25.17 25.35 25.63 1 25.141 2&.94 24.85 Consumers General Purpose Not:ive 25.o6 21.59 17.98 14.h6 11.09 10.97 10.74 10.01 9.62 10.141 Consumers Traction, Trolleys, Bases 0.36 0.09 0.11 0.12 0.11 0.05 0.12 0.07 ----- ----- Street Lighting 0.73 0.75 0.76 1.14 1.h9 1.77 1.90 -.1.93 - 1.96 2.09 Temporary Supply ----- 0.14 0.24 0.25 0.25 Source: BEST Staff . Table 139: UNITS SOLD AND REVENUES BY CATBORY OF CONSUMERS FOR SELECTED YEARS - BMC 1971-72 1968-69 1966-67 1963-64 Units Amount Units Amount Units Amount Units Amount (1) Commercial 159,751 40,057 156,945 29,300 147,715 24,582 116,h16 19,569 lighting, fans, etc. (2) Commercial 174,295 23,977 106,057 11,665 98,279 7,862 33,690 2,491 heating, etc. (3) Residential ) 348,286 34,828 ) 286,911 28,692 158,309 19,789 127,413 15,927 lighting ) ) and fans ) ) (4) Residential ) ) 116,482 6,990 94,788 5,503 heating, etc.) (5) Large 269,204 27,489 225,406 19,367 196,764 14,193 161,994 9,932 motive power consumers (6) General purpose 103,853 14,536 97,523 10,730 122,976 10,477 181,344 13,431 motive power consumers (7) Traction 443 35 1,049 63 2,612 144 (8) Street lighting 21,178 2,661 1!,741 1,974 9,661 773 6,306 424 (9) Temporary 2,70 625 supply Total 1,079,307 144,053 889,026 101,363 851,245 74,729 723,563 67,421 1/ Including lights, pumps of charitable and religious institutions. Source: BEST Staff Table 140: UNITS SOLD AND REVENUES BY CATEGORY OF CONSUMERS PERCENr DISTRIBUTION 1971-72 1968-69 1956-67 1963-64 Units Amount Units Amount Units Amount Units Amount (1) commercial 14.8 27.8 17.7 28.9 17.4 32.9 16.1 29.0 lighting, fans, etc. (2) Commercial 16.1 16.6 11.9 11.5 11.6 10.5 4.7 3.7 heating, etc. (3) Residential ) 32.3 24.2 32.3 28.3 18.6 13.1 17.6 23.6 lighting ) and fans ) (4) Residential ) 13.7 9.4 13.1 8.2 heating, etc.) (5) Large 21.9 19.1 25.4 19.1 23.1 19.0 22.4 14.7 motive power consumers (6) General purpose 9.6 10.1 11.0 10.6 1h.5 14.0 26.1 19.9 motive power consumers (7) Traction 0.1 0.0 0.1 0.1 3.2 (8) Street lighting 2.0 1.8 1.8 1.6 1.1 1.0 0.7 0.6 (9) Temporary 0.3 0.4 Source: Best Staff Table Ila: ELECTRIC TARIFF 1972-73 Onward 1969-1972 I. Non-Tndustrial Tariffs- 1 . Residential premises; premises R, S 12 P per unit subject to a minimum 10 P per unit used for religious, charitable, monthly charge of Re 2.00 educational purposes 2. Premises used for office, C 17 P per unit subject to a 25 P per unit business, trade, cmmerce, minimu.n monthly charge of professional service Rs 5.0 3. Premises with coamercial and/or RC(LV) M.D., charge Rs 18.00 per KVA of M.D. charge Rs 16/KVA of residential and/or industrial billing demand plus energy char billing demand loads supplied at medium 11. P/-mit plus fuel adjustment. energy charge 8.5 P/unit pressure (15/24OV) subject to plus additional surcharge2/ plus fuel adjustment char1 a minimum consumption of 250,000 plus surcharge Zor power factorV plus additional surcharge. units per annum under aereement below 85% for a minimum period of 2 years 4. Premises with canmercial and/or RC(HV) M.D. charge Re 15.5 per KVA of M.D. charge Rs 1 4 per KA of residential and/or industrial billing' demand billing demand loads supplied at 6600 or 11,000 7; energy charge 10P per unit energy charge 7.5 P/un subject to a minimum consumption fuel adjustment char 1I/ fuel adjustment chargei' of 500,000 units per annum for a additional surcharge." additional surcharge. minimum period of 5 years surcharge for power factor below 85W/ 5, Public gardens, traffic signals, SL 12 P per unit 12 P per unit street lights..... belonging to public bodies II. Industrial TAriffs 6. Premises with industrial loads QP(I) 17 P per unit subject to a 14 P per unit supplied at medium pressure minimum monthly charge of Rs 5.00 (413/240 V) with common metera. except for consumption of item 8 7. Premises with industrial loads GP(II) 16 P per unit plus 1.5 P per 12.5 P per unit supplied at medium pressure reactive lagging unit subject to (415/240 V) with separate meters, a minimum monthly charge of except for conswption of item 8 Rs 5.00 8. Premises qualifying for GP (I) or L (GP) 27 P per unit subject to a minimum 25 P per unit GP (II) tariffs for lights, passenger monthly charge of Rs 6,00 lifts, and pumps for sanitary and drinking water 9. Premises with predominantly indus. LND(LV) M.D. charge Rs 1.5 per KVA of M.D. charge Rs 13 per KVA of trial loads supplied at medium billing demand billing demand pressure (415/240 V) with miLdmum energy charge 8.5 P / unit energy charge 7.00 P /nit consumption of 250,000 units per fuel adjustment charge/ fuel adjustment char, 97 annum for a minimum period of additional surcharge additional surcharge- 2 years surcharge,5or power factor below 8562- 10. Premises with predominantly in- GIP(HV) Bnergy charge 16 P per unit Bnergy charce 12 P per unit dustrial loads supplied at 6600 1iactive unit charge 1 P per unit Reactive unit charge 0.8 P/ or 11,000 V with minimum consump- fuel adjustment charRe.. unit tion of 20,000 units a month for additional surcharge-- fuel adjustment chare. a minimum period of 5 years surcharge or power factor additional surcharge= below 85,- 11. Promises wiTh predominantly in- IND(HV) M.D. charge Rs 13.20 per KVA of K,D. charge Rs 11. per KA dustrial loads supplied at 6600 billing demand for the first 1 ,000 demand for the first 1 ,000 KVA or 11,000 V with minimum con3ump- K7A and Re 12.30 per KVA for the and Re 10.25 per KVA for the tion of 500,000 units per year rest rest for a minimum period of 5 year3 energy charge energy charge 6.86 P/unit for 1st 500,000 units 5.72 P per unit for the first 6.4h P/unit for next 1,000,000 units 500,000 units consumed 6.16 P/unit for the rest during the month fuel adjustment charse-7 5.37 P/unit for the next additional surchargE,Z 1 million units surcharge for power factor 5.13 P per unit for te rest below 85;LY fuel adjustment charge Note: See second page of Table for footnotes and source. Table 11: ELECTRIC TARIFF (Continued) 348 1972-1973 Onward 1969-1972 III. Tariff for Temporary Suply 12. Temporary supply (for all TS 27 P/unit subject to a minimum 20 P per unit purposes) charge of Rs 2.00 I number of days for loads given through a separate single phase meter of Rs L.00 X - number of days for loads given through a separate 3-phase meter 13. Stand-by Supply Sb 27 P/unit subject to a minimum 25 P per unit subject to a (all purposes) charge for units equal to 15 times minimum charge equal to 15 times the connected stand-by load in K.W. the connected load in K.W. Meter Rentals (Mater rent charged per meter per month) 1. Single phase meters RS 0.50 Rs 0.50 2. Three phase meters Rs 2.00 Size up to 30 amps Rs 1.00 Size over 30 anps Rs 2.00 3. Three phase meters with Rs 5.00 - Size up to 30 amps Rs 3.00 maximum demand (KW) indicators Size over 30 amps Rs 4.00 4. H.V. Metering equipment Rs 10.00 5. Reactive energy meters N.I. 1/ Fhel adjustment charge is based on the recorded consumption whenever a similar charge is levied by Tatas to the BEST. The rates will be the same as those levied by Tatas for consumptibns recorded during corresponding months. 4/ Additional surcharge is levied when a similar charge is levied by Tatas to the BEST due to variations in duty, taxes, rates, etc. 3/ Surcharge for power factor below 85%. For each complete 1% fall in the average power factor below 85% there will be a 1/2% power factor surcharge in the total bill amount excluding F.A. charge. Source: BEST Staff - 349 - Ad effective tariff rate was computed for the period 1963-1972 by taking average revenue per unit sold by major category of consumers (Table l42 ). Unfortunately, it was not possible to allocate the fuel adjustments charge which was recorded as a separate item for all users; these charges have - been altogether excluded and thus the effective tariffs computed for the categories subjected to these charges are underestimated. This effective rate was Rs.0.25 for commercial lighting and fans, Rs. 0.14 for commercial heating and general purposes motive power consumers, and Rs. 0.10 for large motive power consumers and residential uses. This tariff structure exhibits an obvious rate bias against comercial lighting and general purpose power consumer and residential consumers share an equally favorable treatment. Such a difference in treatment can hardly be explained in terms of differences in cost supply since if anything, supply to large consumers can be expected to be lower than to individual consumers. Such considerations may have guided, to scme extent, the tariff structure of the BEST in earlier years when residential tariffs were the second highest after those imposed on commercial lighting and fans. However, successive changes in tariffs have meant increasing charges to all consumers with the exception of the residential category, whose tariffs were actually lowered in 1967. / Only data for these years are available. However, they reflect the changes which took place in tariff rates over the period under study. - 350 - Table 1h2: REVENUES PER UNIT - BY MAJOR CATEGORY .. .. . .. . .OF CONSUMERS- 1963-64 1965-66 1966-67 1967-68 1968-69 1971-72 Rs/Unit Rs/Unit Rs/Unit Rs/Unit Rs/Unit Rs/Unit (1) Camercial lighting, fans, etc. 0.17 0.16 0.17 0.18 0.19 0.2 (2) Comercial heating 0.07 0.08 0.08 0.10 0.11 0.14 (3) Residential lighting, fans 0.13 0.13 0.12 0.10 ) 0.10 0.10 (4) Residential heating 0.06 0.06 0.06 0.06 ) (5) Large motive power consi=ers 0.06 0.07 0.07 0.08 0.09 0.10 (6) General purposes motive power consumers 0.07 0.08 0.08 0.11 0.11 0.14 (7) Traction 0.06 0.06 0.06 0.07 0.07 - (8) Street lighting 0.08 0.08 0.08 Q.10 0.10 0.12 (9) Temporary Stand-by - - - - - 0.23 Source: BEST Staff - Table 143: BUDGETARr POSITION OF ELECTRIC SUPPLY (Rs 000) 2 3 5 .6 7 8. Current Income Operat- including Operating Current -ing Current Current General Expendi- Over- Expendi- Deficit/ Deficit/ own Adm. tures Debt head tures Surplus Surplus Tncm6 Income tures Charges Charees (Rs '000) 1-3 . 1-6 2-6 1960-61 49,hh2 51,160 29,853- 7,539 5,648 42,853 +19,589 +6,589 8,307 1961-62 5h,657 56,772 32,086 8,341 7,143 47,570 +22,511 + +7,087 9,202 1962-63 60,496 62,848 36,002 8"925 6,078 51A005 +24,494 +9,491 11,843 1963-64 72,415 74,393 b6,978 9,318 6,505 62,8C0 +25,437 +9,614 11,592 1964-65 80,500 83,112 51,006 9,812 7,503 68,32.1 +29,49h +12,179 14,791 1965-66 85,623 87,984 56,614 10,335 8,242 75,191 +29,009 +10,432 12,793 1966-67 94,555 98,308 60,453 10,44 8,737 79,631 -*34,102 +14,921 18,674 1967-68 104,965 109,941 70,372 12,606 9,649 92,627 +34,593 +12,338 17,314 1968-69 111,828 115,306 74,292 10,0952/ 9,176 93,563 +37,536 +18,265 21,7h3 1969-70 127,599 130,174 86,178 15,19512 1 7,438 108,811 +41,421 +18,788 21,363 1970-71 IL8,500 151,500 101,236 13,660-'/ 6,903 121,799 +47,264 +26,701 29,701 1971-72 158,675 161,975 112,513 13,914V2/ 7,929 134,356 +L,6,162 +24,319 27,619 1972-71. 167,512 170,562 117,701 17,4039,161 11,268 +9,811 +23,286 26,296 1/ Approximates BEST 2/ Amount used for Sinking Fund Installments (in Rs '000) 1969-70 NA Devreciation (Rs '000) 1970-71 9,706 1971-72 9,71 1960-61 = 2,L98 1972-73 NA 1961-62 = 3,000 1962-63 - 3,300 1963-64 = 3,000 3/ Interest on Internal Funds 1964-65 - 3,000 1968-69 5,480 1965-66 - 3,000 1969-70 6,228 1966-67 = 3,000 1970-71 6,735 1967-68 = 500 1971-72 6 S1 1968-69 = 5,908 1972-73 (Est5 8,000 1969-70 = 6,308 1970-71 = 6,786 1971-72 - 8,571 1972-73 = 7,625 Source: BEST Staff - 353 - Debt charges as shown here include the repayment of the principal and interest allocated every year to the sinking fund and the interest paid on internal funds. It was not possible to break down debt charges on public loans and debt service on internal funds for the period before 1968/69. The method adopted for sinking fund provision was changed in 1966-67 when the installments were reduced. According to BEST sources, the interest rate which was thereafter adopted was more realistic than the previous one. A second change ocurred in 1968 when it was decided that sinking fund installments would be adjusted on a basis of the provision for depreciation. This means that a certain proportion of the annual depreciation allowance is now allocated to the sinking fund. This method understimates debt charges and current expenditures. The first, "current own revenue", includes all revenues from electric supply. The second, "current income", includes the income from general administration allocated to the electric branch. The BEST allocated these incomes until 1968-69, when the practice was discontinued. The method adopted in the earlier years by the BEST is used here to allocate these Ancome in the most recent years. The budgetary position of the electric supply branch indicates that surpluses on the operating and current accounts were continuously generated during the period under consideration. Until 1968-69, incaMes have more than kept up with increasing current expenditures since larger operating and current surpluses were attained every year. This trend seems to have continued in more recent years, but when adjustments are made in debt charges in order to take account of the sinking fund installments made from the -epreciation Fund, surpluses have been, in effect, stagnant since at least 1970-71. On this basis, current expenditures increased at an annual rate of 11.7 percent as canpared to 11.1 percent for revenues over the 1960-1972 period. The rate of growth in current expenditures would have been even higher if a consistent method for allocating overhead charges had been adopted throughout the period. In sum, it seems clear that the financial position of the electric branch is deteriorating. According to BEST sources, the tariff increase which took place in 1972 will merely slow down this deterioration. It is also expected that debt charges will become heavier over the next few years as external assistance is increasingly relied upon to finance capital works. A breakdown of current expenditures per unit sold shows that current cost increased by 81 percent from 1960 to 1971. The largest part of the increase results from successive increases in the cost of energy purchased (Table 18)4) which is by far the largest component of current cost with a relative share of about 60 percent. Tatas adjusted its tariffs three times, in 1963, 1967, and 1969. The most recent increase of 20 percent which took place in October 1972 is not yet reflected in the accounts-(see Table 145). Altogether, the tariffs increased by 135 percent during this period. The relatively low share of debt charges (about 10 percent in 1971-72) results not only from the use of sinking funds for the financing of capital works, but also from a relatively low level of investments. The utililation of current surpluses could also explain this low ration. However, as it will become clear later, these surpluses are used in part to cover the deficits incurred in the transport branch of the BEST. Table 14: BREAKDOWN OF CURRENT EXPENDITURE PER UTNI ELECTRIC SUPPLY Current Cost Cost of per 1000 Energy Establish- Other Debt Units Produced ment Charges Charges Sold per unit per unit per unit per unit (Rs) (Rs) (Rs) (Rs) (Rs) 1960-61 76.61 36.23 13.47 1961-62 77.09 36.00 8.75 18.83 13.51 1962-63 74.37 36.95 8.54 15.87 13.01 1963-64 86.81 47.82 8.18 15.57 12.88 1964-65 89.76 - 68.55 8.76 19.56 12.89 1965-66 93.61 51.01 9.29 20.h4 12.87 1966-67 93.61 51.73 9.82 19.98 12.28 1967-68 108.31 60.01 10.63 22.93 Th.74 1968-69 105.4 60.57 10.69 22.92 11.36 1969-70 118.65 67.07 11.10 23.95 16.53 1970-71 127.55 73.41 11.08 29.46 13.60 1971-72 124.80 76.18 11.67 24.06 12.89 1972-73- 138.87 85.30 11.92 25.25 16.40 1/ Based on Estimates Source: Data provided by BESI Table 145: BEST ELECTRIC SUPPLY REVENUES (Rs 000) Estimate 60 61 62 63 6h 65 66 67 68 69 70 71 72 Sale of energy by meter h5,890 50,767 55,688 66,639 74,365 78,213 85,340 93,489 99,983 114,900 132,087 142,1o 156,ooo To tramways 301 190 93 71 ----- ----- ----- ----- ----- ----- ----- ----- ----- To trolley buses - ----- 72 43 . 53 63 71 35 102 66 ----- ----- TOTAL 46,190 50,957 55,816 66,783 74,08 78,266 85,403 93,560 100,019 115,002 132,154 142,410 i56,ooo Street Lighting 1,1'52 1,320 2,002 1,881 1,804 2,409 3,960 5,692 6,714 7,277 9,979 9,672 10,692 Sales Service 1,318 1,522 1,673 2,714 3,114 3,321 3,353 3,330 3,346 3,563 3,910 3,884 4,370 Showroom 720 762 854 816 814 915 1,055 1,154 ----- ----- ----- ----- Sales, line & repairs ----- ----- ----- ----- ------ ----- ----- ----- 1,140 1,144 1,100 1,080 1,235 Miscellaneous 62 97 151 186 285 680 624 1,229 609, 614 1,357 1,629 1,550 TOTAL 49,Ub2 54,657 60,496 72,415 80,500 85,623 94,555 104,965 111,828 127,599 168,50 158,675 173,847 . Source; BMC Annual Accounts B. Transportation 1. Services Provided Public transportation facilities in Greater Bombay are under the responsibility of the Municipal Government and the Central Government. The Government, through Western Railway and Central Railway, operates commuter passenger rail services in addition to their main line passenger and freight service. The BMC, through the BEST Undertaking, provides all internal J:oad transport services within the municipal limits of Greater Bombay, except pfor some very limited privately operated bus services to a few factories and other special places. Outside Greater Bombay, bus services are provided by the Maharashtra State Road Transport Corporation (a nationalized coporation), which provides inter-city services and services between Bombay and other areas but does not carry any internal local traffic. As might be expected, public transportation is by far the most important means of transportation in Bombay, it is estimated that over 90 percent of the traveling public depend on public transport. Rail and buses assume an equally important role with each carrying roughly 2.6 million person trip daily. Approximately one million people travel short distances by taxis and rickshaws, mainly in the central business district; and 300,000 people use cars for the journey to work. Since rail services are operated by Central Government agencies, they are excluded from this report, which is restricted to consideration of local government finance. At present, the BEST operates only bus services, however, the tradition of this company is also linked to other means of transportation, such as minibuses and tramways. Tramways were operated for about 90 years until 1964 when the service was discontinued and at its peak the BEST had a fleet of 438 trams which carried 580,000 passengers daily. By 1964, however, the stock was reduced to 62 trams of which only 55 were in use. -u During that period, tramways were carrying an average of 113,279 passengers per day, which compares very unfavorably with the 1.8 million daily passengers carried by buses. The tramway operation was regularly producing current deficits during the latter years of its operation. Trolley bus service was introduced in the early 60s. The experiment was short lived and at the height of operation, the BEST owned 12 trolley buses, of which 9 were in service; the average number of passengers carried per year never exceeded 9 million. In 1971, when the last trolley buses had outlived their normal life span and the quality of the service was clearly deteriorating, the trolley buses were replaced by buses. The budgetary position of this service was also weak. Bus services were begun in 1926 in the Afghan Church and Crawford Market lines.. In 1973 the BEST operated 136 routes consisting of approximately 1676 kilometers. The route structure provides very extensive coverage of both the City and the suburban areas of Bombay, having undergone a major expansion in 1950 and 1957 when the suburbs and extended suburbs were placed under the jurisdiction of the BYC. Until then, bus services were restricted to the City of Bombay. The majority of the routes in the suburban areas tend to run north and south as do the railroads. But buses also operate on the comparatively few existing east-west roads. Many of the bus routes run nearly parallel to the ril commuter system. There is some - 359 - integration between the railroad and bus operations--the bus system providing some feeder services to the rail commuter service, and all stations are served by the bus system. As of April 1973, the bus fleet consisted of 1,402 buses which was divided into 777 single decker vehicles and 635 double decker vehicles including 100 articulated trailer buses. Most of the single-deck buses have total seating and standing capacities between 55 and 65 passengers, (Table 146). The range of capacity for the double deck buses is approximately 80 to 90. The articulated trailer buses have a capacity of about 100, almost entirely seated. The capacity for standees account for about 18 percent of the aggregate carrying capacity. The BEST also owns a few mini-buses which are used in some sparcely populated areas in the suburbs, and, in particular, in the Industri.al Estates, which are the newly established Colonies of the Corporation and of the Maharshtra Housing Board. The scheme was drawn up Table 116: PASSENGER CARRYING CAPACITY AS OF APRIL 1973 Number Carrying CaDacity Type of Buses of Buses Seating Standees Total Double Decker 635 51,538 5,893 57,431 Single Decker 777 31,607 12,988 44)50/ Total 1,412 83,145 18,881 102,026 Source: BEST Staff - 360 - in 1971-72 anid consists of none man, operated minibuses on a flat fare system". The fleet is composed of buses of at least 3 manufacturers. In 197172, Xor ekample, orders were placed with Ws Ashok Leyland Ltd. for cometized Titan Chagsis and Viking Chassis and semi-articulated trailer buses, with Ws Telco for T.M.B. chassis, and with M/s Mahindra Owen Ltd. for semi-articulated trailer buses. There are at least eight different model single-deck buses in the fleet and a total of 29 different t-ypes when seating configuration is considered. A number of seating model combinations appear in the fleet only two or three times. The abundance of model types and seating configurations probably result in inefficient maintenance and operating practices; it suggests the need for larger inventories of spare parts and a large number of maintenance practices and rules to handle the large variety of buses in the fleet. It is difficult however, to specify exactly the additional cost incurred. Single deckers and semi-articulated trailer buses are produced in India. The double decker chassis are also being developed locally, but the major components of the chassis, i.e. chassis frame, front axle, and real axle, are still imported from the United Kingdom. Efforts are made to assemble double decker chassis with indigeneous components of Comet vehicles in order to reduce capital cost and bottlenecks in the expansion of the fleet resulting from import restrictibns imposed by the Governient of India. The imported double decker Titan chassis alone costs about Rs 210,000. X prototype chassis indigeneously made was put in service in 1968. Doiible- decker vehicles are preferred by the BEST for use in the City. However, due to financial and technical constraints the number of double deckers in service declined from 732 in 1963-64 to 6L5 in 1971-72. - 361 - The average bus age was 8.75 years in 1971 and 7.50 in 1972; it was 7.7 years for single decker vehicles and 10.2 years for double decker vehicles. Buses are scrapped by the BEST after seven years or half a million kilometers for single decker vehicles, or 12 years or 750,000 kilometers for donble decker vehicles, whichever is higher. These standards are basically the ones laid down by the All India State Road Transport Association, with the exception for double de0ker vehicles, where the standard is 12 years or 900,000 kilomers. The Association also suggests that the "average" age of the fleet should be four years for single decker vehicles and 6 years for double decker buses. However, due to a shortage of new chassis, the BEST had to postpone its scrapping programs more than once aid in 1971-72, 41.7 percent of the single deckers and 44 percent of the double deckers were overaged, as compared to only 33 percent and 36 percent respectively in 1970-71. Basic indicators of the bus service performance indicate that passengers increased at an average annual rate of 4.6 percent as against 2 percent annual increase in total passenger carrying capacity over the period 1961-1971. The larger increase in the number of passengers does not seem to have resilted in an increase in the average bus load as is seen from the number of passengers per kilometer, which remained nearly constant. The increase in carrying capacity resulted exclusively from a more intensive utilization of the fleet. The total number of buses owned did not significantly change over the period and even declined after 1966-67 1/ It is not clear how the data on the number of passengers is obtained. It seems that informations come from single ticket sales which do not always represent single trips and that passengers traveling free such as policemen are not included. 2/ It does not mean that crowding did not increase at certain times. - 362 - while the number of double deckers decreased by 15 percent. The coefficient of fleet utilization, which was already quite high in 1963, was raised about 90 percent in 1972, Y as a result of better maintenance services on buses which resulted in fewer breakdowns. Another important factor contributing to capacity increase was the increase in the number of trips per bus and per day. The total numberof kilcmeters per year increased by 50 percent, which was in part due to additional bus routes and to an increase in the number of daily trips per-bus* The number of seating acrommodations was reduced in favor of standing accommodations and productivity campaigns were donducted among conduct6rs and drivers. In 197t, for example, the capacity was increased by approximatdy 4.2 percent by introducing single decket vehicles with larger standing capacity. An incentive pay plan for conductors and drivers was introduced a few years ago since there was same problem getting the conductors and drivers to fill the buses. Bonuses are given on the basis of the collections which encourages some overloading. The 2/ modalities of the scheme are not known in their current form, bat in 1970 the conductor was given targets of Rs 1,500 per month for city operations and Rs 2,QOO per month for suburban operations. In spite of these policies, the performance of the system had been steadily deteriorating. On average, passengers wait for 30-35 minutes as compared to a 20 minute wait only a few years ago. During peak hours, the waiting time can extend to two to three hours and buses are almost always 1/ The average number of buses in service over average effective fleet. The utilization figures may be somewhat distorted as the effective fleet excludes buses undergoing major overhaul. It is estimated that never more than 3 percent of the fleet is being overhauled at one time. 2 IBRD, Report on Bombay, Annex III, Transportation, April 30, 1971. 3/ IBRD Staff Estimates - 363 - overloaded. Traffic is slow, particularly in the center of the City, as a result of increasing traffic congestion. The average speed for buses is estimated at 13 kilometers/hour in the metropolitan area and 0-5 kilcmeter/ hour in the downtown area. The problem is also compounded very substantially by the presence on the roads of many pedestrians, handcarts, oxcarts, horsecarts, stray oxen and other vehicles. Very few traffic lights exist and in ma'ny places roundabouts or traffic circles are used in place of appropriate signals. There is no special lane for buses but the establish- ment of such traffic rules are under consideration by the BIC. Indeed, the mobility problem is overwhelming in the city. It results mainly from the concentration of economic activities near the Southern ti of the Island while in recent years, most population growth has taken place in the out- lying areas. The residential areas which are for most part located in the Northern suburbs are sanetimes up to 30 miles from the places of employment. This situation worsens every year as population in the suburbs increases faster than the number of city dwellers; this is not surprising since the city is already overcrowded and offers few opportunities for further development. In addition, as given the flat fare structure operated by the BEST gives people an incentive to locate in the suburbs where accommodations are also cheaper. The future development of this Bombay area with the creation of the Twin-City, which is being developed as a counter- magpet to the City, does not allow an overly optimistic forecast (see Table 147). Table 147 shows further, as was previously pointed out, that the bus operations have generally run substantial benefits, which are largely financed by internal transfers from the electricity account. - 364 - Table 147: TRANSPRTATION BRANCH - BEST 9 2 3 1 5_ *6 7 8 Deicit Financed Operating Current fr= Expendi- Expendi- Operating Current Electricity Own Including tures Debt tures Deficit Deficit Revenues In,ome GA Income (6-L-5) Charges Overhead (3+h+5) (1-3) (1-6) (2-6) 1960-61 68,353 70,726 56,027 9,625 7,803 73,455 12,326 - 5,102 - 2,729 1961-62 70,934 73,048 58,h39 9,543 7,143 75,125 12,495 - 4,191 - 2,077 1962-63 77,352 79,704 67,784 10,589 6,067 84,440 9,568 - 7,088 - 4,736 1963-64 88,634 90,612 78,574 10,943 6,505 96,022 10,060 - 7,388 - 5,41o 1964-65 93,838 96,450 86,321 9,510 7,503 103,334. 7,517 - 9,496 - 6,884 1965-66 94,846 97,207 96,240 8,928 8,242 .113ý,U1 - 1,394 -18,564 - 16,203 1966-67 100,962 104,714 99,872 8,654 8,736 117,262 1,090 -16,300 - 12,548 1967-68 114,852 119,828 114,731 9,710 - 9,649 134,090 121 -19,238 - 14,262 1968-69 132,328 135,806 122,014 .-"4,466 9,176 135,656 10,314 - 3,328 150 1969-70 145,839 148,414 144,624 4,128 10,558 15',304 1,215 -13,h65 - 10,890 1970-71 159,610 162,612 147,036 3,640 10,397 161,073 12,574 - 1,63 1,539 1971-72 170,634 173,940 152,327 3,641 11,325 167,293 18,307 3341 6,647 1972-731-/ 169,990L/ 173,05451 179,840 5,352 12,837 198,029 - 9,350 -28,039 - 2,975 1/ Approx. actuais given by BEST. DeDreciation 1960-61 685 1961-72 680 1962-63 150 1963-6U 160 1964-65 180 1965-66 - 1966-67 1967-68 - 1968-69 9,762 1969-70 10,728 1970-71 10,h24 1971-72 11,631 1972-73 8,h0 Scurce: BMC Annual Accounts . . -. J