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BDA survives on old cash surplus

Aravind Gowda  |  Chennai/ Bangalore 

The Bangalore Development Authority (BDA), considered a role-model for public agencies during the Congress rule (1999-2004) in Karnataka, has returned to its earlier dormancy in the last three and a half years.
Not a single residential site was distributed during this period compared to 66,000 during the previous five years which helped take forward the middle class' dream to own a house.
The BDA also earned accolades by executing infrastructure projects like flyovers, ring roads, shopping complexes, urban environment programmes and lake rejuvenation in the city.
During the Congress regime, the BDA earned a cumulative revenue of Rs 2,462 crore. This came through development and sale of residential sites (Rs 1,512 crore), recovery of encroached land (Rs 598 crore), auctioning of commercial properties and premium corner sites (Rs 337 crore) and government grant and other revenue from property tax and advertisements (Rs 15 crore).
The expenditure during the period was Rs 1312 crore. When the Congress lost power, the BDA was cash surplus by Rs 1,150 crore. Its positive cash flow helped it obtain a credit rating of LAA+ without government guarantee from the credit rating agency ICRA.
The public agency is now surviving on this cash. It has become the basis for every budget prepared by the BDA in the last three years.
During the last three and a half years, the BDA's cumulative expenditure was in excess of Rs 800 crore, including salaries of employees, payment of bills for the Arkavathi Layout and pending infrastructure works worth Rs 322 crore.
During the period, its revenue receipts were Rs 1,605 crore, including the cash surplus of Rs 1,150 crore, grants and aid for development works under central and state schemes amounting to Rs 198 crore and another Rs 257 crore earned from auction of corner commercial sites and recovery of encroached land.
The cash surplus is being carried forward every year in the account books of the BDA. During 2005-06, the BDA had even invested close to Rs 900 crore of this cash surplus in fixed deposits in a leading private sector bank.
"As of now, the agency is still cash surplus by close to Rs 800 crore. Apart from auctioning of the corner commercial sites, which are fetching huge sums, the agency has not acquired even a single acre to form a layout," a senior state government official said.
When the S M Krishna government took over in 1999, the BDA was living on borrowed time, the earlier J H Patel government having decided to wind up the loss-making body.
But during 1999-2004, the BDA underwent a remarkable turnaround. In contrast, during the 2004-07 period when two coalitions (Congress-JDS and BJP-JDS) governments exercised power, the BDA has not formed a single township.
During the Krishna government, the BDA had formed five residential townships ¿ Banashankari 6th Stage, Banashankari 6th Stage Further Extension, Anjanapura Township, Anjanapura Township Further Extension and Vishweshwaraiah Layout.
The decline in the fortunes of the BDA in the last three years is attributed to the 'pro-farmer' approach of the Janata Dal (S) leadership which has been the common factor in the two post-2004 governments. It does not believe in forming residential townships on land acquired from farmers. Consequently, the land acquisition has stalled.
The very same land acquisition process was highly successful during the Krishna regime. The BDA had then acquired 5,500 acres without any litigation. The contract for layout and township development was awarded through tenders.
As soon as the Congress came to power in 1999, it appointed senior IAS officer Jayakar Jerome as BDA commissioner. At that point the BDA had been reduced to auctioning stray commercial sites in the city to pay staff salaries.
The BDA also recovered government land worth Rs 598 crore that had been encroached upon by the land mafia. Such was the situation that the government had to provide 24ô7 security to commissioner Jerome.
The BDA was in the process of forming the sixth layout ¿ Arkavathi ¿ when the Congress was voted out of power in the 2004 general elections and was replaced by the Congress-Janata Dal (Secular) coalition.
Immediately, all the top bureaucrats of BDA, including Jerome, were transferred. The government also directed the BDA to stop work on the Arkavathi Layout. For the next six months, no work was done. This gap in the land acquisition process prompted land owners to approach the courts and create legal hurdles.
The Arkavathi Layout took another hit when the government, deviating from the tender process, directed the BDA to award development work on a piecemeal basis to small contractors. It resulted in haphazard formation of the layout, with roads losing their alignment.
The government has allotted 10,000 sites in Arkavathi Layout but this is a paper reality. The government does not have the land to redistribute and whatever land has been acquired has not been properly developed.
When the Congress-JD (S) government made way for the JD(S)-BJP alliance in February 2006, chief minister H D Kumaraswamy announced formation of new layouts through BDA. But that did not materialise even after a year.
Meanwhile, real estate prices have shot up dramatically and the government has revised the rates. Now, the BDA will have to allot residential sites at rates above Rs 500 per square foot, a 2.5 times rise in three years compared to Rs 107 per square foot earlier.
"If the BDA forms layout and allots sites in future, ordinary citizens will not be able to afford them since the rates have gone up significantly. It may not be feasible for the BDA to undertake layout formation in future," a top government official rued.

First Published: Tue, November 20 2007. 00:00 IST