BMC gets a AA

It’s not a blue-chip company, but has got the best rating there is. The BMC, the country’s largest corporation with a budget that runs into billions, has earned an AA rating from a Centre-appointed credit rating agency.Now, if the BMC babus so desire, they can approach the debt market (mainly banks) to raise funds for its various infrastructure projects. The ratings, which are valid for six months, have been done for the first time. The agency, Fitch Ratings, has obviously been impressed by the BMC’s financial position and its brand image as an international financial, media and service centre.Civic chief Jairaj Phatak is happy with the rating but says the BMC doesn’t need to go to the debt market right now. “The BMC has deposits of more than Rs 16,000 crore, which is more than our current annual budget. We don’t need to go to the bond market at all,’’ he says.
The grading was initiated for 63 urban local bodies (ULBs) so that they can raise funds through the debt market. It appointed Crisil and Fitch Ratings for the exercise.The Centre helps these ULBs implement infrastructure projects through the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). The Centre provides 35% of the funds, 15% comes from the state concerned and the remaining 50% has to be raised by the local body.“Most ULBs do not have a strong financial position and are unable to provide the 50%. The Centre has, hence, decided to get the ratings done so that these bodies can approach the debt market,’’ said an official attached to Fitch Ratings.The report card also lists the BMC’s drawbacks: delivery of services and infrastructure have been rated as poor.
The Navi Mumbai Municipal Corporation (NMMC), too, has got an AA rating, though it has a reasonable financial base. However, it scores on good infrastructure and delivery of services. Although Pune is being promoted as an IT city, its civic corporation has got an AA- as also the Thane corporation. The Kalyan-Dombivli Municipal Corporation has been given an A, while the one in Mira-Bhayandar has got an A-.“The ULBs have been rated on the basis of financial situation, service delivery, size of the city’s economy, its buoyancy, future business plan for the city and how it will be funded, quality of administration, past record in the implementation of infrastructure projects, reforms carried out so far under the JNNURM and the timeline for various reforms,’’ said sources.
A combined city development plan has been prepared for the Mumbai metropolitan region, which includes the Mumbai, Navi Mumbai, Thane, Kalyan-Dombivli and Mira-Bhayandar municipal corporations. All the other four have benefited from their proximity to Mumbai in terms of economy. “Mira-Bhayandar has no economy of its own. People who work in Mumbai but cannot afford a house there reside here. This has benefited the corporation immensely,’’ said the sources. The BMC has been a leader in carrying out reforms outlined under the JNNURM. It has an e-governance set-up, which is partially operational, has 100% cost recovery for operations and maintenance for water supply and also for solid waste management. However, it lags behind in property tax reforms. “Its collection is 40% as against the requirement of 85%,’’ pointed out the sources.V Radha, joint municipal commissioner, refuted it saying it was nearly 78%. “There are certain disputes in court and various government agencies that are not paying. These cannot be considered and we have informed the Centre about it,’’ she said.