Vision of Life; by Sanjay: City, Revenue & Citizens !

“Remind people that profit is the difference between revenue and expense. This makes you look smart”… Scott Adams.

Scott Raymond Adams is the creator of the Dilbert comic strip, and the author of several nonfiction works of satire, commentary, and business. His Dilbert series came to national prominence through the downsizing period in 1990s America and was then distributed worldwide. And no wonder its such words from the greats like Scott are ageless & applicable even today, if you want a proof, read the news about our dear PMC’s reducing (well, that’s ever reducing actually) revenue! Every year come March, the targets or say budget of PMC rise to new high & as the year crawls to end, the reality (read as revenue) figures tells different story & that’s happening for past few years & it does affects not just real estate but entire city’s development. Agreed, Pune is much blessed than most cities in the State when it comes to revenue but then just like some sharp kid in the class, the expectations of the teachers as well parents are more from PMC as it’s supposedly the Smartest City in the State! Let’s see first what PMC’s budget means as many won’t even know how a city can have a budget!

PMC i.e. our municipal body which is responsible to give us services right from water supply to drainage system to life our garbage to give us proper roads for our vehicles to provide us public transport to maintain public health to give education to the needy students to provide us gardens & public places to keep us entertained, well the list is unending for the services which are essential for the citizens & all these services costs money which needs to be recovered from the people who avail these services means “The Citizens of Pune City”! And here is the main issue i.e. to collect the money required to make all above services possible which is called as infrastructure & the money collected (read as generated) to build the infrastructure is called as revenue. Just like any big corporate company there is a budget which decides how much money is required yearly for building & maintaining the infrastructure the city needs & how this money is going to be generated. We know the kind of services a city needs as its mostly same all around the State or the Country as well the means of revenues are also same but are dependent on many factors & they are growth of the city, the kind of people (read as citizens) the city has & the way this revenue is decided & collected i.e. the system! Here is where the major problems are i.e. collecting as well deciding the avenues of the revenue from the citizens & the city!

Majorly the city’s revenue is generated from four segments, property tax, new constructions premiums, advertising at public places & GST’s share from Central Govt which earlier was Octroy. And then the PMPML i.e. public transport which supposedly should run self sufficient like Railway or any transportation company but it’s just logic as since many years the public transport is running in loss only adding more burden on city’s budget. These all are conventional revenue generation & let’s see about the scene on these fronts…

Main segment of any city’s (ideally) revenue should be property tax i.e. a fixed amount collected periodically from the citizens which are occupying some space in the city for any purpose i.e. may it be for residence or for business or profession i.e. money earning. And this is the most “kamjor kadi” i.e. weakest link in revenue generation as right from the way this tax is calculated to the implementation i.e. actual recovering the tax from the citizens, everything is chaos! Many won’t like my comment but that’s fact, as going by the logic every citizen living in a legal premise (well, will explain that aspect also) in the city & availing services by the city must be charged same in proportion of the size of the premise he or she or by the family it occupies, isn’t it? Well, PMC doesn’t believes in logic as there are hundreds of ways by which the mode of charging to citizens depending up on location to age of the property differs & not just by margin but by huge way. For e.g. a 2 bhk flat in old city area built some forty or thirty years back (and there are thousands of such) has to pay Rs 250 for six months as property tax but a 2 bhk flat built in 2019 of same area has to pay nearly Rs 2500 for six months as property tax. Both flats are in PMC area & sanctioned by PMC only, just the difference is the time span during which they have been built. But a simple logic is people residing in both the flats are citizens of the very city & enjoys same services, then why just some residence is old & some is new can be differentiating factor in calculating property tax, is the question I will ask to the authorities? And if the flat is for sale then just because the flat is built earlier so will that owner will be selling it at way lower than the new flat in the same area, well go & check by yourself guys & tell me the answer! But only our PMC bosses knows the logic in keeping difference for new & old property’s taxation for the same services they provide to both & this is huge deficit for the revenue. Because even the periodical hike in the property tax for the old properties is peanuts in compare to the cost of the services or infrastructure the city needs to serve all old & new development. At the same time rather the maintenance of the infrastructure in the old city area such as age old sewer lines or water lines is a major burden on city’s budget is a fact! Indeed we are a wonderful country, as we can speak for having same law all over the country for all the citizens of the country but nobody speaks about applying same property tax to all the citizens of just one city!

And then there is one more aspect to the property tax, all above new & old are legal properties & at least they are paying may be less or more but no one knows or have any clue about how to collect property tax from illegal property users, residence or commercial! Again no availability of proper data regarding illegal properties is boon for many because we don’t have to worry about illegality then. But if nearly 40% of population of the city lives in slum (read as illegal properties) then they are already living without paying zero or nominal property tax isn’t it, as if some property is illegal in itself then how we can collect tax from it, is the logical question comes to my mind! And then one more thing, why the property tax is only as per size of the property & why not its per person, as in 3BHK flat there can be two people living & in a 1 BHK flat there can be six people residing, so who puts more burden on city infra? One more thing (read as joke), to my knowledge property tax on vacant land is less than the built up land i.e. land on which some structure has been build. Logical as vacant lands doesn’t put any burden on PMC infra but if the said land is planned for some use say residential zone or has some reservation on it & the owner isn’t developing it or handing the same for the purpose it’s been reserved for, then such lands must be charged ten times than normal rate of property tax! This is the way they do in European cities as well in USA because if a land has been marked for some particular use & just as the landlord is not using it for the same then that lands potential is not being utilized causing more burden on city, so this must not happen is the logic behind it. For e.g. if a land has been shown as under reservation of play ground & the land-lord is not handing over the said land to PMC then the entire city is being deprived from having a sports ground isn’t it & unless the land-lord is pinched by virtue of such additional taxation, he won’t hand it over to PMC as well that can be one way of generating more revenue for the city also!

Now coming to next aspect is premiums from new constructions i.e. for every square foot of new plan sanctioning PMC gets some amount in the form of various premiums as well development charges & they too are reducing in recent past. Surprising isn’t it as with ever increasing city population, how is it possible, is what many will ask. Well answer lays with again “pahale anda ki pahale murgi” types with revenue only. As lesser revenue affects infrastructures’ even distribution in & around the city & real estate grows only where proper infrastructure is available. Thus the suburbs of the city which has good road, ample water, proper drainage & rest all things, here the rates of lands are above gold (just a fraze) & not many can afford to buy a home here & in the locations where infrastructure is not proper people are not ready to live, thus in both ways there is reduction in new projects which directly affects real estate as well city’s revenue in the form of premiums. And then there are many pending policies such as TDR utilization as well Metro TDR & paid FSI making new projects got delayed. At the same time no TDR on the lands of road with 6 meters type decisions are also reason for lesser supply of homes in the city which has maximum roads of that width. And then no more people are having PMC as only option as the new job centers are like Hinjawadi, Kharadi, Chakan, PCMC, it’s obvious with lack of proper public transport more & more people are opting to stay out of corporation limits i.e. in PMRDA limits which again is resulting in lesser projects in PMC area. At the same time this migrating population for job in Pune region just can afford to buy home with PMC limit is also a matter of concern. So now the focus must be to create more jobs within city limits & for that one has to rethink entire city planning!

At the same time need is think out of the box for new avenues of revenue earning & tourism or medical tourism can be good option. But unfortunately PMC doesn’t have tourism dept itself to my knowledge, so you can imagine our rulers’ attitude towards new ideas & innovations regarding not just revenue but entire city as a whole. On any Sunday or public holidays, all that one can do is visit the Malls or Cinemas as the city doesn’t have enough public gardens or recreation or heritage places where people can come together & spend time.

And then the same confusion about policy or lack of vision is with advertising revenue; with thousands of illegal hoardings, billboards occupying city sky yet generating zero revenue!

See, just one aspect of property tax & there is so much to think as we act up on but the main problem with PMC is all the dirty jobs (read as revenue increasing) are left with administration & elected members rarely push for any such drive as they think it will affect their vote bank! I think high time the so called wise rulers (are there any) of this city come together giving up so called political rivalry & think for the city’s survival (read as revenue generation) or else one day the budget may cross hundreds of crores of rupees but at the end if revenue is zero, we won’t be no more a Smart City but Mungerilal’s City (Search for “Mungerilal ke Haseen Sapne” on Google)!

Sanjay Deshpande

Sanjeevani Dev.

Please view my sharing about real estate in Pune at U-Tube link below..

https://youtu.be/al0NZ-7Zhq0

Please do visit my blogs to know about our philosophy at Sanjeevani ! (Click the links below)

http://visonoflife.blogspot.com/2018/08/pune-city-no-1.html