BMC Faces Tough Revenue Generation Amid Real Estate Crisis
The Brihanmumbai Municipal Corporation (BMC) is struggling with revenue generation, especially after the real estate crisis and the waiving off of property tax for small houses. Despite a 55% increase in income in the first half of the decade, the second half saw a significant decline.
BmcRevenue GenerationReal Estate CrisisProperty TaxDevelopment PlanReal Estate MumbaiMay 29, 2025
In 2011-12, the total revenue and capital income was Rs 15,595 crore. In the next four years, though the octroi revenue remained the same, BMC's income rose sharply. In those five years, property tax rose from Rs 3,400 crore (2011-12) to Rs 5,700 crore (2015-16) and development department revenue increased from Rs 1,600 crore to Rs 6,000 crore. As a result, the total revenue generation increased by 55 per cent to Rs 24,267 crore.
However, the trend did not remain the same over the next five years. On the basis of the octroi collected over the previous years, the civic body claimed compensation from the state government, which increased at a rate of 8 per cent every year and saved the BMC. Meanwhile, the revenue from property tax and development tax decreased sharply. Though property tax collection crossed the Rs 5,000-crore mark every year, BMC found it difficult to recover the disputed tax. Even earnings from giving permissions for buildings reduced to Rs 1,500 crore/year, which is 25 per cent of that of 2015-16.
Over and above all of this, the civic body failed to explore new avenues for income generation. Ex-commissioner Sitaram Kunte and Ajoy Mehta had suggested collecting property tax from slums. Mehta had also proposed a 1 per cent surcharge on all property deals, but even that just remained on paper.
Revenue generation now an uphill task for BMC. While the first five years of the decade saw a 55 per cent increase in income, BMC was hit by the real estate crisis in the second half of the decade. The BMC has two income sources — revenue and capital. It earns about 98 per cent of its income through revenue, which comes from taxes and various charges.
Capital income includes grants, loans, premiums of land and buildings, which are usually not more than 10 per cent of the total capital revenue. Revenue expenditure is mainly for paying salaries, but a small portion goes to programme expenses, revenue grants, etc. Capital expenditure is spent on projects like roads, bridges, water tunnels, waste treatment plants, etc.
While the civic body waived off property tax for small houses, they failed to come up with new ways of generating revenue. This has put a significant strain on the BMC's financial health and its ability to fund essential projects and services.
Frequently Asked Questions
What is the main source of income for BMC?
The main source of income for BMC is octroi, followed by property tax and earnings from the development plan department.
How did the real estate crisis affect BMC's revenue?
The real estate crisis led to a sharp decline in property tax and development department revenue, significantly impacting BMC's overall income.
Why did BMC waive off property tax for small houses?
BMC waived off property tax for small houses to provide financial relief to homeowners, but this decision also reduced the corporation's revenue.
What new revenue generation ideas were proposed by ex-commissioners?
Ex-commissioners Sitaram Kunte and Ajoy Mehta suggested collecting property tax from slums and proposing a 1 per cent surcharge on all property deals, but these ideas were not implemented.
How does BMC allocate its capital expenditure?
BMC allocates capital expenditure on projects like roads, bridges, water tunnels, and waste treatment plants to improve infrastructure and public services.
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