The slide provides the findings of the finances of the Bhubaneswar Municipal Corporation.The study was done by the Odisha Budget and Accountability Centre(OBAC), a budget and policy research unit of Centre for Youth and Social Development(CYSD),Odisha

1. www.obac.in
Finances of Bhubaneswar Municipal Corporation
- An Analysis and Assessment
Odisha Budget and Accountability
Centre (OBAC), CYSD
24May 2017

2. Rationale of the
study
www.obac.in
 Passage of the 74th Constitutional Amendment Act has enabled
the growth of functions of the urban local body(ULB).
 Flow of resources to ULB has been on rise due to
recommendation of the state and central finance commissions,
implementation of flagship programmes and schemes like
JNNURM,AMRUT, Smart City Mission.
 The expectation of the citizen from BMC has been increasing on
delivery of the basic services and infrastructure development.
 Understanding the budget - essential to understand the
development activities .

3. Objectives
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 To make an analysis of the budget making process
 To locate the sources of revenue and mode of
disbursements
 To perform a budget variance analysis
 To identify the sectors assuming priority in budget making
 To make an assessment of the finances

4. Size of the Receipts of
BMC over the Years
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Rs.33.95cr.
(2004-05)
Rs.236.46cr.
2013-14
Rs.282.12 cr.
2016-17(BE)

5. Size of the Expenditure
Budget of BMC over the
Years
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Rs.35.86 cr
(2004-05)
Rs.207.46cr
2013-14
Rs.281.28
cr.
2016-17(BE)

6. Sources of Funds
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Revenue Receipt
Tax
revenue
Assigned
revenue and
compensation
Rental Income
from municipal
properties
Fees from
user charges
Sale and hire
charges
Income from
investment
Other income
Capital Receipt
Loans
Deposits
Grants
• From centre
• From state
• Other govt. agency
Funds from sale of properties
others

7. Share of components of
receipts of BMC in 2013-
14
2.47
16.47
59.23
21.83
Share in capital
receipts(%) in 2013-14
Deposits
Received
Grants from
Central
Government
State
Government
Grants
Grants from
other
Government
Agencies
22.2
57.07
1.17
9.18
0.55 9.83
Shares in Revenue
Receipts(%) in 2013-14
Tax Revenue
Assigned Revenue
and Compensation
Rental Income from
Municipal
Properties
Fees and User
Charges
Sale and Hire
Charges
Income from
Investment-General
Fund
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8. Grants vs Own tax in BMC
budget
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7.10
39.06
30.31
13.31
% share in 2007-08 % share in 2013-14
Share of grant and own tax in
BMC budget
Grants Own tax revenue
2.41
10.29
92.37
31.48
0
10
20
30
40
50
60
70
80
90
100
Grants Own tax revenue
Grant vs Own tax in BMC
Amount in Rs.crore
2007-08
2013-14

9. Components of BMC expenditure
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Expenditure
GeneralAdministration
andestablishment
Administrativeexpenses
Solidwastemanagement
Repairs&maintenancec.
Interestpayment
ProgrammeExpenses
Revenuegrantsandsubsidies
Contingencies
Refundofdeposits
Acquisitionofassets
Loansandadvances
Medicalexpenses
Purchaseofstorematerials

10. Pattern of expenditure in BMC
www.obac.in
5.31
35.48
11.74
12.50
10.49
16.01
5.76
1.39
0.55
0.66
24.12
22.77
16.08
12.94
10.00
6.37
5.00
1.47
0.57
0.33
0.00 10.00 20.00 30.00 40.00
Program Expenses
Revenues Grants & Subsidies
Acquisition/ Construction of Fixed
Assets& Capital Work in Progress
Generaladministrative&establishmen
t
Solid Waste Management
R & M
Administrative Expenses
Refund of Deposits
Loans and Advances
Purchase of Stores
share(%) in 2015-16(BE)
share(%) in 2013-14(actual)

11. Budget Management
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 Operation ratio: ratio of revenue expenditure to
revenue income. If ratio is <1, it speaks sound
finance
 Capital utilisation ratio: Ratio of capital expenditure
to capital income. For better utilisation, the ratio
should be 1
 Ratio of establishment expenditure to revenue
income. Ratio should be as low as possible.
 Budget variance is more than the safe limit1
percent
Year Operating Ratio Capital Utilisation
Ratio
Ratio of Establishment
Expenditure to Total Revenue
Income
2007-08 0.94 1.40 0.58
2008-09 0.74 4.32 0.13
2009-10 0.93 1.40 0.32
2010-11 1.79 1.07 0.37
2011-12 0.62 3.67 0.23
2012-13 1.04 0.17 0.34
2013-14 1.94 0.35 0.37

12. Changes brought in BMC
budget process
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 Odisha Municipal Accounting Manual
(Rules) was brought out in 2012. This is called as
OMAR(Odisha Municipal Accounting Rules).It
became effective from 01.08.2013 in BMC.
However, the OMAR rule was reflected in 2014-15
budget of the BMC
 BMC has been following the double entry accrual
basis of accounting system in lieu of single entry
cash basis of accounting system from the fiscal
year 2014-15 as per Orissa Municipal Accounting
Manual.
 Budget for urban poor was started after JnNURM.
Budget for this scheme was Rs.15 crore in 2006-07
and it increased to Rs.109 crore in 2015-16.

13. Municipal Budget Cycle
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Municipal
Budget
Cycle
Budget
Preparation
Budget
Approval
Budget
Execution
Budget
Evaluation

14. Specimen of a Budget
Calendar
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Activity Timelines
Convening the Meeting of All Concerned 31
October
Completion of the Format in which Budget Proposal is to be Prepared by
Departments
10
November
Preparation and Submission of Budget Proposals by Departments 25
December
Compilation of the Budget Proposals Received from Departments 7 January
Submission of the Complied Budget Proposal to Designated Committee 15 January
Review of Budget Proposal and Submission to the Concerned Authority 15 February
Preparation of Budget Estimates and Placing the Same Before the Council 7 March
Approval of Budget by the Council 31 March
Submission of Budget to Government and Other Relevant Authorities 31 March
Source: JnNURM Primer

15. Summary Findings
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 Tax revenue and receipts of the grants(capital receipts)- two prominent
sources of revenue. Grants not as much dependable source as own
source of revenue
 Assessment has found overestimation of revenue receipts and
underestimation of capital receipts.
 Budget variance(difference between estimate and actual) exists for
BMC. This is more than the safe budget variance limit of 1 percent.
 The financial ratios( intended to assess the efficiency and
performance) of the BMC is not consistent.
 In each year, right from 2006-07 to 2015-16, BMC has been producing
a surplus budget at the beginning of the financial year but at the close,
some of the years have exhibited overall deficits in BMC budgets. This
is indicative of either over projections of receipts or under projections of
expenditure.
 BMC is committed to fulfill the twin objectives- alleviation of urban
poverty and providing basic services and facilities to urban poor

16. Cont….
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 ULBs need to have access to market based system of local
government finance
 PPP mode of financing the developmental project
 Mismatch between the functions and funds to be narrowed down
to make BMC a viable economic unit
 Property tax to be institutionalised

17. www.obac.in
Thank
you
To get the report, please contact
Library in Charge,
Centre for Youth and Social Development(CYSD),E-1 Institutional
Area,
Gangadhar Meher Marg,
Bhubaneswar-751013,Odisha
Mail id: info@cysd.org