B'lore Corporation rides on real estate boom

Earns Rs 573.02 crore revenue in 2005-06

Bangalore City Corporation (BCC) is set to achieve a 16.72 per cent hike in revenues in 2005-06, mainly by riding high on a boom in real estate, complemented by hike in property tax guidance value. On Friday, the BCC presented the 2006-07 budget with a total outlay of Rs 1,870 crore.

The revenue generated in 2005-06 financial year is estimated to touch Rs 573.02 crore, up from Rs 490.90 crore in 2004-05. The revenue receipts for the year 2003-04 stood at Rs 452.80 crore.

The only negative aspect is a loss of Rs 15 crore of potential revenue as a result of abolition of parking fees in the city.

The BCC's main revenue sources are property tax, improvement charge, advertisement tax, trade licence and building licence fee, surcharge on stamp duty, fines and rent from corporation properties. Property tax collection alone accounts for nearly 60-70 per cent of the BCC's revenue.

The marked improvement in revenue generation this year is attributed to the increase in guidance value of residential and commercial properties in 2005.

Consequently, the property tax on commercial establishments has increased between 30 and 40 per cent, leading to an overall improvement in property tax collection.

Besides, property tax collection has been streamlined through computerisation. In addition to this, there has been a boom in real estate in 2005-06 with registration of more built-up properties, which has added to the tax kitty.

As against Rs 227.13 crore collected as property tax in 2004-05, it is up 26 per cent at Rs 285 crore till date for the 2005-06 financial year.

Prior to the introduction of Self Assessment Scheme (SAS), property tax collection stood at Rs 113.22 crore in 1999-2000.

During the first year of its introduction, property tax collection rose to Rs 157 crore (2000-01). It has been growing thereafter: Rs 165 crore in 2001-02; Rs 191.81 crore in 2002-03; Rs 198.58 crore in 2003-04; Rs 227.13 crore in 2004-05 and Rs 285 crore in 2005-06. The projected collection is Rs 400 crore for 2006-07.

Though the BCC's own revenues are growing, there is a fluctuation in the grants from the state government. These grants are to compensate for the revenue loss on account of abolition of octroi.

The yearly grant from the State Finance Commission (SFC) to the BCC is as follows: Rs 58.77 crore in 1999-2000; Rs 82.68 crore in 2000-01; Rs 73.16 crore in 2001-02; Rs 66.98 crore in 2002-03; Rs 60.36 crore in 2003-04 and Rs 56.48 crore in 2004-05.

However, in the 2006-07 budget, the SFC grants have been increased to Rs 129.10 crore. Besides, the state government has pledged a financial support of Rs 217.50 crore under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM).

The JNNURM funds will be released by the state government to the BCC only after the projects are approved by the Centre.

The BCC had presented a Rs 10,000 crore detailed plan under JNNURM, which was returned by the Centre for reworking. As on date, the Centre has not approved any state project under JNNURM.

This apart, the BCC has proposed to build 14 flyovers and infrastructure corridors to decongest the city at an estimated cost of Rs 287.14 crore (borrowed funds). The BCC has proposed to borrow Rs 326.96 crore for various development works.