Govt bailout for corporations

Govt bailout for corporations

1831Cr Loan To Help Tide Over Liabilities & Budget Deficit

TIMES NEWS NETWORK 

New Delhi: Delhi government on Monday decided to extend a loan of Rs 1831 crore to the three new corporations to help them tide over their liabilities and budget deficit. 
    The government has fixed an annual budgetary allocation of Rs 1724 crore (non-plan) and Rs 1771 crore (plan) for the three corporations in its budget outlay for 2012-13. 
    The state government’s loan and total budgetary allocations to the new municipalities add up to Rs 5326 crore. However, all this money comes with a reminder to the three corporations that they need to pull up their socks and rationalize tax collections, which are currently not up to the mark. 
    In a statement issued on Monday, Dikshit said, “The government is alarmed to note that MCD has outstanding contractors’ liabilities amounting to approximately Rs 600 crore and that the increase in revenue has not been commensurate with theincrease in expenditure.” 
    She said the corporations need to rationalize their tax base and seriously focus on enhancing efficiency in revenue collection. 
    Dikshit said her government expected that the new corporations “will exercise fiscal and financial prudence and propriety in incurring expenditure and take initiative to augment its revenue resource.” 
    The assessment of the financial health of the corporations shows that only the budget estimates of South Delhi municipal corporation are closing with a surplus. 
    Both, North Delhi municipal corporation and East Delhi municipal corporation have registered a deficit. This needs to be rectified before the budget of the two corporations is passed. 
    The Rs 1831 crore is thus being given by the state government as a loan to bridge the budget deficit and to make payments to clear contractor liabilities of Rs 600 crore. The contractor liabilities will only be cleared after due scrutiny, a senior official said. 
    As per section 110 of the Delhi Municipal Corporation Act, it is obligatory on the part of the MCD to maintain an estimated cash balance of at least Rs 1 lakh as the closing balance. 
    This means that the budget estimate of any municipal corporation cannot be closed with a balance of less than Rs 1 lakh. 
    The budget of the new corporations will be passed according to the statutory requirement on the first day of their meeting that is likely to take place between April 30 to May 1.  


Source: Times of India