GHMC faces financial crisis, lacks funds to pay employee salaries


A view of the Greater Hyderabad Municipal Corporation head office in Hyderabad.
| Photo Credit: NAGARA GOPAL

The Greater Hyderabad Municipal Corporation (GHMC), which is undergoing major financial crisis, is unable to pay salaries to its employees this month.

Seven days into the month, the civic body that derives revenue from the 650 square kilometre area of the capital city, is fumbling to find cash in its coffers to manage its day-to-day affairs.

Commissioner Ronald Rose frantically checked with the revenue generating departments towards November end, to pool up to ₹50 crore in order to pay the interest on loans that the GHMC had availed for infrastructural projects in the city, sources said.

Immediate relief to to tune of ₹120 crore is needed to pay the salaries to employees, so that the corporation can get a breather of one month.

“The revenue staff was busy with elections the last month, so there was no collection of Property Tax. We have sent a detailed report about the ongoing projects to the government, and are awaiting some assistance to sail through the month,” an official informed.

The downfall of GHMC — which otherwise had surplus funds in fixed deposits — had started in 2016 when it was made to compensate for the losses suffered by the Telangana State Road Transportation Corporation to the tune of ₹336 crore.

Subsequently, the corporation was made to issue bonds worth close to ₹500 crore and avail term loans worth ₹2,500 crore for construction of flyovers and other structures as part of the Strategic Road Development Plan (SRDP).

Loans close to ₹1,500 crore were reportedly availed for the Comprehensive Road Maintenance Programme (CRMP) under which maintenance of major road stretches was handed over to private agencies. The GHMC was also made to borrow for the Strategic Nala Development Programme (SNDP) intended to improve the stormwater drain network in the city. Besides, the corporation spent from its own general fund on and off for financing the double-bedroom housing project, which reportedly totalled ₹500 crore.

“Earlier, whenever flyovers were constructed, respective governments would sanction the funds. That practice stopped after Telangana emerged as a separate state,” an official shared.

The state, though, was not as enthusiastic in devolving to GHMC its share of funds from various sources. As per the rules, 95 per cent of the Professional Tax collection from the city should be allotted to GHMC, which has not been done for the past several years. GHMC is also entitled to a surcharge on the stamp duty and part of the Motor Vehicle Tax collected, which are rarely ever paid. These apart, Property Tax arrears on state and central government buildings accrued to over ₹7,000 crore.

Further, the government has not compensated for the property tax exemptions and waivers it had announced before successive GHMC elections. All that the GHMC got from the government was ₹32 crore per month under the Pattana Pragathi programme.

Since October this year, GHMC has started repaying principal amount on the loans availed for SNDP and CRMP projects. Come January, the repayment of principal amount would begin for the SRDP loan too.

“Every alternate month, we will have to shell out ₹125 crore towards loan servicing. We have no clue how we would generate that kind of funds,” says another official.



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