“From Deficit to Surplus: A Realistic and Achievable Roadmap to make MCDs financially self-reliant”

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DRAFT
“From Deficit to Surplus: A Realistic and Achievable Roadmap to make MCDs
financially self-reliant”
Table of Contents
Our Vision................................................................................................................................................3
We believe ..............................................................................................................................................3
What we want to achieve? .....................................................................................................................3
1. 2000 cr/yr for development of Infrastructure Deficit Areas.......................................................3
2. Timely wages and Arrears of Sanitation Workers and other Municipal Employees ..................4
3. Primary Health ............................................................................................................................4
4. To restore and enhance the monthly pension to Rs2,500 for 2.25 lakh needy persons............5
5. Primary Education.......................................................................................................................5
6. Issue vending license and identify vending spaces for 5 lakh Street Vendors ...........................6
7. World class scavenging and Solid Waste Management..............................................................7
Some other key facts ..............................................................................................................................8
1. Transparency and accountability:...............................................................................................8
2. Lack of innovative ideas to improve revenue generation: .........................................................9
3. Property Tax..............................................................................................................................10
4. Toll Tax Collections: ..................................................................................................................10
5. Outdoor Advertisement............................................................................................................11
6. Revenue from Car Parking ........................................................................................................11
How to achieve it? ................................................................................................................................12
1. Property Tax Reforms ...............................................................................................................12
2. Development of Land Bank as an Annual Revenue Generation Resource ...............................12
3. Municipal Bonds and Credit Rating...........................................................................................12
4. Street Vendors License .............................................................................................................13
5. Transparent Toll Tax Collections...............................................................................................14
6. Outdoor Advertisements ..........................................................................................................14
7. Parking Charges.........................................................................................................................16

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The Three Municipal Corporations across Delhi are struggling to meet their objectives and
have failed to even come close to the promises made to the Delizens.
The common cause put across by the Municipal councillors and the officers of the MCD is
the lack of fund and lack of political synergy between, State, Centre & the Municipal
Corporations. The said reasoning is nothing but an alibi far from reality and the given
excuses are nothing but an ‘eyewash’ to cover for extensive pilferage and plundering of
public funds and thereby stifling the revenue potential that the MCD could have earned on
its own.
The current leadership is bankrupt with regards to fiscal sapience that is required to bring
out the MCD from the current mess. While a local street vendor, a housewife or a
businessman knows how to maintain a balance between expenses and income, however,
the BJP ruled MCDs have failed to attain this basic understaing.
Few of the major causes which have brought the MCD to disrepute and ridicule of the
people of Delhi are listed below:
1. Extensive pilferage in implementation and collection of the revenue from existing
resources;
2. Lackadaisical planning & management of the funds allotted by centre and state;
3. Lack of innovation and failure to generate additional revenue potential without
creating a burden on people;
4. Rampant corruption, nepotism and lack of political will to take action;
5. Lack of vision & political will to implement key guidelines;
6. Inefficient human resource and infrastructure management;
7. Complete lack of planning & co-ordination within the MCD as well with other
Government bodies;
8. Failure to engage and connect with employees, citizens for their participation in
many key initiatives taken by Municipalities themselves, State & Centre;
9. Undue delay and reluctance in implementation of the Fourth Finance Commission by
Delhi Government;
10. Projects not moving from drawing boards;

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It’s no denying that currently there is a gap in the financial requirements of the Municipal
corporations and the same not being filled-in either by the State or the Central Government
as both have deeply politicised the municipal organisation by constant rope pulling for their
own petty benefits, It’s a reality that presently the municipal corporations of the National
Capital are being governed and guided in most inept manner. There is tremendous potential
and opportunities available with the corporations provided that vision of performance and
transparenct public service replaces the current red-tapism. Also, the majority of the
requirements of the corporations can be easily met within, and without being unduly
dependent on grants being doled out as alms.
The rightful and just financial commitments that are to be met through pool of Centre and
State Government treasury, needs to be collected in time-bound manner and utilized
judiciously in planned and focused manner than indulging in often repeated passing the
buck game of “MCD has not got funds on time or MCD has not got enough funds”.
Our Vision
We will be focusing on fiscal management of the 3 municipal corporations essentially
through two platforms, i.e. Protecting and safeguarding the “Interest of Delizens”, especially
those belonging to economically weaker sections and “Make the MCDs financially self-
reliant-From Deficit to Surplus”
We believe
“Real, sustainable transformation of the 3 Delhi Municipal Corporation can only be
achieved by sound financial management and developing internal capacity & governance
through synergy with all stake holders…the most important of which are Delizens
themselves!”-And this is achievable in a time frame of two years only.
What we want to achieve?
1. 2000 cr/yr for development of Infrastructure Deficit Areas
Annual funds of Rs2000 crores for development of infrastructure deficit areas of Delhi,
particularly the Unauthorised Colonies and the Slums.

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2. Timely wages and Arrears of Sanitation Workers and other Municipal Employees
Sanitation Workers are provided uninterrupted wages and arrears immediately released.
Sanitation workers, and other employees of the Municipal Corporations should be paid
wages on time. All pending arrears to Sanitation Workers be released. The pending arears to
sanitation workers are as follows:
a) North DMC- 550.07 crores
b) South DMC- 547.30 Crores
c) East DMC- 461.82 crores (All Employees)
Total pending arears thus is 1,559.19 crores in all the MCDs.
3. Primary Health
Public health systems are different from private health providers in that they are supposed
to promote health and prevent disease in addition to providing healthcare.
Public health requires a systemic view with appropriate backward and forward linkages at
different levels- primary; secondary and tertiary- of healthcare delivery. Role of primary
health centres to provide information, screen for risk factors, provide curative services at
the primary level and triage patients for appropriate level of healthcare. Moreover, primary
health centres should be equipped to expand healthcare delivery during epidemics and
other health emergencies.
Instead of concentrating on its core area of Primary Health, the Delhi’s Municipal
Corporations (falling under the jurisdiction of North MCD) has six big hospitals under it
costing around 652 crores per year (51.3% is salary). MCDs have been resisting transfer of
these Hospitals to Delhi Government. Delhi Government can use its funds to further
develop these hospitals, which otherwise are in depleted conditions. This amount thus
saved by the MCDs can be used to set up a robust first line of defence as primary health
centres.
‘Health for All’ will be the mantra for the municipal bodies and guiding principle for all
municipal health programmes and would be supported through CSR programmes. All health
facilities will be transformed into comprehensive Primary Health Centres adequately
equipped to act as first response centre. Ward Committee would play a fundamental role in

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monitoring and planning of health services. No user fees would be charged in any health
centres. Essential medical supplies will be provided in adequate quantities and at no cost to
the patients through better and efficient running of MCD dispensaries
4. To restore and enhance the monthly pension to Rs2,500 for 2.25 lakh needy
persons
To restore and enhance the monthly pension to Rs 2,500 of two lakhs twenty-five thousand
needy persons @ 800/ ward by spending Rs 675 crores/ year. Pension given by the
councillors to needy persons in their wards (800 Pensions per ward) has been with-held
since last 44 months in the East Delhi, 27 Months in North Delhi and 20 months in South
Delhi Municipal Corporations.
5. Primary Education
Following startling features indicate the plight of municipal corporations run primary
education in Delhi.
a) Number of students in South DMC have dropped by 56,703 in last 5 years
b) More than 100 schools in South, 262 schools in East and most of the schools in North
Delhi Municipal Corporations do not have Fire NOC.
c) 205 schools in South and East Delhi do not have Delhi Jal Board Metered
connections.
d) Primary School infrastructure is in shambles. School buildings, Toiles, Desks, school
uniforms, textbooks etc are way behind the standards of a National Capital.
Primary Education will be the focus and additional revenue generated will be spent
adequately and wisely on it. Improvement of facilities, through enhanced funding in MCD
primary schools through a unique Donor Programme- “Shiksha Nayaks”, by involving the
citizens in this noble cause. Such programs have been successfully implemented by the
municipalities in Karnataka and they would be studied and implemented with required
amendments.
The objectives of the Donor programme would be improving the infrastructural facilities and
overall development of the primary schools. A separate civil task force (or society) would be

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formed to monitor receipt and finance details. Under the Societies Act donors are subject to
exemption from Income Tax under Section 80G. Various options can be offered to donors:
i) If the 2nd party (the donor) wishes to avail the benefits of I.T. exemption and use
his own contractors for fulfilling the works, then he should remit his funds
directly to Society and execute the work. The work would be supervised by the
officials and payments would be made to the contractor.
ii) If the Donor desires to contribute funds to a particular work in their choice of
school, the estimates will be prepared by the Engineers of MCD and the said
work will be carried out by the Society as per Government Rules and necessary
payment will be released by the Donor (I.T exemption, the funds flows needs to
be confirmed once with the authorities).
iii) If the Donor is not interested in IT Exemption under 80 G and desires to execute
the work by hiring a Contractor as per his selection of school, he can carry out
the work by obtaining necessary No Objection Certificate from the Society and
necessary supervision will be done by the Engineering Section Heads of MCD.
iv) The Primary School may be named after the donor who donates Rs. 5,00,000 /-
for a period of 2 years and if he is interested, the Primary School may be named
after the donor who donated Rs.10,00,000 /- for a period of 5 years . The donor
would have first right of refusal for continuing their name after the naming
period expires, however this would be subject to all conditions of contract being
fulfilled.
6. Issue vending license and identify vending spaces for 5 lakh Street Vendors
Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014 was
legislated by the Union Congress Government. It mandates for identification of proper
vending spaces and issuing vending license by the ULBs @ 2.5% of the total urban
population. Delhi thus qualifies for around 5lakh vending spaces and licenses.
Following is the number of official vendor licence holders in Delhi:
S.
No.
Municipal
Body
Number of
vendors having

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license
1. SDMC 4412
2. EDMC 1742
3. North DMC 7680
4. NDMC 700 (approx.)
But all the ULBs in Delhi have issued only 14,534 vending licenses. It has resulted in an
inspector raj where-in each of these 5 lakh vendors end up paying Rs150 to Rs1000 per day
to municipal and police authorities. If Street Vendors Act is implemented and Rs1000/month
is charged from each of the vendor, MCDs can collect Rs600 crores per year. Using this
money, we can pay the arears of sanitation workers (Rs1559.19 crores) in two and a half
years! A win-win for everyone.
7. World class scavenging and Solid Waste Management
There is a huge shortage of jetting machines, trucks, loaders, bulldozers , suction machines
in Municipal Corporations.
As per the 'Delhi Citizens' Handbook 2016' prepared by 'Centre for Civil Society', the
Municipal Corporations were unable to utilise funds allocated under the Centre's Swachh
Bharat Mission (SBM).
North DMC (DEMS) Unspent Amount
4267.66 Lakhs 2015-16
4600 Lakhs 2016-17
2745 Lakhs 2017-18
Similarly, South Delhi Municipal Corporation (SDMC) managed to only spend 0.25 per cent
out of the total received amount of Rs 31.63 Crore in 2015-16.

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Some other key facts
1. Transparency and accountability:
Two out of the three Delhi’s
Municipal Corporations are
not able to pay their wages
in time. Arears due to
Sanitation workers, since
they regularised, are
pending in all the three
Municipal Corporations.
Pension given by the
councillors to beneficiaries
in their respective wards (800 Pensions per ward) has been with-held since last 44
months in the East Delhi, 27 Months in North Delhi and 20 months in South Delhi
Municipal Corporations. While corporations in Delhi are in a huge financial distress,
but on the other hand, with better transparency and accountability, the Mumbai
Municipal Corporation has no dearth of money and has a surplus fixed deposit of
Rs51,000 crores (even though such a huge amount lying idle in the banks is also
equally undesirable). The reason for this is perhaps the following table as indicated
in the Economic Survey 2016-17. Mumbai stands first in the ranking of transparency,
accountability and participation. And Delhi is sixth from the bottom. This clearly
reflects poor and opaque revenue collection.
In a report in Times of India published on 11th May 2016 it has been reported that a
total of 1,332 cases of corruption were reported in three municipal corporations of
Delhi in the last three years, of which 630 have been investigated and mere 24
officials penalised.
In the same report a statement made by the Minister of State for Home has been
reported as under:

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"In the last three years, a total of 1,332 cases have been reported in three Municipal
Corporations in Delhi and 630 cases have been investigated," Minister of State for
Home Haribhai Parathibhai Chaudhary said during Question Hour.
The Minister also said that a total of 79 officials were booked by the CBI and Anti-
Crime Bureau in 42 cases registered by them in the last three years.
2. Lack of
innovative ideas to
improve revenue
generation:
Delhi’s 4th Finance
Commission (March
2013) while analysing
the finances of Delhi’s
Municipal
Corporations has
observed that:-
“…in case of MCD, the tax collection
is around two-third of the total
internal revenue indicating that it is
totally dependent on taxes and is not
mobilising revenue from other
sources like user-charges, rentals etc.
for increasing the internal revenue
further.” It would be interesting to
see here the performance of another
ULB from Delhi in this regard. The chart/s for New Delhi Municipal Council (NDMC)
under the Union Government points some interesting facts. The NDMC, unlike
Delhi’s Municipal Corporations, is self-dependent with 94% of its revenue mobilised

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from internal sources. Besides, 84% of this revenue is Non-Tax revenue. Around 450
crores are earned annually by the NDMC through rental income.
While 14% of Delhi Metro Rail Corporation (DMRC) is funded by GNCTD, 2% is
stipulated from property development. Above Table also clearly indicates that DMRC
had annual earnings up-to Rs130.94 crores from Leasing out Property. Despite
having huge land banks available, Delhi’s Municipal Corporations have failed to
realise this potential. Even for the Hong Kong Metro’s annual revenue, 35-40% is
contributed by property rentals.
3. Property Tax
Following table depicts the property tax
collection details from Delhi’s Municipal
Corporations. Property Tax rates have
remained unchanged since last many years. It is
mentioned in the 4th Finance Commission
(2013) Report that only one-third of eligible
properties are in tax net. Thus, Rs1,600 crores
of Property Tax are just 33% of the Property Tax
potential. If we can take it to 80% using GIS
and other modern technology, it can be
increased by Rs2,278 crores to Rs3,878 crores per year.
4. Toll Tax Collections:
Toll Tax collections also have been fraught with
corruption and opacity. The South MCD had asked
in 2014, Sriram Institute for Industrial Research
(SIIR) to conduct a survey of number of vehicles
entering Delhi and the amount of Toll Tax which
can be collected. SIIR suggested that the yearly
estimated revenue collection should be Rs1922 crores. The table of Toll Tax collection
depicts only 42% of the potential with a shortfall of 1135.12 crores last FY alone. Even if we

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set aside 3% collection charges and 15% contractor’s profit, the annual collection should be
Rs1574 crores. This is a shortfall of 50%!
5. Outdoor Advertisement
This is another area, where there is an
enormous scope. Last few years, collection
figures and variation also indicates grave
irregularities.
6. Revenue from Car Parking
There are many technological innovations
for enhancing revenue from Car Parking.
Following is the revenue collected and the
variations as seen in outdoor advertising
revenue collection depicts a sorry state.

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How to achieve it?
1. Property Tax Reforms
Following table depicts the property tax
collection details from Delhi’s Municipal
Corporations. Property Tax rates have
remained unchanged since last many years. It is
mentioned in the 4th Finance Commission
(2013) Report that only one-third of eligible
properties are in tax net. Thus, Rs1,600 crores
of Property Tax are just 33% of the Property Tax
potential.
If we can take it to 80% using GIS and other modern technology, it can be increased by
Rs2,278 crores to Rs3,878 crores per year.
2. Development of Land Bank as an Annual Revenue Generation Resource
Huge land bank is available with Delhi’s Municipal Corporations. As indicated above, New
Delhi Municipal Council (NDMC) draws around 450 crores annually from rental income. Even
the DMRC uses land as a resource, both as capital and revenue. But the Delhi’s Municipal
Corporations hardly uses its vast land banks to generate revenue.
3. Municipal Bonds and Credit Rating
To begin with, soon after bringing in transparency and accountability, steps should be
undertaken to get Credit rating from reputed credit rating agency.
Municipal City Development Bonds should be introduced in the open market after taking all
corrective steps and approvals, so that the dependency on state and centre financing can be
avoided. Similar approach had been taken Ahmedabad Municipal Corporation successfully.
These initiatives have been successfully adopted in developed nation and Municipal
corporations in Tamil Nadu, Karnataka and Andhara Pradesh had benefited from them.

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The tax-free City Development Bond
issued by the Municipal Corporation
of Hyderabad to the tune of Rs.82.5
Crores during March 2002 is one
such example. The bond issue was
assigned CRISIL rating AA+(SO) and
ICRA rating LAA+(SO). The bond
proceeds are dedicated to the
financing of development projects
including traffic and transportation
projects to decongest the city—road widening, junction improvement, development of
parallel roads, slip roads and link roads, signalisation of intersection etc. storm-water
drainage, sewerage and solid waste management, modern lighting and slum up gradation,
etc. Hyderabad City Development Bond have been evaluated as the best-rated municipal
bond in the country.
The Credit rating would also help the municipal corporation to attract FDI in their plans and
funding through national & international financial institutions
4. Street Vendors License
Street Vendors (Protection of Livelihood and Regulation
of Street Vending) Act, 2014 was legislated by the Union
Congress Government. It mandates for identification of
proper vending spaces and issuing vending license by the
ULBs @ 2.5% of the total urban population. Delhi thus qualifies for around 5lakh vending
spaces and licenses. We can also create special zones for Night markets/ food parks or
entertainment zones and creating revenues through same.
But all the ULBs in Delhi have issued only 14,534 vending licenses. It has resulted in an
inspector raj where-in each of these 5 lakh vendors end up paying Rs150 to Rs1000 per day
to municipal and police authorities. If Street Vendors Act is implemented and Rs1000/month
is charged from each of the vendor, MCDs can collect Rs600 crores per year. Using this

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money, we can pay the arears of sanitation workers (Rs1559.19 crores) in two and a half
years! A win-win for everyone.
5. Transparent Toll Tax Collections
Toll Tax collections also have been fraught with
corruption and opacity. The South MCD had asked
in 2014, Sriram Institute for Industrial Research
(SIIR) to conduct a survey of number of vehicles
entering Delhi and the amount of Toll Tax which
can be collected. SIIR suggested that the yearly
estimated revenue collection should be Rs1922 crores. The table of Toll Tax collection
depicts only 42% of the potential with a shortfall of 1135.12 crores last FY alone. Even if we
set aside 3% collection charges and 15% contractor’s profit, the annual collection should be
Rs1574 crores. This is a shortfall of 50%!
6. Outdoor Advertisements
The current status is pathetic and the corporations have let the outdoor advertising
opportunity pass on either to Outdoor mafia or Cartels or have distributed it like sweets to
their near and dear ones. They have tied the opportunity down with heavy chains of legal
entanglement through various litigations and court stays. The spirit with which they should
have nurtured this opportunity is missing.
 The biggest example of mishandling and mis-governance can’t be more evident than
the way the Municipal Corporations have handled the Outdoor Policy of Delhi, which
was approved by the Hon’ble Supreme Court of India and Bhure Lal Committee after
extensive efforts been put into it, to ensure planned, monitored and controlled
growth of Outdoor advertisement in manner that its sole purpose was to make Delhi
more habitable, more beautiful and well landscaped, safe, illuminated and as means
to provide public facilities to Delizens without any burden on corporations, state’s or
centre’s coffers. This becomes even more critical in view of the fact that full bench of
the Hon’ble Supreme Court in 2007 overturned its own full bench of judgement of
1997 in which it had banned Outdoor Advertisement in Delhi & permitted it as the
new one was Policy based & amenity oriented. But after getting Hon’ble Supreme

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Court’s nod for the new Outdoor Advertisement Policy, the Corporation never made
any attempt to take advantage of it and earn more revenue or to beautify Delhi.
 Crores and Crores of revenue is being lost month on month, due to failure of the
corporations to get their act together, to the benefit of corrupt officials, outdoor
advertisers and corporation governing bodies.
 The sole purpose of the Outdoor policy not getting ratified is that the existing
corporations want to benefit unduly in illegal manner to fill in their personal pockets,
through corruption and nepotism. They award the outdoor advertising projects
without legal and commercial scrutiny and then let corporations entangled in
litigations filed by the outdoor advertisers. They are hand in gloves in this with
outdoor mafia.
 There is no mechanism set by the existing corporations to Audit, Monitor and
Check the extent of Outdoor revenue being created by other private or public
bodies, who are supposed to pay or share the outdoor revenue generated by them.
For example auditing of the T3 International Airport, Delhi Metro Rail Corporation,
Indian Railway, DND Expressway etc. had never been done in terms of their total
revenue earned & the revenue entitlement of the MCD & also the area of actual
display Vs the area awarded by the Municipal bodies.
 There were additional means of revenue generations through new innovative
mediums (LED screens in pedestrian areas or in markets, Outdoor Digital screens
providing live information, Distress Women Booths, Night Shelters etc.) and the way
to apply the fee, which was explained within the Outdoor Policy, has been
completely ignored, to ensure that the existing system does not get reformed.
 The firmness that is required to collect outstanding dues is missing, except for hiding
behind the legal framework. No punitive action is taken on time and same outdoor
advertisers who have been bleeding corporations are awarded media in same
company name or a new name with same ownership, without checking the
credentials.
o The glaring examples of same can be witnessed on BRT Corridor, where illegal
media has been created on cycle shelters, on so-called Info-panels, Toilet
blocks etc.

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o There has been no tender on DND flyover for last 1.5 years and yet the
display of illegal outdoor media can be witnessed over it.
o On Nizamuddin Bridge the Unipoles have been awarded by UP Irrigation at
the rate of Rs5000/ Unipole without calling any tender, which has led to
mushrooming of media on it, making it dangerous for commuters, at the
same time MCD had been losing in terms of revenue sharing.
o MCD decided to abolish a major revenue earning source (Wall Wraps) already
identified in the Outdoor Advertising Policy because it failed to control and
monitor their implementation.
7. Parking Charges
Cartelization and political influence of the existing governing bodies of the corporations
have encouraged these operators to flout every norm, be it of providing safe parking space
or charge authorised parking charges or overcrowd parking by exceeding the number of
vehicles permitted to be parked in allotted parking space.
The parking charges and other mandatory information that should be displayed in allotted
parking space is seldom done. The parking coupons are fraudulently printed without any
numbers, no revenues are shared with corporation and no taxes paid on this excessive
illegal parking charges collected. This is being done in complete knowledge and with
blessings of existing corporation governing bodies.
The proper demarcation is never undertaken and parking operator encroach on public space
much beyond the allotted space, sometime to the extent of 3 to 4 times of the allotted
space. Thus, robbing the corporations at one hand of the revenue as well as causing
inconvenience to the public.
Many of the parking spaces are further sublet or sub-contracted to people who hire petty
criminals, untrained attendants etc. who run their tyranny in the neighbourhood. They
engage in overcharging, harassing women, sheltering illegal occupants carrying unlawful
activities and creating nuisance. Any resistance by parking users and general public to their
harassment by this parking mafia results in physical fights and verbal abuses.

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Even some of the basic rules and equipment’s operational in New Delhi Municipal Council
(NDMC) area as well as in Private parking spaces in Malls are completely missing. For
example the practise of issuance of parking coupons through hand held parking devices
which record the time and duration of the parking and collect the correct parking fee and
systems like automatic parking coupons issued by self-operated, non-manned coupon
dispensing machines used in malls. If such initiatives and operations can be successful in
one part of Delhi, there is no excuse for not allowing it in other parts and are ignored
through lame excuses.

“From Deficit to Surplus: A Realistic and Achievable Roadmap to make MCDs financially self-reliant”

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