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Pune civic body stares at fiscal dependence post GST


Senior civic officials are concerned about the civic body losing its financial independence.

"With GST in play, PMC will largely be dependent on state grants, private investment and bonds to complete its ambitious projects. Already the 24x7 water scheme and metro projects have opened doors for private investment. It is a fact that the civic bodies in the state have lost their financial independence under the BJP’s regime," admitted a senior PMC official, adding that the PMC is not able to generate much revenue from property tax and development charges.

The Union government's insistence on decentralization of power by making local governing bodies financially independent falls flat. The once financially strong PMC has to depend on the state and private players to achieve almost 50% of its annual budgetary target for 2017-18 fiscal.

Moreover, with the introduction of Goods and Services Tax (GST), the Local Body Tax brought into force after the scrapping of octroi in 2013 — will become defunct.

The PMC had received Rs 1,450 crore revenue through LBT in the last fiscal and expects a substantial rise this year. It can only hope that the state would continue to provide assistance in the form of grants for at least the next five years, so that the civic body does not feel the GST pinch.

The government had directed PMC to collect LBT instead of octroi in its jurisdiction from April 1, 2013 on the goods to be imported for use, sale and consumption. The octroi comprised about 40% of civic revenue, but the government’s decision now has pushed the civic body into a huddle to ponder on how to manage its annual budget.

The same directives were also given by the state government to the other civic bodies of the state in Nagpur, Thane, Pimpri-Chinchwad and Navi Mumbai. Traders with business of Rs 50 crore and below were exempted from paying LBT in 2015. However, those with large businesses continued to remain under its ambit.

According to PMC’s estimates, the city needs an annual budget of Rs 9,828 crore to develop and maintain infrastructure for 32 lakh people. It also faces other challenges like raising Rs 25,000 crore to implement development plans for the old city areas.

Standing committee chairman Muralidhar Mohol said the panel will ensure that the administration meets all revenue targets.


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