Author: Maj Gen S.G.Vombatkere (Retd)
In this age of acronyms and massive financial transactions, the citizen needs to know at least of those which affect him directly or immediately. The City of Mysore is receiving about Rs.125 Crores on loan and about Rs.15 Crores as grant, in order to improve and upgrade the infrastructure. The work on water supply, sewage disposal, surface drainage, slum improvement, garbage disposal (solid waste management), and roads has already commenced and is scheduled for completion by January 2000. The loan is provided by the Asian Development Bank (ADB) to the Government of India (GoI) in dollars, and the GoI provides the loan to the Government of Karnataka (GoK) in rupees. In turn, GoK which has constituted the Karnataka Urban Infrastructure Development Finance Corporation (KUIDFC) under a Managing Director, provides the money to the City of Mysore. The Mysore City Corporation (MCC) is responsible to pay back the loan with interest @ 12% to KUIDFC, over 20 years commencing 2004. That is, about Rs.15 Crores interest plus about Rs.6 Crores principal, every year. Even a school child will guess that paying back means that the citizens of Mysore will have to do the paying. And that school child will also realise that after s(he) grows up, s(he) will be paying. Two questions therefore arise at this stage – first, how can MCC raise money, and second, if MCC cannot or does not repay regularly to KUIDFC, what will be the consequences?
To answer the first question, we have to first see how much and from where MCC is getting its money, and how that money is being spent. The bulk of MCC’s annual income is from property tax, which currently stands at about Rs.2 Crores. If all citizens pay property tax correctly, this income may rise to about Rs.9 Crores. But that still leaves a shortfall of about Rs.12 Crores. One of the important methods of bridging this gap of Rs.12 Crores per annum appears to be to raise the rate of property tax payable, and ensure proper and regular collection of tax. Raising the rate of tax will not only have to be sufficient to service the loan, but also to have money available to MCC to provide the normal services to the existing and growing City, as well as money to maintain the expensive assets created from the loan. Another method is to get the income from the Annual Dasara Fair and Exhibition. At present, even though Mysore hosts the Fair and Exhibition, the income from it goes to the State Government, and MCC then has to go with a begging bowl to Bangalore for funds. This does not make sense from any angle except the desire of the State Government to control the funds. This can and must be changed by the popular will of the citizens of Mysore. There is also a suggestion that the “floating population” in Mysore should bear some of the burden for using the infrastructure. Notwithstanding that we have elected Corporators and Council Meetings, MCC should publish at least an annual statement of its accounts so that citizens are aware how their Corporators are planning and using (or misusing) the funds, and immediately throw open for public discussion, the proposals for raising money. All of these imply and involve improving the efficiency of functioning of the MCC, and the active co-operation of the citizens. But most important of all is that politicians (Corporators, MLAs and MPs) must set aside petty party politics and work to further the will of the people.
The second question is more complicated. In the world of finance, loans are given only after the lender has established that the borrower is capable of returning the amount with interest, and after securing adequate collateral. In the present case, let us first see if the borrower (MCC) is likely to default or not. The ADB loan was negotiated after an international consultant appointed by ADB recommended that with proper training of staff, computerization of records, and careful management, MCC will be capable of raising its income to meet the additional liability of the ADB loan. The foreign consultant could not have been very conversant with the levels of motivation of MCC staff (to attend the training), nor with the problems of implementing any new scheme of management due to opposition from staff members to change, as well as their stake in the status quo. The best-conceived and prepared plans can be easily blocked by the disruptive elements within an organisation in the present atmosphere of political interference, indiscipline and caste politics. For example, a proposal which was approved by the Council of the Bangalore City Corporation to rationalize the property tax structure, has not yet been implemented due to opposition from the Revenue Collectors. If the schemes for raising revenue are well planned (so that citizens actually start paying tax at the enhanced rates) and well implemented (so that Revenue Collectors strictly collect tax dues from all without fear or favour), MCC can perhaps raise its income to meet the liability. But practical realities make the “if-and” in the statement combine very negatively with the “perhaps”. The water billing has been computerized and the income from water tax has improved, but the main source remains property tax, and this has not yet been tackled. Thus, if a citizen should wonder what will be the fall-out of the likely default by MCC, s(he) should not be criticized. In the world of finance, default ultimately leads to forfeiture of the collateral. But we have neither offered nor given any collateral in the present case. No doubt, GoI and GoK have given guarantees to ADB, so MCC is “safe” from ADB. But what will KUIDFC do if MCC cannot or does not repay?
It may not be naïve to suggest that such a situation may well lead to privatization of at least the basic public amenities of water supply, sewerage and solid waste management. There are many who would strongly suggest and support such a move in the belief that the solution for inefficient Government or Quasi-Government services is not in improving the services, but in changing the system to private control. It is sobering to remember that these privatized services will be owned and run by the very same corrupt politicians who are interfering with the existing services, and are the main cause of inefficiency. The privatized services may or may not be more efficient (the service rendered by some private LPG agencies in Mysore indicates what can happen), but there will be no remedy for the ordinary citizen should the water supply company, for example, decide to double the rate for water, or cut the connection due to say late payment of dues. In the privatized world, only money talks, and those who do not have money to spare will inevitably suffer.
The choices before the people of Mysore are two. One, improve the state of finances of MCC by making their Corporators answerable to the people in each Ward, participate in the governance of Mysore in the spirit of the Nagarpalika Act (74th Constitutional Amendment), and co-operate so that corruption is rooted out. Or two, remain passive and unconcerned, sink deeper into debt, and be damned.