Cash-Hit EDMC Proposes 2 New Taxes, Education Cess In Budget Proposal

Taking a cue from its counterparts in north and south, the East Delhi Municipal Corporation (EDMC) on December 10 proposed two new taxes for the financial year 2019-20. The cash-strapped municipal body wants to introduce professional & betterment tax and an education cess in order to improve its earnings. Development work in the municipality has been hit owing to paucity of funds. 

Last year also, the EDMC had planned to impose a betterment tax at the rate of 15 per cent of the property tax. The civic body expected to generate an additional revenue of Rs 10 crore annually through this new tax.

"In 2018-19, Rs 80 crore was earmarked for construction and upgrading roads and drains. This is to be increased to Rs 100 crore in the revised estimates. And, Rs 80 crore has been proposed for year 2019-20 for the same purpose," the EDMC said in a statement.

The EDMC's total Budget overlay for FY20 is estimated at Rs 4,616.26 crore while the Budget estimates for FY19 has been revised to Rs 4,391.35 crore. The EDMC plans to earn Rs 271 crore fro property tax collection besides what has already been collected in this financial year.

What if it launches the tax this year?

Those with an annual income of Rs 5 lakh in the area may have to pay a professional tax. The same was proposed in the last financial year as well but was not implemented. This would help the EDMC earn Rs 5 crore every year. The EDMC proposes an education cess of five per cent of the property tax. It would add Rs 10 crore to the funds of the corporation annually.

The money crunch

According to Census 2011, the area has a total pollution of 17 lakh. Between 2001 and 2011, the population increased by 16.8 per cent. For many reasons, the number has more than doubled since. The area is now home to as many as 40 lakh people, private estimates show.

About 97 per cent of the population is spread across the three municipalities of EDMC, NDMC and SDMC (South Delhi Municipal Corporation). Of the three, the EDMC is the most populated, housing over 40 lakh people in 105 square kilometres of area. However, 245 colonies under the EDMC jurisdiction are illegal colonies. This has been a key reason behind EDMCs' deteriorating financial condition ─ property tax is the main source of revenue generation for municipal bodies.

The corporation needs Rs 170 crore every month and Rs 2,040 crore every year to pay salaries of its staff. On the contrary, the EDMC earns a paltry Rs 1,370 crore annually from internal sources.

“It is a challenge to provide civic services in such circumstances. The EDMC has been in poor financial condition since it was conceived, and we are not in a position to provide salaries to our employees on time,” the then EDMC commissioner Mohanjeet Singh told media while presenting the Budget in December last year. The EDMC came into being in 2012.

In March last year, the civic body sought the assistance of its counterpart in south, and wrote a letter asking for Rs 131 crore or any amount the SDMC could spare to be able to pay salaries and arrears to its staff. Sanitation workers went on strike multiple times in the past two years over late salary payments.