Hyderabad: The Greater Hyderabad Municipal Corporation apparently believes that obtaining loans from banks by mortgaging prime property is easier than getting the state government to release a major portion of the funds it owes to the Corporation.
According to a resolution passed by the Standing Committee (Resolution Number 649, dated April 28, 2011), the GHMC is in intense negotiations with banks to obtain long-term loans up to Rs 600 crore. These loans would be repaid in the next ten years, with a minimum of Rs 100 crore to be repaid each year.
The State Bank of India has agreed to release Rs 250 crore with an interest of Rs 10.75 per cent, while other banks and financial institutions are demanding anything from 12 per cent to 12.5 per cent for the remaining amount.
This money is needed by the GHMC to carry on development works in the Municipalities which were merged in the erstwhile Municipal Corporation of Hyderabad to form the Greater Hyderabad Municipal Corporation.
The huge interest being demanded by the banks would mean that the GHMC will be forced to pay around Rs 450 crore to Rs 470 crore as interest on the principal amount of Rs 600 crore.
Telugu Desam Party Floor Leader in the GHMC Singi Reddy Srinivas Reddy points out that ironically, the state government owes the GHMC about Rs 350 crore.
Of this Rs 350 crore, Rs 170 crore as professional tax, Rs 50 crore as road maintenance, and Rs 130 crore in other dues has to be paid by the state government to the GHMC.
“Instead of trying to get the state government to release this amount, the GHMC is looking at Banks to fund its works. This would ultimately result in the residents being saddled with the GHMC’s follies,” Mr Singi Reddy said.
Besides this, the GHMC is looking to mortgage some of the prime properties which it owns to raise the money.
The Moazzam Jahi Market is among the 18 markets to be mortgaged, besides 12 community halls spread across the city.
If it does go ahead with option of taking the loan, the GHMC plans to spend Rs 200 crore for the drinking water supply in some of the recently merged Municipalities.
Under pressure from the Majlis-e-Ittehadul Muslimeen, the Corporation would also spend Rs 200 crore in the original constituent of the GHMC, the MCH limits.
The remaining Rs 200 crore would be spend for the other development activities like medical and sanitation, street lighting, etc.
According to the draft proposal, the GHMC is looking at imposing an additional 5 per cent taxes on the areas in which this Rs 600 crore is spent to recover the amount.
Mr Singi Reddy pointed out that the GHMC’s inability to collect the funds due to it from the government is evidence enough of its inefficiency. “How can the decision making body in the GHMC, the Standing Committee hope to collect the additional taxes from the people if it is unable to convince even the state government to release the money it owes to the GHMC? The TDP is willing to totally support the GHMC in any attempt to deal with the government, but so far this is not being done,” he pointed out.
The TDP leader also expressed the worry that the GHMC’s inability to collect the money due to it may ultimately result in it being unable to repay the loans and the accrued interest. “This would lead to the prime properties mortgaged to the banks being auctioned off,” he said.
Incidentally, the sources of revenue for the GHMC are the amount sanctioned by the government in the Budget, collection of property taxes, building assessments and permissions, trade licences and the various certificates it issues.
Besides this, Central grants in the shape of schemes like the Jawaharlal Nehru National Urban Renewal Mission and Rajiv Awas Yojna contribute to the GHMC’s kitty.(INN)