BMC's Financial Squeeze Intensifies with Corporators' Return
The Brihanmumbai Municipal Corporation (BMC) prepares to welcome corporators back after a four-year gap. This return marks a critical moment for the Mahayuti government. Its biggest challenge now appears financial rather than political. The BJP-Shiv Sena alliance secured a clear majority by making subsidy-heavy promises. Asia's richest civic body must now balance these welfare commitments against rising infrastructure costs and dwindling reserves.
Shrinking Reserves and Mounting Projects
BMC holds financial reserves exceeding Rs 81,774 crore for the 2025-26 fiscal year. Its yearly budget stands at Rs 75,000 crore. Over the past five years, these reserves have dipped by at least Rs 10,000 crore. They previously totaled Rs 91,690 crore in 2021. The reserve corpus mainly sits in fixed deposits across multiple banks. Interest earned from these deposits contributes to civic revenue.
In recent years, BMC has launched several capital-intensive infrastructure projects. These include the coastal road, the Goregaon-Mulund Link Road (GMLR), and a waste water treatment facility project. This project involves building seven sewage treatment plants (STPs). A mega road concretisation project is also underway. Civic officials report total expenditure on all major infrastructure projects now exceeds Rs 1.5 lakh crore. This amount nearly doubles the BMC's current reserve corpus.
Out of the total reserves, Rs 51 crore held as fixed deposits are earmarked for internal commitments. These funds cover employee gratuity, pensions, Provident Fund contributions, and refundable bank guarantees from contractors. A civic official speaking anonymously highlighted the issue. "Only 49 percent or Rs 39,500 crore of the Rs 81,000 crore reserve can be used for infrastructure projects. The overall project size is nearly four times this usable amount. This clearly indicates a looming liquidity crisis for BMC in the coming years," the official said.
Budget Pressures and Subsidy Promises
BMC's commissioner presents the civic budget in February. Last year's budget reached Rs 74,527 crore. Capital expenditure accounted for 58 percent or Rs 43,000 crore, largely funding infrastructure works. The official noted, "Last year's budget showed no signs of financial crunch. This year, we managed the dip because property tax generation increased. Premiums from the building proposal department also rose. However, without full attention to controlling expenditure and fixing liabilities, things will gradually spiral out of control."
The return of corporators and subsidy promises in the Mahayuti manifesto will likely increase BMC's expenditure. One heavily criticized proposal plans to subsidize bus fares for women by 50 percent. The Brihanmumbai Electric Supply and Transport (BEST) undertaking currently relies heavily on BMC grants. Last year, BMC allocated Rs 1,000 crore to BEST, up from Rs 850 crore the previous year.
BEST records show total financial liabilities at Rs 9,286 crore for the ongoing financial year. The annual deficit stands at Rs 2,200 crore. In May 2024, minimum fares increased for non-AC buses from Rs 5 to Rs 10 and for AC buses from Rs 6 to Rs 12. This hike boosted BEST's daily revenue margin from Rs 2.5 crore to Rs 3.5 crore. A BEST official explained, "If subsidies proceed, daily revenue could dip by 40 percent or Rs 1.4 crore daily. That means an annual loss of Rs 511 crore for the undertaking."
The Mahayuti manifesto also promises to halt the annual 8 percent water tax hike for five years. BMC currently charges Rs 6 per 1,000 litres for residential water supply and Rs 50 for commercial and industrial use. A 2013 policy allowed annual tariff hikes up to 8 percent. Since 2023, no hike occurred even as water supply costs rose by 20 percent. The last increase in 2022 was 7.12 percent. An official warned, "BMC supplies 3,870 million litres daily at a nominal rate. Supply cost nearly doubles the tax. Without rate increases, this could lead to an annual loss of at least Rs 200 crore."
Fixed Expenditure and Funding Strategies
Corporators' return will increase fixed expenditure by Rs 1,931.6 crore annually over five years. This covers salaries and development funds. The civic administration pays each of the 237 elected and nominated corporators a monthly salary of Rs 25,000. Each also receives an annual development fund of Rs 1.6 crore for constituency works. These funds remained unutilized during the four-year absence of an elected body.
The official added, "The Mumbai Municipal Corporation (MMC) Act mandates salaries and development funds for corporators. This fixed expenditure will burden BMC for five years. Until 2022, BMC didn't face pressure from so many big-ticket infrastructure projects simultaneously. The situation has changed, requiring tighter expenditure control."
To manage costs while executing projects, BMC increasingly turns to the Public Private Partnership (PPP) model. Private companies invest in projects and maintain them post-completion for a fixed period. For instance, BMC develops an 11-hectare Marine Drive-like promenade along the coastal road. Private agencies handle the remaining area. Reliance Industries Limited (RIL) develops nearly 53 hectares, while Tata Sons Limited beautifies five hectares, including the road median.
In recent months, BMC floated Expressions of Interest for PPP tie-ups on projects like the Rs 1,250-crore overhaul of Deonar abattoir, Asia's largest slaughterhouse. A textile museum at Kalachowki in Byculla, estimated at Rs 80-100 crore, is also planned. Earlier in 2025, BMC proposed privatizing services like cardiology, dialysis, and blood banks in at least six peripheral civic hospitals under PPP. This move drew criticism from several organizations.
Officials stated PPP projects aim to reduce strain on civic finances and generate additional revenue. In parking projects, for example, private operators share a portion of earnings with BMC.
