The country’s richest local civic body has to factor in a big dent in its collections this month. Since the government’s sudden move to demonetise higher denomination currency, the octroi collected by the Brihanmumbai Municipal Corporation (BMC) has dipped by around 20 percent, data compiled by BloombergQuint shows.
While business is slowly crawling back to normalcy, octroi collection dipped by as much as 40 percent in the first three days since the demonetisation came into effect, said a senior official in the Assessor & Collector Department of the BMC on the condition of anonymity.
The daily octroi collection of the BMC is around Rs 15 crore, excluding the crude oil component. Of this, about 40 percent is in cash. But since the move to ban higher denomination currency notes, the collection has barely reached Rs 12-13 crore, the official added.
There are 37 entry points into Mumbai, and the data collected by BloombergQuint from the four most important toll nakas in the city, shows that there has been a 60 percent drop in cash payments, while other modes of payment have jumped 10-15 percent.
The department collects octroi in cash, debit cards for clients who have accounts in municipal co-operative banks, as well as through electronic modes of payment. The bigger clients use e-payment while small and medium-sized businesses generally prefer to pay in cash, the senior official quoted above said.
Since November 9, collections through e-payment have gone up significantly, he added.
There is no provision for cheque payments. However, an exception was made on November 9 when the department allowed cheques as a mode of payment for a short while. But it was considered a risky affair and the department discontinued it the very next day.
The octroi department is the highest revenue generator for the richest civic body in the country. The corporation expects about 27 percent of its income this fiscal to be generated from the octroi department at an estimated Rs 6,895 crore, according to BMC’s budget estimates for financial year 2016-17 uploaded on its website.
The octroi collection so far in the current fiscal year (as of November 27) stands at Rs 4,465.16 crore as against Rs 6,276 crore for financial year 2015-16.
So far in November, the department has been able to collect Rs 457.87 crore, including the collection from crude oil, compared to Rs 669 crore in the previous month. This is the lowest monthly revenue since July, a month that was marked by particularly heavy rainfall which impacted road traffic and consequently the flow of goods into the city. The revenue in July this year stood at Rs 494 crore.
The monthly revenue has also increased since August as the department hiked the octroi charged on the movement of crude oil to 4.5 percent from 3 percent earlier, the official added.
The department remains apprehensive about collections going forward. The overall market looks sluggish as the impact of the cash crunch begins to play out, the official said, which can have an adverse impact on collections as goods coming into the city wound down. If the economy slows down further, as is being suggested by various reports, it will definitely hit collections, he added.
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